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Mecklenburg County, North CarolinaEconomic Update Presentation
January 2019
Economic Update
#1 - Metro with Highest Growth of Women-Owned Firms -American Express OPEN
#1 - Best State for Business - Forbes Magazine
#1 - Best State to Start a Business - FitSmallBusiness.com
#1 - #1 International Airport with Highest On-time Rate: CLT -U.S. Department of Transportation
#1 - City Craft Beer Real Estate Footprint Growth - Colliers International
#1 - Cheapest City to Base Your Tech Startup - Bloomberg Technology
#1 - Regional Medical Group: Carolinas Medical Center - US News Best Regional Hospitals Rankings
#1 - Top Tech Momentum Market - CBRE Group
#1 - State for Most Incoming Moving Truck Rentals - U-Haul
#1 - State with Fastest Growing Large Economy - Bureau of Economic Analysis
#1 - Millennial Moving Destination City - Smart Asset
Mecklenburg County National Recognition
Economic UpdateSource: Charlotte Chamber Rankings
Economic Update Sustained Population Growth
Economic UpdateSource: 2007 - 2017 US Census Bureau 2018 – 2027 OSBM Estimates
Population
2007 – 865,0752017 – 1,076,837
• 40th largest county in the nation.
• 16.6% population growth since 2010.
• Most populous county in the State.
• Growth largely dependent on migration.
Economic Update 10,981 new migrants moved to Mecklenburg County in 2017 (56% of all new residents)
Economic UpdateSource: U.S. Census Bureau
Dec 18 2018 AvidXchange announced 1,229 new jobs with $41 million in new investment.
Dec 10, 2018 LendingTree, LLC, a leading online lending exchange, is expanding their corporate headquarters in Charlotte. The company will create 436 jobs over five year.
Nov 29, 2018 Honeywell is moving its headquarters to Charlotte, bringing 750 new high paying jobs
Jun 25, 2018 Amazon announces plans to build a $200 million distribution center in the County which will add 1,500 new jobs.
Apr 10,2018 Yokohama Tire Corp. announces plans to build a research and development facility in the County. The investment in the facility is $5.8 million, and will create 56 new jobs.
Apr 10,2018 Kurz, a leader in hot stamping and coating technology announced plans to build a North American headquarters in Mecklenburg County. The headquarters will create 90 new positions with an investment of $18 million.
Apr 03, 2018 Chinese forklift manufacturer Hangcha establishes a new U.S. headquarters in Charlotte.
Feb 27, 2018 Ernst & Young LLP announces development of an EY Wavespace Innovation Center. This development will create 375 new jobs with an investment of $8.2 over the next five years.
Nov 09, 2017 Aflac invests $3 million into new office space creating 30 new jobs.
July 11, 2017 Sitehands, which specializes in IT field services selected Charlotte for its global headquarters. The company will create 200+ new jobs.
Sept 22,2017 NN Inc plans to relocate its headquarters from Tennessee to Charlotte adding 200 new jobs to the County.
Aug 09, 2017 Allstate announced it will create 2,250 new jobs in its second major expansion in the county. The insurance giant will invest more than $22 million to expand its operations center.
Aug 29, 2017 Daumer Corp. invests $21 million to build a flexographic printing facility, creating 40 new jobs.
Economic UpdateRecent Announcements
Source: Charlotte Chamber Economic Update
Economic Update
• Mecklenburg County is home to the headquarters of six of the world’s largest companies.
• In 2018, these six companies generated $200.3 billion in revenue. If these six companies were its own country they would be the 52nd in terms of world GDP.
• A highly skilled labor force, lower than the national cost of living index, and access to major transportation networks are a few factors that make the County a premier location to do business.
Fortune 500 Headquarters Located in Mecklenburg County
Source: Fortune 500 List and International Monetary Fund (IMF) Economic Update
RevenueRank Company Industry ($billions)
24 Bank of America Corp. Banking $100.377 Honeywell Industrials $40.5
125 Duke Energy Utilities $23.2151 Nucor Metals $20.3298 Sonic Automotive Retail $9.9456 Sealed Air Packaging $6.1
200.3$
Mecklenburg County Fortune 500 Headquarters
Economic UpdateMajor Employers – 2018
Economic Update
Atrium Health 35,700
Wells Fargo 24,000
Charlotte-Mecklenburg Schools 18,495
Wal-Mart Stores, Inc. 17,100
Bank of America Corporation 15,000
Novant Health / Presbyterian Hospital 11,698
American Airlines 11,000
Delhaize America, Inc. / Food Lion LLC 9,078
Harris Teeter 8,239
Duke Energy Corp. 7,900
Lowes 7,801
North Carolina State Government 7,600
Daimler Trucks North America LLC 6,800
City of Charlotte 6,800
Mecklenburg County 5,512
Source: Charlotte Chamber of Commerce
Economic UpdatePrincipal Taxpayers - 2018
Economic Update
Taxpayer EnterpriseAssessed Valuation
($)
Percentage of Total Assessed Valuation
(%)
Duke Energy Utilities 2,763,118,686 2.18
Wells Fargo Financial Services 1,515,278,307 1.19
Bank of America Financial Services 1,263,940,945 1.00
American Airlines Transportation 824,920,258 0.65
Spectrum Utilities 392,715,272 0.31
Piedmont Natural Gas Utilities 351,635,636 0.28
AT&T Utilities 342,643,883 0.27
Southpark Mall Retail 328,335,706 0.26
Teachers Insurance Insurance 233,262,239 0.18
Parkway 214 N Tryon Real Estate 210,118,400 0.17
Source: Charlotte Chamber of Commerce
8Source: Charlotte Chamber of Commerce
Economic UpdateForeign Firms
Economic Update
• 2.7% increase in foreign firms.
Count of Foreign Firms Located in Mecklenburg CountyCountry 2017 2018Germany 134 141United Kingdom 79 82Canada 62 62Japan 51 52Switzerland 41 41France 36 37The Netherlands 37 37Italy 34 34China 27 27Sweden 20 20Ireland 15 15Other 132 123Total 668 686
9Source: Charlotte Chamber of Commerce
Economic UpdateNew & Expanding Businesses for Third Quarter 2018
Economic Update
Category Q3 2018 Q3 2017 Q3 2018 Q3 2017 Q3 2018 Q3 2017Number of FirmsManufacturing 5 4 18 9 23 13 Non-Manufacturing 66 85 225 109 291 194 Total 71 89 243 118 314 207 EmploymentManufacturing 45 211 394 100 439 311 Non-Manufacturing 456 677 2,788 3,117 3,244 3,794 Total 501 888 3,182 3,217 3,683 4,105 Square Footage (k)Manufacturing 11.0 164.0 174.4 1,331.0 185.4 1,495.0 Non-Manufacturing 1,158.2 672.0 4,109.6 319.1 5,267.8 991.1 Total 1,169.2 836.0 4,284.0 1,650.1 5,453.2 2,486.1 Investment ($M)Manufacturing 1.9$ 10.4$ 21.2$ 27.6$ 23.1$ 38.0$ Non-Manufacturing 97.1$ 48.3$ 510.9$ 53.9$ 608.0$ 102.2$ Total 99.0$ 58.7$ 532.1$ 81.5$ 631.1$ 140.2$
TotalExpandedNew
Economic UpdateNew & Expanding Businesses by Calendar Year
• Mecklenburg County created an additional 10,004 jobs, adding 9.1 million square footage with an investment of $1.03 billion
• 2019 should be another positive year based on recent announcements
Economic UpdateSource: Charlotte Chamber of Commerce
Year Firms JobsSq. Ft.
(millions)Investment (millions)
2018 933 10,004 9.1 $1,0312017 785 10,820 6.4 $7302016 755 6,517 7.5 $7602015 722 6,406 4.2 $7122014 1,156 11,105 3.1 $6162013 897 8,403 4.3 $530
Economic UpdateCharlotte International Airport connects the County to the rest of the world
Economic UpdateSource: Charlotte City Partners
758 daily flights to over 150 destinations
Economic Update
Positive Factors
• Record low unemployment
• Increasing wages
• Stable inflation
• Low oil prices
• High consumer confidence / sentiment levels
• Tax Cuts and Job Act effects
Negative Factors
• Tariffs
• Global slowdown
• Government shutdown
• Rising interest rates
• Reduction in vehicle sales
• National housing market slowdown
Positive and Negative Factors in the Economy
Economic UpdateSource: Charlotte Center City / Charlotte Chamber Rankings
Economic UpdateWhere are we in the economic cycle?
Economic Update2018 GDP is expected to top the Trump Administration’s 3.0% target
• The U.S. grew at 3.4% in the 3rd quarter. Expectations for 4th quarter are 2.3%
• Median estimates of GDP growth by year:• 2018 - 3.1%• 2019 – 2.5%• 2020 – 2.0%
Source: Bureau of Economic Analysis
Economic UpdateGDP growth for Mecklenburg County continues to exceed U.S. and North Carolina
Source: Bureau of Economic Analysis and JobsEQ
Economic EmploymentLarge concentration in high growth industries fuels Mecklenburg County GDP growth
Source: Quarterly Census Employment and Wages (QCEW)
Economic UpdateSince 2007 the County has shifted towards a more service based economy
Mecklenburg County Employment Composition Comparisons
NAICS Code Industry 2007 2017 % ppts chg62 Health Care and Social Assistance 9.5% 11.5% 2.0%54 Professional Scientific and Technical Services 7.0% 8.2% 1.3%56 Administrative and Support and Waste Management and Remediation Services 8.2% 9.0% 0.9%71 Arts Entertainment and Recreation 1.6% 2.3% 0.8%72 Accommodation and Food Services 8.4% 9.0% 0.7%55 Management of Companies and Enterprises 4.0% 4.4% 0.3%48 Transportation and Warehousing 5.4% 5.5% 0.2%53 Real Estate and Rental and Leasing 1.9% 1.9% 0.0%51 Information 3.4% 3.4% 0.0%21 Mining 0.0% 0.0% 0.0%92 Public Administration 2.7% 2.6% -0.1%22 Utilities 0.4% 0.3% -0.1%11 Agriculture Forestry Fishing and Hunting 0.2% 0.0% -0.2%61 Educational Services 5.3% 5.0% -0.2%81 Other Services (except Public Administration) 2.9% 2.6% -0.3%52 Finance and Insurance 9.5% 9.1% -0.5%42 Wholesale Trade 6.5% 5.8% -0.8%44 Retail Trade 10.6% 9.5% -1.1%31 Manufacturing 6.1% 4.9% -1.2%23 Construction 6.4% 4.8% -1.6%
Grand Total 100.0% 100.0% 0.0%
Average Employment
Source: Quarterly Census Employment and Wages (QCEW)
Source: North Carolina Chamber of Commerce and US Bureau of Labor Statistics
Economic Update
In October 2018, the unemployment rate was 3.2% in Mecklenburg County compared with 3.5% for North Carolina and 3.4 for the U.S.*
Unemployment Rate, Not Seasonally Adjusted
Economic Update
* Seasonally adjusted rate in the month of December for U.S. was 3.7% and North Carolina in November was 3.5%
Economic Update
22% increase in non-farm employment from October 2012 to October 2018.
Job Growth - Total Nonfarm Employment – Mecklenburg County
19Source: North Carolina Department of Commerce (LAUS numbers) Economic Update
Economic UpdateAverage annual wages for the County increased faster than North Carolina and the Nation
Economic UpdateNational Employment Cost Index for State and Local Government
• Employment costs are rising due to a tight labor market, and increasing healthcare costs.
• As of September, wages and salaries increased 2.3% for the 12 month period ending September 2018 with benefit costs rising 3.1% over the same time.
Source: St Louis Federal Reserve Economic Database (FRED)
Economic UpdateInflation remains stable around the 2.0% Fed target
• Inflation remains stable around the 2.0% target.
• Fed took a hawkish stance against inflation in December, and has stated intentions of moving towards a data dependent outlook for future rate hikes.
Source: St Louis Federal Reserve Economic Database (FRED)
Economic UpdateConsumer Sentiment hits its best year since 2000
• Consumer Sentiment continues to remain at record highs on income and job prospects.
• The only time consumer sentiment was higher was in 1997-2000 and 1964-1965.
Source: University of Michigan
Economic UpdateOutlook looks good in FY19, but signals slowing moving into FY20
• LEI increased in November (up 0.2%), but overall pace of improvement has slowed in past two months.
• This suggests the economy is likely to moderate further in the second half of 2019.
Source: The Conference Board
Economic Update
• Median Household Income has grown 12.9% from 2013 to 2017 in Mecklenburg County.
• Gross Taxable Retail Sales in the County grew 42.6% over the past five years.
Median Household Income and Gross Retail Sales
25
Median Household Income Gross Taxable Retail Sales ($ Billions)
Sources: US Census Bureau and North Carolina Department of Revenue Economic Update
$0
$5
$10
$15
$20
$25
2012 2013 2014 2015 2016 2017 2018$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
2012 2013 2014 2015 2016 2017
NC US Mecklenburg
Note: Median household income (left chart) is in calendar year, Gross taxable retail sales (right chart) is in fiscal years
Economic UpdatePermits & Construction
Economic UpdateSource: Mecklenburg County Code Enforcement POSSE Winchester Database
• Building Permit issuance rose by 24% since 2013 and Total Construction Value increased by 104% over the same period.
• The largest increase in construction value was commercial building.
• Since 2013 the total commercial building value is up 75% compared to 121% for residential building value.
Total Building Permits Issued Total Construction Value ($ Millions)
13,047
9,000
9,500
10,000
10,500
11,000
11,500
12,000
12,500
13,000
13,500
2013 2014 2015 2016 2017 2018
$4,070
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2013 2014 2015 2016 2017 2018
Note: Charts above are fiscal year data July 1 – June 30
Economic UpdateHome Sales Show Positive Trends
Economic UpdateSource: Charlotte Regional Realtor Association
• Months Supply of Inventory of homes for sale has declined 47.1% since 2013 from 3.4 months to 1.8 months.
• Days on the market until sold declined from 87 days in 2013 to 33 days.
• Average home sales price is up 31.2% from 2013.
• New Listings for homes is up 10.6% from 2013.Average Sales Price Closed Sales
$320,075
200,000
220,000
240,000
260,000
280,000
300,000
320,000
340,000
2013 2014 2015 2016 2017 2018
19,735
1,000
6,000
11,000
16,000
21,000
26,000
2013 2014 2015 2016 2017 2018
Note: Charts above include data from January through November, 2013 - 2018
Economic UpdateA Seller’s Housing Market
• Data shows that sellers in Mecklenburg County have had to make fewer concessions when placing their homes for sale
• Expect continued growth in the housing market for the county moving into FY19
Source: Charlotte Regional Realtor Association
Economic UpdateStrength in Housing Market
Economic UpdateSource: Charlotte Regional Realtor Association
Mecklenburg County December Year to Date
Key Metrics 2017 2018Percent Change
Thru 12-2017
Thru 12-2018
Percent Change
New Listings 1,020 997 -2.3% 24,938 24,485 -1.8%Pending Sales 1,125 1,114 -1.0% 20,900 19,857 -5.0%Closed Sales 1,579 1,296 -17.9% 20,990 19,735 -6.0%Median Sales Price* $251,955 $248,995 -1.2% $239,900 $252,000 5.0%Average Sales Price* $311,204 $310,996 -0.1% $298,196 $320,075 7.3%Percent of Original List Price Received 97.2% 96.6% -0.6% 98.0% 97.7% -0.3%List to Close 89 95 6.7% 85 83 -2.4%Days on Market Until Sale 37 41 10.8% 32 33 3.1%Cumulative Days on Market Until Sale 44 48 9.1% 39 39 0.0%Inventory of Homes for Sale 2,701 2,975 10.1% -- -- --Months Supply of Inventory 1.6 1.8 12.5% -- -- --* Does not account for sale concessions and /or down payment assistance.
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2013 2014 2015 2016 2017 2018
Fiscal Year Assessed Valuation by Component ($ Millions)
Real Property Personal Property State Certification
Economic UpdateSteady Growth in the Tax Base
• Property tax base growth is strong reflecting the growing population and increasing valuations.
• The split between residential and commercial property has averaged 60% residential and 40% commercial in previous years.
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2013 2014 2015 2016 2017 2018
Fiscal Year Assessed Valuation by Component ($ Millions)
Residential Commercial
Economic UpdateSource: Mecklenburg Property
Note: Charts above are fiscal year data July 1 – June 30
Economic UpdateConstruction is booming
Economic UpdateSource: Charlotte City Partners
Economic UpdateOffice Market Statistics
• Vacancy is low at 8.9% for the County.
• Currently, 3.8 million square feet of new office space under construction.
• Asking Rates per square foot are up 7.8% in the urban portion of the county, and 9.3% in the suburban areas.
Economic UpdateSource: Cushman Wakefield
Economic UpdateIndustrial / Warehouse Statistics
• The rise of E-Commerce has fueled the demand for warehouse space to facilitate last mile deliveries.
• Mecklenburg County’s industrial vacancy rate is 4.5%
• Currently, there is 2.3 million square feet of warehouse space under construction.
Source: Cushman Wakefield
Economic Update
"Charlotte renters expressed general satisfaction with the city overall," according to Apartment List. "They gave most categories above average scores."
Key findings in Charlotte include the following:
• Charlotte renters gave their city an A- overall.
• The highest-rated categories for Charlotte were social life and jobs and career opportunities, which both received A- grades.
• The area of concern to Charlotte renters is the quality of local schools (C).
• Millennial renters are very satisfied with their city, giving it an overall rating of A-, while renters who are parents are equally satisfied, giving it an A.
• Charlotte did relatively well to other cities in North Carolina, including Durham (C), Winston Salem (B) and Wilmington (C).
• Charlotte earned similar scores to other Southern cities, including Charleston, SC (A-), Nashville, TN (A-), and Virginia Beach, VA (A-).
Apartment List Renter Satisfaction Survey
Economic UpdateSource: Apartment List
Economic Update
• Rents in Charlotte have increased by 2.7% in 2018. Currently, median rents in Charlotte stand at $960 for a one-bedroom apartment and $1,120 for a two-bedroom. This is the second straight month that the city has seen rent increases after a decline in October. Charlotte's year-over-year rent growth leads the state average of 2.0%, as well as the national average of 0.9%.
Rents are rising in 2018, but less than the rate of wage growth
Economic Update
Charlotte North Carolina U.S.A
Source: Apartment List
Economic Update
• Based on the price of a two bedroom apartment, Charlotte ranks 8th in the Nation in terms of highest average rents.
• Charlotte's median two-bedroom rent of $1,120 is below the national average of $1,180. Nationwide, rents have grown by 0.9% over the past year compared to the 2.7% rise in Charlotte.
• While Charlotte's rents rose moderately over the past year, many cities nationwide also saw increases, including Phoenix (3.3%), New York (2.7%), and Denver (2.5%).
Rent of a two bedroom national rankings
Economic UpdateSource: Apartment List
Economic Update
• Based on the price of a two bedroom apartment, Charlotte ranks 3rd in the state in terms of highest average rents.
• High Point, Durham, and Cary have all experienced year-over-year growth above the state average (5.3%, 3.6%, and 2.9%, respectively).
Rent of a two bedroom apartment in the 10 largest NC cities
Economic UpdateSource: Apartment List
Economic Update
• Short Run Effect: Market rents are set by the balance of housing demand with the available stock. Therefore, property taxes have no effect on rent.
• Long Run Effect: Rental stock will adjust up or down dependent on the relation of rents to the total costs of providing the rental. At equilibrium the rents equal the user costs to the owner of providing the rental.
Effects of Tax Increase on Renters
Economic Update
Potential Outcomes
• Higher rents to tenants as owners pass cost of ownership to tenants.
• Reduced amount of affordable housing in gentrifying neighborhoods where tenants of affordable housing are less able to incur the higher rent.
• The degree to which an owner can pass costs to tenants will vary on a variety of factors, but overall, due to current market supply / demand the owners have pricing power.
Questions
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