Employment growth in the Southeast/Caribbean region of 2.5 percent during the 12 months ending in August 1997 reflected the strong performance of the South Carolina (5.5 percent), Puerto Rico (4.1 percent), Georgia (3.7 percent), Florida (3.5 percent), and Kentucky (3.3 percent) economies. The 109,800 new jobs in Florida's service industries represented almost a quarter of the total increase in the region.
As a result of two major announcements, the prospects for improved housing market conditions are looking up for the Augusta, Georgia, metropolitan area. Downsizing at the area's Savannah Atomic Energy Plant from 1992 through 1997 meant the loss of more than 10,000 jobs and resulted in significant soft market conditions for both sales and rentals. A recent survey of 13,000 apartments revealed vacancy rates in the 10- to 15-percent range. Hankook Synthetics, Inc., a South Korean manufacturer, announced that it will locate the world's largest polyester-fiber plant in Augusta. Up to 1,800 jobs will be created over the next 10 years, making it Augusta's largest private employer. The Aiken County, South Carolina, part of the Augusta metropolitan area was recently chosen as the site of a Bridgestone/Firestone tire plant. This plant will generate 800 new jobs, paying wages equal to the top 25 percent currently being paid in the county.
Single-family permit activity in the Southeast through September 1997 totalled 224,899 units -- only 2 percent below a very strong 1996 level for the same period. Kentucky, North Carolina, and South Carolina were the only States to report increases in permits. The Charlotte-Gastonia area continued to see strong demand for new sales housing. Permits were issued for 10,158 units through September 1997 -- 9 percent greater than 1996 levels for the same period. Single-family permit activity in Georgia was down 9 percent to 46,264 units in the first 9 months of 1997, but activity in the Atlanta metropolitan area remained almost unchanged (29,212 units) compared with the same period in 1996.
The Florida Association of REALTORS® reported that sales of existing homes increased by 1 percent in August 1997 compared with a year ago, while the median sales price climbed 5 percent to $99,800. The Mississippi Association of REALTORS® reported a 3.3-percent increase in the number of homes sold in August 1997 compared with the same month a year ago.
The Atlanta Empowerment Zone recently established a mortgage assistance program to encourage homeownership within the zone. Applicants may qualify for interest-free, 10-year loans of up to $8,000 to assist in their purchase of a home. To qualify an applicant must have lived in the zone for at least 3 years and must commit to live in the home for the 10-year term of the loan.
The Governor of Puerto Rico signed a new affordable housing law that reduces the risks assumed by contractors and raises the price limit of affordable housing units to $64,000. The new law includes tax exemptions for contractors who build affordable housing. The Governor described the new law as instrumental in achieving his administration's efforts to build 30,000 moderately priced homes.
Multifamily construction continued to show strength in the Southeast region. Permits in the first 9 months of 1997 were issued for 78,465 units -- 9 percent above the level for the same period in 1996. Florida, North Carolina, and South Carolina reported increases of 26, 23, and 33 percent, respectively. Activity in Georgia totalled close to 13,000 units, which was almost unchanged from 1996 levels for the same period.
Carolina's Real Data reported that the Raleigh-Durham-Chapel Hill area had a 3.9-percent apartment vacancy rate as of July 1997, down from 4.6 percent in January, as almost 1,900 multi-family units were absorbed during the first half of the year. There were 3,900 multifamily units under construction as of July 1997, and about 5,000 units were in the planning stages for construction over the next 2 years. The apartment vacancy rate in the Charlotte area as of August 1997 had dropped to 5.3 percent from 6.4 percent in February as some 2,700 new units were absorbed during the previous 6 months. There are currently more than 3,900 multifamily units under construction, and an estimated 2,200 additional units are in the planning stages.
In Florida multifamily construction activity was up significantly in almost every major market. Continued economic growth has produced increased demand for rental housing and attracted large amounts of investment capital. Permits were issued for more than 5,100 units in the Tampa- St. Petersburg area in the first 9 months of 1997, 51 percent above the same period in 1996. Reflecting strong rental housing demand and tighter market conditions in the West Palm Beach metropolitan area, multifamily permit activity in the first 9 months of 1997 totalled 2,270 units, more than double the same period in 1996. According to Reinhold Wolff Economic Research, Inc., the vacancy rate in older apartment projects in August 1997 was 3.6 percent in Palm Beach County. Activity in the Miami area through September 1997 was up 96 percent to 3,175 units from an atypically low volume in 1996. Fort Lauderdale reported a 23-percent increase to 4,496 units, and the Orlando area continued to boom with multifamily permits (5,414 units) up 71 percent.
Alabama rental markets remained strong in Birmingham, Mobile, and Montgomery; however, the Huntsville's soft market conditions continued. A recent market survey in the Huntsville area reported overall occupancy of 89 percent.
In Jackson, Mississippi, the high volume of apartment construction from 1994 through 1996 (2,500 units) was absorbed successfully, and new units coming on the market are being rented fairly quickly. Apartment occupancy is now approximately 95 percent.
In Atlanta much of the success of the newly constructed apartment developments of the past 3 years appeared to come at the expense of existing apartments, many of which experienced declines in occupancy and effective rents due to widespread use of concessions.
Spotlight on Jacksonville, Florida
During 1997 Jacksonville's economy exhibited strength. In the year ending September 30, 1997, the metropolitan area added approximately 20,700 jobs, or 4.2 percent, virtually all in service industries. Nonagricultural employment grew to 518,800 jobs. The four-county metropolitan area's population is currently estimated at 1,030,000, up from 906,727 at the time of the 1990 Census.
The recent high rate of increase in employment may not be indicative of the future, however. The merger of NationsBank and Barnett Banks, Inc., could, in the worst case, reduce local employment by the surviving company by as many as 3,000 jobs. Similarly the two major divisions of AT&T that are up for sale employ 7,800 people in Jacksonville. Cecil Field Naval Air Station, with approximately 3,000 military and civilian Department of Defense (DOD) employees as of fiscal year (FY) 1996, is scheduled to close within 2 years. Its future remains uncertain and is dependent upon the development plans of several corporations still uncommitted to specific sites and dates. The other two major Navy facilities, Mayport and Jacksonville Naval Air Stations, with more than 18,000 military and civilian personnel in FY 1996, forecast stable manpower and utilization levels. Expenditures in the Jacksonville area by DOD total about $1.6 billion annually.
The market for new sales housing has been very healthy and relatively stable. From 1993 to the present, single-family permit activity averaged 7,050 units annually. Activity in 1997 continues at the same pace, with 5,443 units permitted in the first 9 months.
The number of multifamily housing units permitted (1,502 units) in the first 9 months of 1997 in the Jacksonville area was down 57 percent from the same period in 1996. The drop was in response to softer market conditions as a result of more than 6,000 units permitted during 1995 and 1996. In the second quarter of 1997, the Northeast Florida Apartment Council reported that the overall apartment vacancy rate was 9.9 percent, compared with 4 percent in the first quarter of 1996. Vacancy rates rose steadily over the 12-month period. The largest submarket surveyed had an 11-percent vacancy rate in June 1997 versus 5 percent a year earlier. Some recently built apartment projects have initiated rent concessions, which may influence developers to delay subsequent phases of their projects.
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