Regional Activity

Southeast/Caribbean

Nonagricultural employment numbers as of March 1999 indicate that the Southeast/Caribbean region is continuing its very healthy rate of growth with the addition of 664,600 jobs compared with employment in March 1998. Construction employment in the region showed the highest rate of increase (7 percent), while the service and trade sectors accounted for 70 percent of the increase in employment. Florida, Georgia, and South Carolina had growth rates at or above 3 percent, with gains in Florida accounting for 39 percent of the total gains in the region. Although employment growth in the region is expected to slow somewhat in 1999, it will continue to surpass the national rate of growth.

Significant employment announcements during the first quarter include Dell Computer Corporation's plans to locate its second U.S. operations facility in the Nashville area. This could mean more than 2,000 additional jobs. One of the world's largest pension funds, TIAA-CREF, announced plans to open a facility in Charlotte that will employ 1,000 workers.

Building permit activity for the Southeast region during the first 3 months of 1999 was up 15 percent compared with the first 3 months of the previous year. The biggest percentage increase in total activity and in multifamily activity was in South Carolina, where economic growth remains strong. All States recorded increases in single-family home activity. Georgia's single-family activity increased by 13 percent, reflecting the continued boom in homebuilding in the Atlanta metropolitan area, which contained 4 of the 10 fastest growing counties in the Nation based on 1998 population estimates from the U.S. Bureau of the Census.

Rental housing market conditions remain strong throughout the region's major markets. The Birmingham area's rental market is expected to be more competitive later in the year, with approximately 1,400 units scheduled to come on the market by September. In Atlanta, apartment occupancy has firmed up in most submarkets. More than 11,000 new multifamily units were added during 1998, the largest number since 1995. Most new units have been quickly absorbed, although scattered concessions have appeared in submarkets with concentrations of new activity. Rents in Atlanta increased at a healthy 3.4-percent rate during 1998.

The Tampa-St. Petersburg-Clearwater metropolitan area saw a surge of apartment construction in 1997 and 1998. Although the market is currently balanced, conditions will be watched closely over the next year, particularly in Hillsborough County. Local sources report 9,100 multifamily units under construction in the Orlando metropolitan area, 75 percent of which will enter the market during the next 12 months. Orlando-area apartment occupancy remains high at 94 percent, down 1 percentage point from a year ago.

If the economic activity slows in the North Carolina markets of the Raleigh-Durham-Chapel Hill, Charlotte, and Greensboro areas as some have forecast, the current high levels of new apartment production could result in much higher rental vacancy rates. According to projections from the latest apartment surveys published by Carolinas Real Data, apartment vacancy rates in the three areas are expected to increase from 4 to 5 percent currently to as high as 9 percent during the remainder of 1999. In the Memphis area, apartment occupancy as of the first quarter had increased to 94 percent, according to CB Richard Ellis, which also estimates that 1,240 units were absorbed in this market during the first quarter.

During 1998 the Puerto Rico Housing Finance Corporation allocated 1,461 tax-credit units, up 202 units from 1997. Two-thirds of the units are located in the San Juan metropolitan area. One project developed under the program is Trujillo Alto Estates -- a $24 million, 250-unit project for families. The project is a gated community consisting of 2- and 3-bedroom walkup apartments with an average size of 970 square feet and renting for $320 to $338 per month.

There are concerns in a number of the Southeast's market areas about the rapid increase in assisted-living developments for the elderly. In Georgia the number of personal-care facilities has increased 16 percent in the past 5 years. In the Atlanta area alone, there are an estimated 600 assisted-living facilities. Local sources report that 69 new projects with 5,491 units and 17 expansions of existing facilities with 423 units are currently in various stages of development and that these units could come on the market within the next 2 years. Several recently completed projects in the Atlanta area are having much slower rent-ups than anticipated, occupancy rates have declined in some existing older projects, and developers are finding it harder to obtain financing for additional projects.

In North Carolina a moratorium on the approval of additional assisted-living facilities was imposed by the North Carolina State legislature in August 1997. However, developers have been largely successful in obtaining exemptions. In the 20 months since the effective date of the moratorium, exemptions amounting to some 16,000 beds have been approved. Although State officials do not expect all these units to be built, the possibility exists that many markets will face overcapacity, at least in the short run. The State's largest communities (Greensboro, Charlotte, and Raleigh) are the most vulnerable to developing soft markets. The pipeline of units in development in these 3 cities totals 4,493 units, 26 percent of the State total.

Spotlight on Columbia, South Carolina

In July 1998 the Columbia metropolitan area, Richland and Lexington Counties, had a population of 512,316, a 13-percent increase over the 1990 population. The area has a strong and relatively diverse economic base and is undergoing significant economic gains. During 1998 the area captured 11 of the 25 largest new economic developments in the State. This type of activity has been responsible for a decline in the annual average unemployment rate from 2.7 percent in 1997 to 2 percent in 1998. Two new business incubators have been created to further stimulate business and job growth in the Columbia area. The University of South Carolina's School of Engineering created an incubator to foster development of emerging high-technology companies, while Benedict College, a historically black college, received a $365,898 grant from HUD to assist minority-owned businesses.

The downtown area of Columbia is experiencing major redevelopment. Plans were recently announced for the $50 million renovation of a landmark high-rise department store into a hotel on Main Street. In addition, a new Federal courthouse, a basketball/hockey arena, a conference center, the University of South Carolina's Well-ness Center for students and faculty, Benedict College Sports Complex, an IMAX theater/planetarium/observatory, and other projects are under construction or scheduled for development in the downtown area.

Home construction in the Columbia metropolitan area has increased steadily since 1990. From 1992 through 1995, single-family permit activity averaged 2,880 units annually, but it has increased to 3,600 homes annually since. Home sales totaled 6,585 in 1998, up 18 percent over 1997, and the average sales price rose 2.3 percent to $122,000. A major developer in the State has purchased 4,800 acres south of Columbia for development over the next 10 years. The plan is for a mix of multifamily and single-family housing, two golf courses, an outlet mall, an amphitheater, and a retirement village.

The Columbia area has seen a significant level of multifamily housing activity during 1997 and 1998, totaling close to 2,100 units permitted. So far, the new supply is being adequately absorbed. Approximately 900 multifamily units are under construction, and another 950 units are in the planning stage. Development is occurring in both the city and the suburbs. In the Congaree Vista area of the city, plans are under way for a three-phase, $35 million conversion of two old factories (the Olympia and Granby mills) to a residential mixed-use development. The conversion will include 400 units of rental housing, a health club, grocery and drug stores, a bank, and other retail space.


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