Regional Activity

Mid-Atlantic

Wage and salary employment in the Mid-Atlantic region during the 12-month period ending in May 2000 was up 1.5 percent, or 205,000 jobs. Delaware recorded the biggest gain at 3.4 percent, followed by Maryland at 2.6 percent. The Washington area led the region's metropolitan areas with a 3-percent increase in employment during the period, followed by Richmond at 2.7 percent. In general, labor markets throughout the region remained tight. Even the areas with the highest unemployment rates-West Virginia at 5.4 percent and the District of Columbia at 5.1 percent-were down 1.2 and 1.0 percentage points, respectively, in May compared with 1 year ago. The employment growth in West Virginia during the first half of 2000 was the strongest in more than 3 years, and the unemployment rate during the period was the lowest since 1976.

The Washington metropolitan area recently was cited in USA Today as one of the three top high-technology regions in the country. High-technology firms accounted for much of the recent employment growth in the city of Baltimore, where employment and population have been in a downward spiral for nearly five decades. Employment in the city increased 2.4 percent in the 12 months ending in May 2000, compared with less than 1 percent for the same period 1 year ago. New emphasis on emerging life sciences and biotechnology industries resulted in continued expansion of the University of Maryland's Medical and Biotechnology Centers. Johns Hopkins University, Baltimore City's largest employer, is home to NASA's space telescope project. The university is also sponsoring the city's largest planned development-the Johns Hopkins Bayside Research Center. According to the Baltimore Business Journal, a recent study showed that Baltimore City topped the list of cities in the region for new jobs at technology firms that employ less than 1,000 workers.

Single-family building permits in the region through June 2000 totaled 54,374 homes, down 4 percent compared with the first half of last year. Maryland was the only State to record an increase. Multifam-ily housing activity was down 21 percent from last year's volume for the period to 9,764 units. Pennsylvania was the only State to record an increase, which was 5 percent. In the region's strongest housing market, the Washington area, single-family activity was up 4 percent, and multifamily volume in the first half of this year was essentially unchanged.

In much of the region, higher interest rates and prices in 2000 did not significantly slow home sales. The Virginia Association of REALTORS reported that sales of existing homes in the State totaled 41,331 during the first 5 months of 2000, up 2.4 percent compared with the same period in 1999. The Tidewater area recorded 9,400 sales, a 6-percent gain. Activity was also strong in the Richmond area, with existing home sales up 7 percent to 6,895 homes. Sales in the Washington metropolitan area remained robust. Existing home sales during the first half of 2000 totaled more than 49,000, 7 percent above the first half of last year; new home sales totaled more than 15,000 homes, down only 5 percent from a very strong first half of 1999.

Sales activity in the Baltimore area through June of this year remained brisk, with volume unchanged from the same period last year. Existing home sales totaled 9,000, and the median sales price was $138,500 in June 2000. The demand for housing along the city of Baltimore's waterfront communities caused home prices to top record levels.

Rental housing markets in the region's largest metropolitan areas are generally balanced to tight. The rental market in Northern Virginia is the strongest in the region. Vacancy rates in the highest-quality properties are 1 percent or less, and rents in some properties rose more than 12 percent on turnover. Demand for rentals, especially luxury rentals, continued to outpace supply, but builders responded; according to Delta Associates, there are 15,200 units in projects under construction or in the advanced planning stages that will enter the market in the next 36 months. The Reston-Herndon-Eastern Loudoun County area has more than 6,300 units in the pipeline, and Alexandria has 3,110 units. Local sources expect that the tight market conditions in Northern Virginia will ease with the completion of this large pipeline.

In Philadelphia, tight market conditions are prevalent in Center City and many suburban markets. Demand continues to be strong for high-end luxury apartments. The former General Electric building in University City will be converted into 282 luxury apartments. Rents will range from $900 for a studio to $3,200 for a three-bedroom unit. The $58 million development will also include office and retail space.

Spotlight on Pittsburgh, Pennsylvania

Employment growth in the Pittsburgh metropolitan area slowed during the past 12 months. Nonagricultural employment in May 2000 was 1,122,900, 1 percent above May 1999. The unemployment rate for May was 3.8 percent, down from 4.1 percent last year. Despite slower job growth, the unemployment rate dropped in all six counties in the metropolitan area. Construction continues to boost the local economy, fueled by transportation-related projects, sports venues, a convention-center expansion, and redevelopment in downtown Pittsburgh. Slower growth trends were reflected in the manufacturing sector, consumer services, retail trade, commercial banking, and health care. Significant new job announcements in the region included construction of additional facilities by FedEx that will accommodate an additional 800 employees when completed.

Major construction projects in Pittsburgh included improvements to the Monongahela River Locks and Dam, roadwork on the Mon-Fayette Expressway, and work on the Airport Busway. Steelers Stadium and PNC Park (the new home of the Pirates) are under construction and are scheduled for completion in 2001. Land assembly, demolition, and site preparation activities have begun in the city for the $213 million expansion of the convention center. Mellon Bank and PNC both are constructing $100 million corporate operation centers in the city. Lord & Taylor will open a $36 million store downtown this year. National Gypsum and U.S. Gypsum are investing $210 million for wallboard manufacturing plants in Beaver County.

Residential construction in the six-county Pittsburgh area remained strong. The 6,946 units permitted in 1999 was the largest total of the decade. Single-family activity in the first 6 months of 2000 totaled 2,642 homes, a 5-percent increase over the same period of time last year. In the city of Pittsburgh, residential building permits were issued for 367 units in 1999, including 178 single-family homes. Recent activity was driven by an improving economy and renewed interest due to the two new sports stadiums, as well as by recent investment in retail and commercial centers.

The supply of affordable housing helped the local sales housing market remain strong despite interest rate increases. Existing home sales rose 2.8 percent over the first 5 months. May was a particularly strong month for sales activity, with a 7.7-percent increase in the number of homes placed under contract in the metropolitan area. The average sales price of a single-family home in 2000 through May was $108,000 according to RealSTAT, up 5 percent from the same period in 1999.

Small loft-conversion projects, both for rentals and condominiums, are being developed and successfully marketed in the city. Sales prices in the downtown and Strip Districts range from $90,000-$200,000. Most buyers are dual-income households from the suburbs or households relocating to the Pittsburgh area from other cities.

Rental housing market conditions in the Pittsburgh metropolitan area were balanced to tight. A regional survey of more than 20,600 apartment units revealed a 4.6-percent vacancy rate. Multifamily housing permits averaged 1,670 units per year in the last 3 years, considerably above the averages from the previous years in the 1990s. Permits were issued for 760 multifamily units through June. Much of the development was in larger high-rent apartment communities and independent- and assisted-living facilities for the elderly. The number of licensed personal care beds increased 16 percent since 1998 to more than 19,300 beds. Allegheny County dominates the area, with more than 9,600 beds. Assisted-living and independent-living markets softened, and lease-up periods were longer than expected. The competitive conditions are expected to continue for some time.


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