The Midwest economy remained relatively strong in 2001, although employment was flat in the 12-month period ending in June. Nonagricultural employment grew by only 12,000 jobs in the region, the smallest annual gain since the early 1990s. Minnesotas robust construction industry recorded a 4-percent gain in employment during the past 12 months, helping to offset job losses in manufacturing. Nonresidential construction in Ohio will likely remain strong in 2001, boosted by new office and retail development in Columbus, several new sports stadiums for the Cincinnati Bengals and Reds teams, and new educational and medical facilities in Cleveland. Detroit Metropolitan Airports $1.6 billion expansion is stimulating $125 million of commercial construction in suburban Wayne County, while General Motors $500 million headquarters renovation of the Renaissance Center is helping to revitalize the downtown area. The unemployment rate in the region was 4.4 percent in June 2001, up from 3.8 percent a year earlier.
Existing home sales in the region remained strong in the first half of 2001, equal to volume for the same period in 2000. First-quarter 2001 sales stood at an annual rate of 993,000 homes. Preliminary information for the second quarter shows that sales activity remained strong in the regions major markets.
Minneapolis-St.Pauls market for existing homes continues to benefit from the areas healthy economy, with sales activity up 7 percent in the first 6 months of 2001. Strong demand and a shortage of listings combined to produce a record median sales price of $165,300, up 12 percent from the first 6 months of 2000.
The Chicago Association of REALTORS® reported that 2001 will likely be another good year for existing sales in the metropolitan area, with 49,000 homes sold through June. That is identical to the number sold in the first 6 months of 2000. The Ohio Association of REALTORS® also reported that existing sales activity in the State held steady at 53,400 existing homes sold through June 2001. In Detroit-Ann Arbor, sales activity through June was down 4 percent from the high levels of 2000, but the median sales price increased 8 percent to $158,000.
Homebuilding activity in the Midwest remained strong through the second quarter. Building permits were issued for 101,000 single-family homes in the first 6 months of 2001, compared with 100,800 homes in the first 6 months of 2000. Indianapolis builders are optimistic about new home construction in 2001 due to strong sales activity throughout the metropolitan area. Builders took out permits for 7,900 single-family units, up 23 percent from last year. Chicagos healthy economy and strong demand for new homes continued to fuel the areas new sales market. In the first 6 months of 2001, sales contracts were up 20 percent from a year earlier. In the city of Chicago, one builder described activity as terrific, with new homes selling as fast as they are completed. The city continued its strong commitment to affordable housing in 2001, with the allocation of $134 million through March compared with $41 million in the first 3 months of 2000. In the Minneapolis-St. Paul area, new home construction slowed in the first 6 months of 2001, although activity is still high. The Builders Association of the Twin Cities reported permits were issued for 8,000 new homes through June, compared with 9,000 homes in the first 6 months of 2000. Builders remain upbeat about residential construction in 2001 owing to brisk sales of new homes priced below $250,000.
Rental markets remain in good condition throughout the Midwest, with occupancy in the 92- to 97-percent range as of the second quarter of 2001. Multifamily building permit activity dropped 5 percent to 26,600 units in the first 6 months of the year. Activity declined in all of the regions States except Ohio, where activity was unchanged from 2000. In the Chicago area, multifamily construction continued to show strength. Permits rose 8 percent to 5,890 units through June. Demand for new and existing apartments is expected to remain strong across the metropolitan area, keeping overall vacancies in the 4- to 5-percent range.
The greater Detroit-Ann Arbor rental market is balanced to tight. Terzo & Bolognas 2001 Detroit Apartment Market Report also showed vacancies in the metropolitan area holding steady in the 3- to 5-percent range, while rents are increasing 5 to 6 percent annually. Multifamily building permit activity in the Detroit-Ann Arbor area rose 28 percent in the first 6 months of 2001, to 2,205 units.
In the Minneapolis-St. Paul area, multifamily activity through June fell 14 percent. The decline was due, in part, to the scarcity of good sites. The apartment market in the Twin Cities area remains tight with vacancy rates at around 2 percent. In Indianapolis, multifamily building permit volume in the metropolitan area in the first 6 months of 2001 was down 17 percent, as developers responded to market conditions and 5 previous years of high volume development. Indianapolis revitalization of downtown is seeing good absorption of new rental housing due to the areas growing popularity with single professionals and the expansion of Eli Lillys headquarters, which will add 7,500 new jobs to the area during the next 10 years.
In Ohio, multifamily building permit activity in the first 6 months of the year held steady at 6,000 units compared with the first 6 months of 2000. Activity in the Cincinnati-Hamilton metropolitan area through June totaled 1,450 units, a 35-percent increase. At the current pace, 2001 will be the fourth straight year of strong development activity. Vacancies in the metropolitan area were in the 6-to 7-percent range as of the second quarter of 2001 compared with 4 to 5 percent in the second quarter of 2000.
Demand for new apartment units in downtown Cleveland remains strong, but vacancies increased in the past 12 months to 9 percent as of May 2001 because of the slowdown in the local economy. The 160-unit Stonebridge project is leasing units as they are completed, and the FHA-insured Statler Arms Apartments is preleasing its 295 units at a brisk pace. The Greater Dayton Apartment Associations first quarter 2001 survey of 10,400 units showed vacancies in the 6- to 7-percent range, down from 7 to 8 percent in the first quarter of 2000.
Spotlight on Columbus, Ohio
During the 1990s, the Columbus metropolitan area was one of the fastest growing in the Midwest. According to the 2000 census, the population of the six-county area increased during the decade by an annual average of 19,400 people (1.2 percent) to more than 1.5 million.
Anchored by Ohio State University, insurance, and the Federal and State governments, Columbus diversified economy is one of the more stable areas in the Midwest. One of the major economic developments in the area is the redevelopment of Rickenbacker Air Force Base to an industrial park and foreign-trade zone, which includes more than 150 million square feet of warehouse and distribution facilities that attract transportation businesses to the area. Within a days drive or a 90-minute flight from Columbus, 58 percent of the population of the United States and 50 percent of the population of Canada are accessible.
Nonagricultural wage and salary employment in the metropolitan area totaled 905,500 jobs in June 2001, an increase of 9,600 jobs (1 percent) from June 2000. Strong job gains in services, retail trade, and local government offset job losses in manufacturing. The unemployment rate was 3 percent as of June 2001, up slightly from 2.8 percent a year earlier.
The Columbus area has experienced a significant volume of commercial construction recently. Completed projects in the downtown area include the Nationwide Arena, home of the National Hockey Leagues Blue Jackets, and expansion of the convention center. Additional office and commercial development, including a cinema and an amphitheater, is occurring in the Arena District and the adjacent River District. Residential construction is also planned for River District.
The healthy overall economy has contributed to high levels of homebuilding and strong sales of existing homes throughout the Columbus area during the past 3 years. During the period, single-family building permit activity averaged 8,833 homes annually, with a peak of 10,165 units in 2000. Single-family activity in the first 6 months of 2001 increased 12 percent to 5,200 units. The Columbus Board of REALTORS® reported that 2000 was a good year with 19,000 existing homes sold, nearly identical to the number of homes sold in 1999. The average sales price increased 4 percent to $148,500.
The Columbus rental market has become more balanced over the past 3
years. The latest apartment report from Corson and Associates indicated
a rental vacancy rate of 6 percent compared with a tight 3.7 percent
reported in 1997. The large number of new units entering the market
are being successfully absorbed. Multifamily construction activity in
the metropolitan area averaged approximately 5,800 units annually between
1999 and 2000, compared with 3,500 units in the 1997 to 1998 period.
Activity in the first 6 months of 2001 totaled 2,600 multifamily units,
unchanged from 2000. Easton, a northeast Columbus residential/ retail/office
planned development, has been an attractive area for rental housing.
Monthly rents in the area range from $530 for a one-bedroom unit to
$3,550 for a four-bedroom townhouse. According to Rob Vogt of the Danter
Company, 2,370 rental units were completed in the Easton area during
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