Regional Activity


Employment growth over the past 12 months has varied considerably in the Southeastern States. Florida continues to lead the region with a 3.2-percent annual growth rate as of June 2001. At the other end of the spectrum, employment in Mississippi and North Carolina declined slightly during the period. With the exception of North Carolina, all States in the region recorded unemployment rates below the national average in June 2001. Georgia’s annual growth rate as of June 2001 slipped to 1.2 percent, but the unemployment rate remained low at 3.6 percent. The slower rate of growth was due in part to a increase in layoffs. Layoffs by Georgia companies through the first 6 months of 2001 increased by 50 percent over the first 6 months of 2000. Layoffs have hit various industrial sectors, with manufacturing losing almost 19,000 jobs over the 12 months ending in June 2001.

In the Atlanta metropolitan area, employment growth has slowed to less than one-half the rate experienced in 1999. In the 12 months ending in May 2001, employment increased by 35,500 jobs, a growth rate of 1.6 percent. This is down significantly from the 59,200 jobs and 2.8-percent growth of 2000, and the 98,500 jobs and 4.8-percent growth of 1999. Once the Nation’s job-growth leader, Atlanta has now fallen from the top 10 metropolitan areas. Job reductions at several large employers were announced in the second quarter of 2001, including Etour, Lucent, Pillsbury, Solectron Corporation, Wachovia, and Webvan. Although it is not yet clear how long the slowdown will persist, a more modest pace in housing construction in the region may be needed to lessen the risk of overbuilding.

Although construction and service-sector employment in Puerto Rico grew by 4.8 percent and 2.6 percent, respectively, for the 12 months ending June 2001, the manufacturing sector lost 7,800 jobs due to the shutdown of a major tuna cannery and several apparel manufacturing plants. In response to the loss of manufacturing jobs, the governor of Puerto Rico has proposed an amendment to Section 956 of the Internal Revenue Service Code to provide a new Federal tax exemption that will help stem the out-flow of companies from Puerto Rico.

South Carolina recently scored another victory in its efforts to reduce its dependency on textile manufacturing and agricultural jobs, when Blue Cross and Blue Shield of South Carolina’s TRICARE Operations announced that it would add 1,000 new jobs in Columbia. TRICARE supplements Medicare coverage for military retirees and their family members over age 65. Currently Blue Cross employs more than 4,000 people in its TRICARE Operations in Camden, Columbia, Florence, and Surfside Beach.

Nonagricultural employment in Miami averaged approximately 1 million jobs for the 12 months ending in May 2001, an increase of 29,500 jobs (3 percent), during the period. The Miami economy seems to be running counter-cyclically to that of the Nation. Two years ago, while the Nation’s economy was surging, Miami was in the middle of a major slump. Now, Miami is recording monthly increases in employment. Local sources say that the economy has benefited from growth in the number of small businesses.

Regionwide, single-family building permit activity in the first 6 months of 2001 totaled 179,660 homes, a 6-percent increase over the same period in 2000. Florida, Georgia, and North Carolina all recorded significant increases compared with the first half of 2000, offsetting slower activity in other States in the region.

According to the NATIONAL ASSOCIATION OF REALTORS® , the seasonally adjusted annual rate of sales for the first quarter of 2001 increased from the first quarter of 2000 in all the region’s States except Mississippi. The increase in most of the other States came in around the national average of 2.1 percent, whereas Georgia had an 11.6-percent increase and Kentucky, a 10.1-percent increase. Data from the North Carolina Association of REALTORS® indicated a modest increase in sales activity in the first half of 2001 compared with the same period in 2000. Sales volume increased in 11 of 16 markets, with the largest increase occurring on the Outer Banks area (63 percent). The largest decline in sales volume was recorded in the Greensboro/Winston-Salem/ High Point area, where sales fell 14 percent.

One of the most significant recent economic developments in the Southeast region is occurring in the Jackson, Mississippi, area. Suburban Madison County will be the site of a $930 million Nissan assembly plant. Construction began in spring 2001. The plant is expected to initially employ more than 3,000 workers when it begins production in summer 2003. In addition, six of Nissan’s suppliers are scheduled to build facilities within 2 miles of the assembly plant. Nissan expects that the suppliers will invest $140 million in plants and equipment, creating 1,000 new jobs. Housing construction and sales in Madison County are expected to accelerate as additional construction activity occurs and the completion date for the assembly plant nears. The Central Mississippi Planning and Development District has estimated that Madison County will double its population to 140,159 by 2020 as a result of the plant.

A 10-percent increase in multifamily building permit activity in Florida partially offset substantial declines in several of the other States in the region during the first half of 2001. In the first 6 months of the year, permits were issued for 55,075 units, a 5-percent decline compared with the same period in 2000. The economic slowdown has dampened multifamily building activity, which should help to slow recent increases in vacancy rates in a number of rental markets around the Southeast.

Employment growth in Miami appears to have fueled a rebirth in the local rental market. Multifamily permit activity in the Miami area totaled 2,875 units through June, a 22-percent increase compared with a year ago. Occupancy rates are also much higher than those of a year ago, and rents increased for the ninth consecutive quarter. Quarterly sales of new single-family homes totaled 1,260. The condominium market has been affected by both the strong rental market and single-family sales. Second-quarter sales of new condos totaled 612 units, off 19 percent from the second quarter of 2000.

Although the Atlanta metropolitan area rental market is balanced, there are signs of more competitive conditions. Most local surveys indicate occupancy rates in the 93- to 95-percent range; however, signs of softening have appeared as a large number of new units have been added to the market. Recent surveys show occupancy declining and concessions becoming more commonplace even in previously hot in-town markets. Dale Henson Associates estimated occupancy in 2001 at 91.5 percent. Developers report tightening lending standards for multifamily developments, but this has not affected construction levels. However, multifamily permit activity for the first 6 months of 2001, at 9,160 units, is almost identical to the volume for the same period in 2000.

In North Carolina, local governments and the development community are increasingly discussing measures to counteract sprawl and beginning to identify opportunities for infill housing that affords easier access and convenience to major employment centers. The Greensboro City Council has begun consideration of the city manager’s proposal for “growth boundaries,” within which the city would be willing to provide water and sewer service in the future. The mounting enthusiasm for infill development is reflected in the increased number of multi-family insurance proposals presented to HUD that involve rehabilitation or adaptive reuse of existing structures or redevelopment of vacant sites closer to the urban core.

Spotlight on Knoxville, Tennessee

The six-county Knoxville metropolitan area experienced moderate growth in the 1990s, with population increasing at a rate of 1.6 percent annually to 687,249 in 2000. Employment growth in the Knoxville area in recent years has been moderate with nonagricultural employment increasing by 2 percent in 2000. Job growth has slowed in recent months as a result of the current economic slowdown.

Nonagricultural employment grew at a 2.4-percent rate during the decade, rising from 266,100 jobs in 1990 to 338,800 in 2000. The Knoxville area has a broad economic base, with services, trade, government, education, and manufacturing all playing important roles in the local economy. Knoxville serves as the center for health care for much of eastern Tennessee, with several hospitals ranking among the area’s largest employers. Tourist-related service and trade employment is boosted by the city’s location near the Nation’s most visited national park, Great Smoky Mountains National Park.

The University of Tennessee–Knoxville, with a total enrollment of more than 26,000 and a faculty and staff of 4,200, is located in downtown Knoxville. Although manufacturing has become less dominant in recent years, it still accounts for a number of the area’s largest employers. Clayton Homes, Inc., a Blount County builder of manufactured homes and commercial buildings, employs 2,500 people. Sea Ray Boats, Inc., employs 1,600 persons in Knoxville, and DeRoyal Industries, a provider of health care services and products, employs more than 1,400 persons.

A concerted effort to revitalize downtown Knoxville is in progress. Construction on a new convention center is under way with completion expected in mid-2002. Redevelopment proposals are being considered for Market Square in downtown and recent revisions in building codes for the downtown area are expected to encourage residential renovations of existing buildings. A large high-technology planetarium dubbed “Universe Knoxville” has been proposed as a major downtown tourist destination.

The Knoxville area experienced a strong market for sales housing during the 1990s. The homeownership rate increased from 68.3 percent in 1990 to 70.5 percent in 2000. Knox County accounted for almost one-half of the increase in owner households, with the city of Knoxville changing from majority renter in 1990 to majority owner in 2000.

Single-family construction in the metropolitan area peaked in 1996 (corresponding to a period of strong employment growth in the county) before moderating in the second half of the decade. The recent slowdown in job growth has not impacted the sales market in the Knoxville area. Residential sales through the first half of 2001 were 8 percent above the same period in 2000 and 4 percent above the first half of 1999.

In the second quarter of 2001, the most common price range for single-family sales was $100,000 to $120,000; one-half of all sales are below $160,000. Condominium sales account for more than 11 percent of total sales. The number of new listings in the second quarter increased almost 10 percent above the same period in 2000.

Despite concern over slower job growth, new home construction in the area has not slowed. The number of single-family units authorized by building permits in the first 6 months of 2001 totaled 1,605 homes, slightly above the volume for the same period in 2000.

The Knoxville area apartment market softened after a high volume of new units entered the market in 1996 and 1997. As a result, vacancy rates approached 15 percent. With a slowdown in production in the latter half of the 1990s, the market showed gradual improvement. As of the 2000 census the rental vacancy rate for the Knoxville metropolitan area stood at 11 percent, 10.5 percent in the city of Knoxville. As the second half of 2001 began, rental vacancy rates remained near these levels. The market remains relatively soft, and conditions are very competitive. Multifamily building permits in the first 6 months of 2001 totaled 557 units. Despite lower levels of production, vacancy rates are expected to remain high during the next 2 years.

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