#EOCCHS
Introduction The annual economic forecast for the Charleston region is a partnership project between the Charleston Metro Chamber of Commerce’s Center for Business Research and the College of Charleston’s School of Business and Economics. The 2015 Economic Outlook Conference marks the 24th annual conference and forecast. The forecast is based upon historical data tracked and collected by the Chamber’s Center for Business Research. Data on each of the key economic indicators that drive the region’s economy are collected and provided to the College of Charleston, Office of Economic Analysis and the data is reviewed by Dr. Frank Hefner. Using an econometric forecasting model, a projection for each indicator is developed. The model also forecasts national indicators. The key to the success of the forecasting project has been the Economic Outlook Board. The collective insight of the Economic Outlook Board provides information that may not be factored into a statistical analysis of the data. The Board often has information on future developments that no statistical model would capture. Furthermore, the data is often reported in a lag. The Board reviews the statistical forecast and adds the “real-time, real-knowledge” insight into the actual performance of the local economy.
Table of Contents Introduction Top Rankings Regional Overview Forecast Summary Key S.C. Indicators Employment / Labor Force Real Estate Permits Real Estate Sales Retail Sales Transportation (Port) Transportation (Airport) Visitor Industry Attraction Attendance Economic Outlook Board Methodology 1
1 2 2 3 3 5 5 6 6 7 7 8 8 9 9
Charleston ranked #7
Regional Overview
for Where the Jobs Will Be in 2015 With a net employment outlook of 21%, Charleston tied for #7 alongside Austin, El Paso, San Jose and Seattle on the Forbes list for Where The Jobs Will Be in 2015. More than 18,000 U.S. employers in the top 100 metro areas were surveyed. - Forbes
#1 Travel Destination in the United States
Charleston was voted #1 Best City in the United States for the fourth year in a row and #2 World’s Best City due to its amenities and lifestyle attributes, according to Condé Nast Traveler’s annual Readers’ Choice survey. - Condé Nast
Charleston ranked #12
Greatest Places to Live in America Outside Magazine used factors such as the number of outfitters, miles of trails and number of bike shops as well as unemployment rates, median incomes and an editors’-choice variable to determine a place’s livability. - Outside Magazine, August 2014
#9 U.S. Metro
for Foreign Direct Investment (FDI) Charleston ranks 9th among top U.S. metros for high FDI intensity, with foreign-owned firms offering 7.2% of jobs, compared to 5% for the U.S. The report shows a sizable jump in foreign investment and employment in the Charleston region over time.
Comprised of three counties – Berkeley, Charleston and Dorchester – the Charleston region is a highly diverse market, strategically located on the Atlantic coast half-way between New York and Miami. The region, which covers more than 3,100 square miles (8,192 kilometers), combines a thriving economy, rich history and breathtaking environment to offer an outstanding business climate and a quality of life that is second to none. The region’s emergence as a world-recognized destination for manufacturing, innovation and research is now paralleling our national and international reputation as a top travel, tourism and food mecca. With access to the global marketplace through its logistics and transportation system and a diverse portfolio of location opportunities, the Charleston region offers the right combination for business.
The continued ranking of the region as both a top business and visitor destination attest to the economic vitality of the area and thriving economic base. The area’s economic mix is diverse, combining one of the busiest container ports along the Southeast and Gulf coasts, an internationally recognized visitor industry, one of the Southeast’s most impressive medical hubs, a well-established base of national and international manufacturers, as well as a large military presence. Arts, recreational and cultural opportunities are abundant including: museums, music, dance and theater, water sports, golf, hunting, fishing, horseback riding and more.
- Brookings Global Cities Initiative Report, June 2014
Top 12
technology hubs in America Charleston made StateTech’s list of the top twelve tech hubs in America that are “nipping on Silicon Valley’s heels” based on the city’s ranking in the Top 10 fastest growing cities for software and internet technology. - StateTech Magazine, November 2013
2
Forecast Summary The Economic Outlook Board summarized the Economic Forecast for the Charleston region for 2015 as – Opportunity Across the Board. A quick glance at the forecast shows each indicator moving in a positive direction, including unemployment.
Numerous rankings and studies point to the region’s robust economy and the forecast for 2015 shows a positive impact in every sector. With more than 25,000 new jobs forecasted in the region in the next five years, both 2015 and 2016 are expected to see net gains of more than 5,000 jobs – the healthiest gain in several years.
The region’s real estate market will continue to expand in building permits, home sales and value of sales. The multi-family market, the most difficult to predict, is also expected to continue to see healthy gains in 2015.
Key REGIONAL Indicators
3
+1.6%
+2.0%
-5.6%
+6.5%
+5.8%
Labor Force
Employment
Unemployment
Real Estate Sales
Single Family Permits
The Port of Charleston will take advantage of increasing exports in 2015 and the opening of the Panama Canal expansion in 2016. Container volumes are predicted to expand by a healthy 15% in 2015 and an additional 8% in 2016. Break-bulk cargo and the number of vehicles shipped through the Port of Charleston are also expected to grow in each of the next two years.
Charleston International Airport will complete the $189 million terminal renovation project in late 2015, providing much needed upgrades to the existing space and room for growth with the addition of five new passenger gates. The forecast calls for a steady rise in passenger traffic in 2015 and 2016.
The Charleston region has been ranked as the number one visitor destination in the U.S. for four years in a row. As a result, the region has experienced growth in the number of hotel properties and hotel rooms. Due to this increased inventory in the market, the forecast calls for more moderate growth in the visitor industry in 2015.
+2.8%
+15.0%
+3.8%
+1.9%
Retail Trade
TEUs
Airport
REVPAR
4
Job gains are expected in both 2015 and 2016 with total employment projected to increase by more than 6,000 net new jobs in 2015 and another 5,000 in 2016, resulting in declining unemployment, falling to 4.6 percent by the end of 2016.
4 201
(f) 2015
2016 (f)
350,000 340,000
13 20
330,000
20 12
320,000
201 1
310,000 300,000
2010
The region’s labor market expanded in 2014, with total employment growing by just under one percent. The largest job gains were in Education and Healthcare (+4%), Manufacturing (+2.9%) and Trade, Transportation and Utilities. The Government and the Construction sectors experienced a slight decline for the year.
Labor Force / Employment -Charleston Region
290,000 280,000
2009
Employment and Labor Force
270,000
Labor Force Employment
Source: U.S. Bureau of Labor Statistics (f) forecast
Residential Permits
Source: U.S. Bureau of the Census (f) forecast
Real Estate Permits
1,000 2,000 1 201
3,000 4,000
12 20
5
500 2010
More modest growth in 2015, that will level off in 2016, is forecasted for the residential building market. Multi-family construction is expected to see growth again in 2015 as a number of large projects across the region gain approval to move forward.
0
2009
The region’s residential real estate market experienced robust growth in 2014, with builders describing the market as active as pre-recession levels by the end of the year. Total single family permits increased 10% compared to 2013. Multi-family permits also soared, increasing more than 23% compared to the previous year.
5,000
20 13 201 4
Total Residential Permits
6,000 2015 (f)
2016 (f)
7,000
Residential Home Sales
Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (f) 2016 (f)
Sold 15,740 14,240 11,530 7,907 8,702 8,840 9,380 10,637 13,101 14,253 15,184 15,466
Average Sales Price $246,362 $263,895 $277,067 $299,721 $252,880 $264,068 $251,151 $263,778 $280,890 $290,910 $291,840 $293,300
Median Sales Price $190,199 $206,705 $209,742 $201,777 $179,148 $187,000 $181,275 $190,025 $204,900 $215,000 $216,000 $217,000
Real Estate Sales The number of residential home sales in 2014 increased 9% over the previous year. The average sales price increased by 4%. Residential housing sales are expected to continue to grow. The forecast expects a 6.5% increase in the number of sales in 2015 and another 1.9% the following year. The average sales price is predicted to be relatively flat for the next two years primarily because of the price recovery that has already taken place in the market.
Source: Charleston Trident Association of Realtors (f) forecast
Gross Retail Sales
Source: S.C. Department of Revenue (f) forecast
2016 (f)
Retail Sales 0
2015 (f)
2,500,000
201 4
5,000,000
20 13
10,000,000 15,000,000 12 20
20,000,000 25,000,000
Total retail trade in the region increased 5.3% in 2014 – the result of growth in the region’s housing market and strong visitor industry. The forecast for 2015 and 2016 is for steady growth in both years, with total retail sales increasing 2.8% each year – just above the national forecast.
1 201
2009
2010
Gross Retail Sales ($000) 6
20 12
1,500,000 1,000,000 500,000 250,000 0
TEUs
Source: S.C. State Ports Authority (f) forecast *TEUs: twenty-foot equivalent units
Enplanements Deplanements
Source: Charleston County Aviation Authority (f) forecast *includes civilian and military passengers
0
2009
800,000
2010
1,000,000 1 201
Total passenger volumes are forecasted to continue to grow over the next two years by 3.8% in 2015 and 1.3% in 2016.
1,200,000
12 20
1,400,000 20 13
7
2,500,000 2,000,000
13 20
Transportation (Airport) Total passenger activity at Charleston International Airport reached more than 3 million passengers in 2014, setting a new record for Charleston International Airport. Passenger volumes for all airlines serving Charleston increased during the year.
2016 (f)
201 1
The forecast calls for container volumes to increase in each of the next two years as the Port of Charleston continues to expand and attract new business. The opening of the Panama Canal expansion in 2016 is also expected to be a boost for Charleston as is the continued progress to deepen the Charleston Harbor. The U.S. Army Corps of Engineers’ recommendation to deepen the harbor to 52 feet will result in Charleston’s harbor being the deepest on the East Coast, a significant game changer for our region.
4 201
(f) 2015
2010
Charleston’s ports volume increased in 2014, with container cargo leading the way. Total TEUs increased by 11.9%, the largest port gains of any port in the U.S. In calendar year-end results, container volumes measured in 20-foot equivalent units reached more than 1.7 million.
Port of Charleston Activity
2009
Transportation (Port)
Charleston International Airport Passenger Activity
201 4
1,600,000
2015 (f)
2016 (f)
1,800,000
2009
$120.00
2010
$100.00
RevPAR 2009 - 2016 201 1 20 12 13 20
$80.00
4 201
$60.00 $40.00
(f) 2015
$20.00
2016 (f)
$0
Hotel Daily Rate
The region’s visitor industry continued to expand in 2014, with area experts reporting another strong year of activity. One of the highlights of the year was being named the country’s top travel destination for the fourth year in a row by Condé Nast. Average hotel occupancy increased to 74.47% and the average daily rate charged by area hotels was $136.50. RevPAR – revenue per available room, a standard measurement by the lodging industry – increased by 9.8% from the previous year. RevPAR is used as an overall metric indicating financial performance of a property.
Source: Office of Tourism Management, College of Charleston (f) forecast
Attendance at Area Attractions Year 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 (f) 2016 (f)
Visitor Industry
Attendance 1,711,030 1,690,060 1,692,547 1,514,128 1,543,429 1,583,664 1,654,289 1,652,423 1,749,027 1,706,481 1,707,030 1,732,636
% Change From Previous Year -3.0% -1.2% 0.1% -10.5% 1.9% 2.6% 4.5% -0.1% 5.8% -2.4% 0.0% 1.5%
Source: Center for Business Research (f) forecast Attraction Attendance is the reported attendance at 15 select area attractions: Fort Sumter, Fort Moultrie, Charleston Museum, Heyward Washington House, Joseph Manigault House, Aiken Rhett House, Charles Towne Landing, Middleton Place, Edmondston-Alston House, Gibbes Museum, Nathaniel Russell House, Drayton Hall, Patriots Point, Charles Pinckney and the SC Aquarium.
Attraction Attendance Total attendance at area attractions decreased by 2.4% in 2014. Poor weather for the first quarter of 2014 was partly to blame for the decline as many attractions were simply closed due to icy conditions. The closing of the Gibbes Museum during the year for a major capital renovation project also impacted overall attendance numbers. The forecast is for attendance to remain flat for 2015 and then increase by 1.5% for 2016. The profile of Charleston’s typical visitor includes a high level of repeat visitation so the historic attractions continue to be challenged to find new and creative ways to attract attendees. 8
Economic Outlook Board
Methodology
Charlie Carmody CB Richard Ellis Carmody
Data for the forecast is collected by the Charleston Metro Chamber of Commerce’s Center for Business Research. The survey methodology has been reviewed by the College of Charleston. Data reported by national and state agencies, such as employment, inflation and interest rates, are downloaded directly from those agencies.
Harry Gregorie GDC Jim Hamilton ReMax/Charleston Trident Association of Realtors Katie Henderson Dunhill Staffing Systems Danny Kassis SCE&G Wilbur Johnson Young Clement Rivers LLP
The statistical methodology used to generate the forecast herein is Vector Autoregression or VAR.
Perrin Lawson Charleston Area Convention & Visitors Bureau Tripp Meares Wells Fargo Barbara Melvin South Carolina State Ports Authority Judi Olmstead Charleston County Aviation Authority Steve Slifer NumberNomics Peter Steketee Embassy Suites Hotel Charleston Area Convention Center Steve Warner Charleston Regional Development Alliance
Department of Economics and Finance, School of Business, College of Charleston Frank Hefner, Ph.D. Mark Witte, Ph.D.
Center for Business Research, Charleston Metro Chamber of Commerce Mary Graham Jacki Renegar 9
Center for Business Research Charleston Metro Chamber of Commerce 4500 Leeds Ave., Suite 100 North Charleston, SC 29405 843.577.2510
www.charlestonchamber.net
Driving growth. Defining tomorrow. As the collective voice of business, the Charleston Metro Chamber of Commerce is committed to advancing the region’s economy and staying competitive through our work in: ▪ Infrastructure ▪ Education ▪ Talent Development ▪ Military Retention ▪ Entrepreneurialism ▪ Regional Advancement ▪ Small Business ▪ Economic Development
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www.charlestonchamber.net 4500 Leeds Ave. Ste. 100 North Charleston, SC 29405 843.577.2510
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