Q2 2012 Louisville, Kentucky Commercial Real Estate Economy

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Q2 2012 Louisville, Kentucky Commercial Real Estate Economy

The mid-point of 2012 found employment fairly strong in the Louisville Metropolitan Statistical Area (MSA). The Great Recession certainly left its mark here, and the area cannot be said to have completely recovered the job losses of 2007 to 2010. However, according to Current Employment Survey (CES) data from the U.S. Bureau of Labor Statistics, total non-farm payroll employment increased by 17,400 jobs (2.9%) in the 12 months ending in July 2012, another solid gain after a similar rate of increase was recorded in the previous Reis Observer. Unemployment has also declined, reaching 8.3% in July, down 150 basis points over 12 months. The metro’s recovery was noted in a September 10th article in the Courier Journal citing a study by the Brookings Institution’s Metro Monitor that “shows Louisville-Southern Indiana recovering pretty well from the recession, at least among the 100 biggest metro areas.” The study states that the Louisville metro area ranks 27th of 100 metros, up from 30th the prior quarter. “The metric gauges employment, unemployment, house prices, and overall economic output in each area. The latest report, which covers the second quarter of 2012, shows Louisville employment bouncing back faster than the norm, and area house prices not falling to same depths.” Louisville ranked 20th in employment, 32nd in unemployment, and 33rd in output (Gross Metropolitan Product). In another bit of good news, Louisville and nearby Danville were ranked by Money Magazine to be among the 25 Best Places to Retire. “Business First reports that the magazine determined that Louisville is best for people who want a big-city atmosphere, and it highlighted the Kentucky Derby, downtown museums, Waterfront Park, and the Kentucky Center for Performing Arts.”

On the manufacturing front, Louisville is home to a huge Ford Motor Company plant and its related suppliers. In June, Industry Week reported “in order to build its new Escape, a fuel-efficient small utility vehicle with an automatic transmission that was launched on June 13, Ford Motor Co. announced it has added 1,800 jobs at Louisville Assembly Plant. The company plans to add an additional 1,300 more employees to a third shift this fall, bringing total hourly employment at the plant to 4,200.” Also, General Electric is a major employer here. According to CES data, the Manufacturing sector added 3,900 jobs (6.3%) year-over-year in July. Within that sector, Transportation Equipment Manufacturing added a notable 4,600 jobs (61.3%). As home to the UPS Worldport Air Hub at Louisville International Airport, warehousing and distribution are big players here. Data from the Louisville Regional Airport Authority for 2011 indicate “Louisville International and Bowman Field operations Support 64,135 total jobs in the local community, meaning that more than 9% of total area employment—almost one in every 10 jobs in the Metropolitan Statistical Area—is attributable to airport-related activities.” Accordingly, Wholesale Trade employment is up by 1,200 jobs (4.3%) and Transportation and Utilities employment is up by 1,400 (4.3%). More developments in Manufacturing include a revival of Jefferson Riverport International, “Louisville’s largest industrial park with nearly 13 million square feet under roof,” according to Business First. The economic downturn had taken its toll on the park, this source reported, and “fewer orders for the park’s manufacturers, and reductions in company inventories caused some distributors to scale back or eliminate their operations there.” Today, Riverport is on the rebound, having weathered the worst of the economic crisis. “Several companies have expanded or are exploring growth opportunities at the park. Only about 800,000 square feet of space remains available for lease,” this source reports.

Although Louisville is not known as a white-collar employment enclave, Professional and Business Services added 5,200 jobs (7.0%) in the 12 months ending in July, with a gain in the Administrative and Support Services component of 3,700 jobs (9.0%). Financial Activities was down 100 jobs (0.2%) and the largely government-funded Education and Health Services sector saw employment increase by 2,200 jobs (2.6%). Total private employment increased by 17,600 jobs (3.4%) in the 12 months ending in July, CES data states. Rounding out the sectors, Retail Trade employment increased by 1,400 jobs (2.3%) and Leisure and Hospitality by 2,800 (4.5%) year-over-year as of July. After prior losses, Construction employment increased by 100 jobs (0.4%) in the year to July.