Q2 2012 Rochester, New York Commercial Real Estate Economy

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Q2 2012 Rochester, New York Commercial Real Estate Economy

The economy of the Rochester Metropolitan Statistical Area (MSA) is, at
long last, beginning to shake off its legacy of a declining “company town”
that has seen its better days pass. A June 15th report in The Atlantic
magazine noted the city’s “unique place in the Rustbelt Revival.” Under
the newly coined term “Rustbelt Chic,” many Midwestern cities and, for
that matter, cities like Rochester, are drawing entrepreneurs and young
residents who have chosen to make these second tier cities their home.
However, cautions the article, it remains unclear if Rochester is “really in a
position to respond in a way that grows the momentum.”

The city’s economic underpinning was once dominated by “the big three,”
in the form of Kodak, Bausch and Lomb, and Xerox. These industrial and
technological giants kept the city going for much of the 20th century, but
their decline over the past several years (Kodak filed for bankruptcy earlier
this year) left the city scrambling. At the height of the Great Recession,
Rochester lost nearly 15,500 non-farm jobs in 2009, according to data
from the U.S. Bureau of Labor Statistics (BLS). But if the companies are
not what they once were, they left an educated workforce, which local
leaders intend to utilize in establishing the region’s photo optics and
technical base. The regions’ largest employer is, according to the Rochester
Business Journal’s Book of Lists for 2012, the University of Rochester, with
nearly 20,000 employed. The next is Wegmans Food Markets Inc., with
over 14,000, and Rochester General Health System, with 7,514 employees.
Eastman Kodak Co. follows with 7,100, after which is Xerox Corp., with
6,672. Bausch & Lomb is considerably further down the list with 1,593.
Thus, the region can indeed point to a fairly sophisticated workforce. In
August, the Rochester Democrat and Chronicle reported on the Finger Lakes
Regional Economic Development Council’s draft list of priority projects
for 2012. Leading the list was “efforts to preserve and strengthen Eastman
Business Park, the former Kodak Park.” The other projects were the
Health Sciences Center for Computational Innovation, intended to make
the region a leading center for high performance computing, and the
Golisano Institute for Sustainability will make Rochester Institute of
Technology a leader in helping develop sustainable products, the Democrat
and Chronicle reported. Whatever its current problems, Rochester is looking
towards high-tech and developing industries to pull it through.

The latest Current Employment Statistics (CES) data from the BLS give
cause for hope. The employment news is generally good. Total non-farm
payroll employment increased by 8,200 jobs (1.6%) from August 2011 to August 2012. This is not a great an increase as recorded in the previous
Reis Observer, but is an increase nonetheless. The job count for the private
sector was up by 8,300 jobs (1.9%) year-over-year in August. Construction
was up only slightly, at 500 jobs (2.6%). Perhaps reflecting a more active
local economy, Retail Trade employment was up 1,200 jobs (2.1%).
Transportation and Utilities employment was up 300 jobs (3.2%). In the
more white-collar sectors, Financial Activities employment was up 400
jobs (1.8%), while Professional and Business Services employment
increased by a strong 4,800 jobs (7.6%). Education and Health Services
employment was also strong, with an increase of 1,900 jobs (1.8%). There
were weak spots in Leisure and Hospitality and Government employment,
but the general job picture here is good.