By James Flick, Vice President of Research and Marketing
While global economic growth has slowed throughout the world, the US has seen its growth remain stable. The unemployment rate, at the end of 2015, was 5.0%. The rate was unchanged between November and December despite the addition of 292,000 jobs in the month. This could signify that people are beginning to rejoin the workforce as evidenced by the 62.6% labor-force participation figure in December, the highest since the mid-year. Additionally, hourly wages rose 2.5% over the last year.
Gas prices are expected to trend downward in 2016 as supply continues to increase and demand is falling. This is one of the factors affecting the overall economy. The lowering prices are good for the consumers, though, and resulted in approximately $500 per American in savings during 2015. While these savings had only a limited impact on spending, additional savings could translate to stronger consumer metrics in 2016.
Locally, the Cincinnati economy was boosted by the addition of 16,000 jobs over the last 12 months. This growth fueled a 40 basis point decline in the local unemployment rate. Unemployment currently sits at 4.2%, which is 80 basis points better than the US figure of 5.0%.
Over the next five years, the region is expected to add 35,000 jobs according to Julie Heath, Director of the University of Cincinnati’s Economic Center. In addition to the job growth, earnings are expected to increase by $500 million over that same time span.
From a population perspective, according to the latest resident population estimates from the US Census bureau, the Cincinnati metropolitan area has grown by 1.6% since the last census figure (2010). They estimate that between 2013 and 2014 alone, nearly 11,000 new residents were added to the area.
The strong educational opportunities offered by the various colleges and universities in the region, combined with the job creation, population growth and earnings increases will help fuel continued economic growth through at least 2020.
With the economy expected to remain strong, its impact As the economy continues to grow, those middle-priced retailers may face additional challenges amid the frugal mindset consumers developed during the tough times of the recession. That mindset has consumers researching prices and products online, a consequence of the growth in e-commerce, then selecting the store where they can find the best deal for their dollar. With 75% of all retail sales still occurring in brick-and-mortar stores, consumers are finding comparable products for cheaper in the discount retailers than in the middle-priced ones.
We recently underwent a philosophy change in terms of retail research. As a means to clue in on the strengths and weaknesses of the retail marketplace, we have shifted our focus to four types of shopping centers, for statistical purposes. Those shopping center categories are Neighborhood/Community, Strip, Power/Regional, and Lifestyle.
The vacancy rate in shopping centers at the end of 2015 was 10.6%. Annual net absorption topped 670,000 sf and nearly 670,000 sf was delivered to the market. The average asking rental rate was $15.39 NNN.
In terms of development, the fourth quarter of 2015 was highlighted by the grand opening of Liberty Center in Liberty Township. When completed in its entirety, the first phase will include a Dillard’s department store (200,000 sf), a Dick’s Sporting Goods (80,000 sf), a 16-screen cinema, office space (75,000 sf), 240 multi-family units, and a 130-room AC Hotel by Marriott. Liberty Center is just one of the many developments taking shape in Liberty Township. Others include the region’s first Cabela’s, additional retail and office space and medical office buildings all of which are in the pipeline over the next 18 months.
2016 will also see the long-awaited Kenwood Collection delivered, more offices, multifamily and retail at Oakley Station, Florence Market’s addition of Menard’s and Costco, and expansions of Kroger’s’ in both Dent and Anderson. These new and expanded stores are an example of retailers committing to brick and mortar operations despite the rise of online shopping and its impact on reshaping the nature of retail.
James Flick joined the company in 2010. As Vice President, Research and Marketing, he is responsible for overseeing the Marketing and Research activities in our Cincinnati and Dayton offices. This includes the production of presentations, studies, and statistics on topics affecting the regional economy as well as the local office, industrial, retail and multi-family markets.