The numbers are out, but the numbers behind the published numbers will startle you. Yesterday the Bureau of Labor Statistics released the latest numbers on national unemployment rate; but the government also released numbers on Metropolitan Statistical Areas which include New Orleans and is included in this analysis.
The Office of Management and Budget defines statistical areas for the metropolitan and micropolitan areas of the United States and Puerto Rico. Most recently, the OMB defined 1098 statistical areas, of which, 388 are Metropolitan Statistical Areas, 381 for the U.S. and 7 for Puerto Rico.
A Metropolitan Statistical Area is one or more adjacent counties or county equivalents that have at least one urban core area of at least 50,000 population, plus adjacent territory that has a high degree of social and economic integration with the core as measured by commuting ties.
map msa
Unemployment rates were lower in August than a year earlier in 311 of
the 372 metropolitan areas, higher in 47 areas, and unchanged in 14
areas, the U.S. Bureau of Labor Statistics reported. Not all areas were similar, with 28 areas having jobless rates of at least 10.0 percent, and 41 areas
having rates of less than 5.0 percent. Two hundred and eighty-eight
metropolitan areas had over-the-year increases in nonfarm payroll
employment, 72 had decreases, and 12 had no change. A total of 207 areas had
August unemployment rates below the U.S. figure of 7.3 percent, 158
areas had rates above it, and 7 areas had rates equal to that of the
nation.
The other side of the story is that there has been a massive withdrawal in the number of people looking for jobs, which affects how the unemployment rate is calculated. The chart below shows the labor force participation rate is at its lowest level in ten years.
chart labor force participation rate
The numbers for the people employed compared to the population show we are still near a ten year low, as shown in the chart below.
chart population ratio
The labor force since 2010 has grown from 153 million to 155.5 million. That is a growth rate of 1.6 percent over 33 months, or 0.58 percent annual growth, as shown in the chart below.
chart labor force since 2010
Unemployment for the New Orleans-Metairie-Kenner MSA was worse, at 7.2 percent for August 2013, compared to 6.9 percent in August 2012, and was the opposite of a positive trend witnessed by the State of Louisiana which experienced unemployment of 6.7 percent for August 2013, compared to 7.9 percent in August 2012. The New Orleans MSA recorded 547.3 thousand workers in the civilian labor force, which, as shown in the chart below, has recovered some since Hurricane Katrina.
chart new orleans employment
Since 2011, New Orleans MSA employment has increased from 520 thousand to 533 thousand, a growth rate of 2.50 percent total, or approximately 1 percent annual growth in employment, as shown in the chart below.
chart new orleans since 2011
The reason we look at these numbers is to try to figure out if there are more people getting jobs which drives the economy in the future. The answer is yes, there are people getting jobs but there are also more people leaving the labor pool because they giving up or unable to find jobs. This makes sense in an economy where GDP was 2.5 percent growth in the 2nd quarter 2013 compared to the 1st quarter 2013, and 1.1 percent for the 1st quarter compared to the previous quarter, as shown in the chart below. The number that makes the most sense is not a rate or ratio but how many people are in the labor force and how has that grown. The answer is the above chart on labor force growth is 155.5 million with a growth rate of 0.58% annually since 2010. The prudent and logical conclusion is that, even though interest rates are at their lowest levels in decades, we will continue to have a slow economy for several years, maybe even a decade. In a slow growth environment, cash flow from assets should do very well, and the conclusion is that New Orleans commercial real estate producing income from 5 percent to 10 percent can easily be found today, generating a real return over inflation of between 3 percent and 8 percent which historically beats any other asset class over the last decade.
chart gdp
For more information about MSA's, including maps, see our article at:
https://louisianacommercialrealty.com/2013/09/how-is-the-new-orleans-economy-doing/
For more information about labor force participation, including charts and tables, see our article at:
Sources: www.louisianacommercialrealty.com, Bureau of Labor Statistics
The past few months have witnessed several large commercial real estate transactions in New Orleans, including hotels, retailers and warehouses, emphasizing that New Orleans is a diverse market with buyers who have confidence in the future of commercial real estate and are willing to invest millions. Recently there were 14 big money transactions in New Orleans commercial real estate, and here are the specifics:
When he is not spending time taking First NBC public, Ashton Ryan, works on developing Lake Forest Plaza in New Orleans East, which has been a multi-year challenge. He sold 104,000 square feet of the vast land area for $2,250,000 to CVS in December 2012, which is $21.50 per square foot.
3601 camp sells for $1.2mm
In February 2013, the Orleans Parish School Board sold the three story, 20,000 square foot, Free School at 3601 Camp for $1,200,000, or $39 per square foot. The building is on 31,000 square feet of land and was appraised at $1,400,000, but sold at auction to the highest and best bidder that wasn't afraid of environmental problems and investing $5 to $10 million more to bring the property back into commerce. The site is zoned RM-2, Multi-family.
1139 jackson avenue sells for $1,015,000
1139 Jackson Avenue, an unrenovated, 18 unit apartment complex sold in February for $1,015,000. In the Rosalie Pinke family since 1978, the apartment complex is in operation on the corner of Jackson Avenue and Camp Street. It was purchased by Haddad Ventures.
124 st charles avenue sold for $26 million
124 Saint Charles Avenue, the 140 room Marriott on the corner of Common and Saint Charles Avenue, sold last month for $26 million, or $185,000 per room, by Adam and Thad Ackel to Summit Hotel,LP.
300 julia street sold for $31.5mm
300 Julia Street, the 202 room Courtyard by Marriott sold last month for $31,500,000, $155,000 per room, to Summit Hotel. LP, a real estate investment trust based in Austin, Texas.
301 st joseph sells for $33.5 million
The 208 room Marriott at Julia and St. Joseph also sold last month to Summit Hotel, LP for $161,000 per room.
3 galleria sold for $20 million
The 120 room Residence Inn near the Galleria Office Building at Causeway and I-10 sold last month by Galleria Inn, Henry O'Conner, to Summit Hotel, LP at $166,000 per room.
2 galleria marriott sold for 24 million
Last month the 153 room Courtyard by Marriott sold for $24 million, or $156,000 per room, by Galleria Court, Henry O'Conner, to Summit Hotel, LP.
140 carondelet sold for $660,000
140 Carondelet Realty, Michael Kirby, sold the 11,000 square foot building to St. Peter Group, Richard Williams, for $660,000, or $59 per square foot. The 3-story, elevator-serviced office building formerly housed Commonwealth Savings Bank.
The first floor former bank branch has been gutted and the other two floors are built out as offices. There is a common alley in the rear of the building with access to Common Street.
5405 tchoupitoulas sells for $858,000
The 16,000 square foot lot at Tchoupitoulas and Jefferson Avenue, home of the Roly-Poly restaurant, sold for $858,000, or $52 per square foot, by Shamus, LLC, Ben Butler to BCH NOLA, Ben Butler. Shamus purchased the lots in March 2012, for $830,000 from Claude Zerinque, who purchased the lots in March 2006, for $160,000.
2127 prytania sold for $1.6mm
Near Jackson Avenue, the 13 room hotel sold for $1.6mm, or $123,000 per room.
This vacant land site was acquired for a mixed-use development of apartments and retail at $37 per square foot, one of the highest prices paid for vacant land on Tchoupitoulas Street. The zoning is B-1A, Neighborhood Business District and the flood zone is A1. This property is on the corner of Richard Street and Magazine Street in the Lower Garden District. The buyer is the original owner of the swampland he sold to the City of New Orleans to house Dorothy Mae Taylor's ill-fated Jazzland.
In the Industrial sector, 321 Time Saver Avenue, 115,000 square feet of land, sold last month for $2,850,000.
In Retail, the old K-Mart at 5990 Lapalco Boulevard, a 72,000 square foot building on 6.8 acres, sold last month for $1.5 million.
In the Office sector, the old CNA building at 3350 Ridgelake Drive, sold for $2.3 million by Joe Jaeger from Craig Guidry at Vatocan Ventures who purchased the building in 1997 for $1.8 million.
These recent big money transactions are a result of strength in several markets: hotel, industrial, office and retail, since the buyer has confidence that the million dollar prices will return a reasonable rate of their investment. While one side of the coin says a sale of the Marriott Hotels means they are getting out of the market, the other side of the coin says because the properties did not sit on the market for years or sell at fire sale prices, that the New Orleans commercial real estate market is vibrant and a worthy investment.
Sources: www.louisianacommercialrealty.com, DeedFax, Clerk of Court records.
