July 31st 2006

In This Issue

Economic Notes:

This Weeks Leads



Economic Development and Farm Subsidies

In 1990, Ireland’s total work force was 1.1 million. This year it will hit two million, with no unemployment and 200,000 foreign workers (including 50,000 Chinese).

Irelands economic development advice is very simple:

  • Make high school and college education free;
  • Make your corporate taxes low, simple and transparent;
  • Actively seek out global companies;
  • Open your economy to competition;
  • Speak English
  • Keep your fiscal house in order; and
  • Build a consensus around the whole package with labor and management.

Then hang in there, because there will be bumps in the road – and you too, can become one of the richest countries in Europe.

”It wasn’t a miracle, we didn’t find gold. It was the right domestic policies and embracing globalization.” – Irish Economic Development Official.

Source: Financial Times, 2006

A recent OECD report shows that a simultaneous reform involving a halving of trade protection and domestic support across all sectors could potentially generate USD 44 billion in welfare gains globally.

Most of these gains arise from agricultural reform and most of these agricultural gains come from reform of market access measures.

The report finds that almost all countries gain overall. Those with the highest levels of support and protection would benefit most from such reforms.

The most efficient agricultural exporters would also gain significantly. But for many developing economies the immediate benefits would be relatively small and would be concentrated more in manufacturing than in agricultural trade.

RankUSDA Subsidies to Utah Farms1995-2004 ($)
Total USDA Subsidies to Utah Farms$339,381,000
1 Weston Family Partnership, Logan$1,775,894
2C V Ranches % Perkins Fm Ptnsp, Bancroft, ID$1,378,413
3Holmgren L & L % J Holmgren, Tremonton $1,372,807
4 Garn Farms, Fielding$1,314,393
5Cedar Valley Farms, Lehi$1,268,389
6Sandall Farm & Ranch Family Partn, Tremonton$1,140,045
7E Ray Okelberry Joint Venturem Goshen$1,127,105
8N D Or R Grover Partnership, Brigham City $1,100,693
9 Rudd Farms Partnership, Garland$984,536
10Roundy Farms, Cache Junction$862,592
11Ault Farms, American Fork $856,499
12Holbrook Farms, Lehi$838,173
13 Wilson Brothers Livestock, Payson$733,771
14Robert A Adams, Brigham City $713,518
15 Double P Ranch, Nephi$710,036
16Frank L Rees Limited Partnership, Brigham City$698,867
17Triple C Farms, Holden $657,936
18Wm F Goring & Son Inc, Deweyville$645,678
19Green Mountain Grain, Tremonton$645,505
20Little Salt Creek Farms, Levan$637,135

RankUSDA Subsidies in Utah by CountyTotal Subsidies 1995- 2004% of TotalCumulative %
1Box Elder$90,405,29826.6% 26.6%
2Cache$37,989,672 11.2%37.8%
3San Juan$26,4789,0357.9% 45.7%
4Millard$26,053,079 7.7%53.4%
5Utah $21,658,4246.4%59.8%
6Sanpete$16,785,5 584.9%64.7%
7Duchesne$14,620, 2534.3%69.0%
8Juab$14,182,674 4.2%73.2%
9Uintah$12,534,555 3.7%76.9%
10Emery$8,383,278 2.5%79.4%
11Iron$7,153,847 2.1%81.5%
12Beaver$6,893,643 2.0%83.5%
13Rich$6,636,579 2.0%82.5%
14Weber$5,604,718 1.7%87.1%
15Sevier$5,431,870 1.6%88.7%
16Summit$4,399,07 81.3%90.0%
17Washington$4,27 5,3141.3%91.3%
18Piute$4,192,514 1.2%92.5%
19Wayne$3,698,174 1.1%93.6%
20Salt Lake$3,438,6961.0% 94.6%
21Tooele$3,390,624 1.0%95.6%
22Garfield$3,043,01 00.9%96.5%
23Carbon$2,472,85 70.7%97.2%
24Davis$2,436,211 0.7%98.0%
25Morgan$2,228,87 30.7%98.6%
26Kane$1,683,583 0.5%99.1%
27Wasatch $1,611,4150.5%99.6%
28Daggett$976,684 0.3%99.9%
29Grand$402,000 0.1%100.0%

Best Places to Live 2006 - MONEY magazine and CNN/Money

  1. Fort Collins, CO
  2. Naperville, IL
  3. Sugar Land, TX
  4. Columbia/Ellicott City, MD
  5. Cary, NC
  6. Overland Park, KS
  7. Scottsdale, AZ
  8. Boise, ID
  9. Fairfield, CT
  10. Eden Prairie, MN

10 Best Big Cities 2006 - MONEY magazine and CNN/Money

  1. Colorado Springs, CO
  2. Austin, TX
  3. Mesa, AZ
  4. Raleigh, NC
  5. San Diego, CA
  6. Virginia Beach, VA
  7. Omaha, NE
  8. Columbus, OH
  9. Wichita, KS
  10. New York, NY

MONEY magazine and CNN/Money

Airport Retail Takes Flight

Airport retail has been a growing sector since 2001. Because of heightened security, travelers have to show up at the airport earlier and have more time to peruse in-terminal retail options. That success is now inspiring developers at Dallas/Fort Worth International and Denver International to think big-- big box, that is.

In what would be the first project of its kind in the U.S., Dallas/Fort Worth International is in the planning stages for a 600-acre mixed-use development that would include up to 800,000- square-feet of retail space. And Denver International has already awarded a development contract for a 17-acre site to build a mixed-use complex that might eventually grow by an additional 500 acres.

The projects, which would include major big-box category killers, are a way for airport operators to generate revenue at a time when they can’t squeeze more fees from the struggling U.S. airline industry. “They are looking to not be so dependent on what airlines can pay,” says Bruce F. Katz, founder and president of San Francisco-based consulting firm Retail Focus. The new projects, he says, are just the most ambitious extension of a move to develop non-airline revenue that has been under way for 15 years.

It’s not just about snagging a few more bucks from travelers with time to kill. At both Dallas/Fort Worth and Denver, demand is expected to come from nearby residents and airport employees. Denver International employs about 30,000 workers, while Dallas has approximately 57,000.

“The employees are there, they work long hours and it would be convenient for them to leave [without having to deal with a lot of security procedures],” says Karen Bellantoni, senior vice president with New York-based Robert K. Futterman & Associates.

In the case of Dallas/Fort Worth, the airport is attempting to develop a vacant property on its southern tip tentatively called Passport Park. The project would devote 125 acres of land to retail. The airport’s management is hoping to bring in stores like Target, Wal-Mart and PetSmart.

Dallas/Fort Worth officials have already met with several developers to discuss the project and are also considering building the complex in a joint venture partnership that would allow the airport to share in ownership revenues. The airport’s board of directors has not yet granted approval on the development, but Marcus Phillips, an officer with Redwood Real Estate Partners LLC and one of the people involved in the Denver International project, believes that large-scale retail complexes at airports will eventually become the norm.

“I think airports are becoming the center of commerce and that’s definitely a wave that’s happening,” he says. “The term aeropolitan accurately reflects what’s going on. Airports are beginning to be city centers.”

Redwood and its partner Denver-based CMCB Development Co. have been chosen by Denver International to develop the 17-acre land parcel north of Pena Boulevard and about a mile away from the airport’s main terminal. The Pena Project will initially be much smaller than the Dallas/Fort Worth development–it will include approximately 60,000- square-feet of inline retail, a hotel and possible office space–but the airport might eventually expand it to encompass 500 acres along Pena Boulevard that it has already identified for future commercial uses.

“DIA owns a large amount of ground and their mission is to consistently drive non-airline revenues upward, so they are absolutely planning to evaluate the retail and commercial aspects of the airport,” Phillips says.

The challenge for Dallas/Fort Worth is that there might not be enough residents close to the southern tip of the airport right now to create a large enough market for big box stores. Company executives have said that the Passport Park development won’t come on line for another two to three years, possibly giving them time to come up with a mixed-use strategy that would create the necessary retail demand.

“If they have 600 acres, they must create some housing there – that would help them a lot,” Katz says. “If there are not a lot of residents [at the moment], they might develop this property in phases to get [the demand] going.”

Katz believes that as long as the market fundamentals are strong, big box tenants at airports would make as much sense as any other kind. “If there is enough population and the store deployment is such that another location is supportable, there is no problem putting anyone in,” he says.

Source: Retail Traffic


Open your economy to competition? How much are businesses and individuals subsidizing Utah Farmers?

  • Economic Notes:
    • Qtr II GDP

    • The U.S. second quarter advance GDP grew at a somewhat weaker than expected 2.5%. Weakness in growth was widespread in the second quarter; personal consumption, capex and exports all slowed, the latter two more than expected; inventory investment remained low, private residential investment fell for the first time in three years. The core PCE deflator rose by 2.9% (q/q, saar) and was up 2.3% from a year ago. On net, today's report makes a pause more likely in August.
    • US Economic Growth

    • US economic growth slows to 2.5%
    • Core prices up 2.9% in second quarter
    • Chain Store Sales

    • Chain store sales rose a slight 0.2% in the week ending July 22, according to the ICSC. Year- over-year growth dipped to 1.9%, another 17-month low. On the plus side, demand reportedly strengthened late in the week.
    • MBA Mortgage Applications Survey

    • Mortgage demand decreased last week, with the market index falling 1.3% in the week ending July 21. Purchase applications decreased 2.4%, while refinance applications increased 0.6%.
    • Consumer Confidence

    • The Conference Board index of consumer confidence rose in July to 106.5, up just over a point from a downwardly revised June level. The gain was led by the expectations component of the index although the present situation component also rose.
    • Oil and Gas Inventories

    • Crude oil inventories held steady for the week ending July 21, according to the Energy Information Administration, against expectations of a 0.7 million barrel decline. Gasoline inventories, however, plummeted 3.2 million barrels for the week, soaring past expectation of 0.2 million barrel draw. Refinery utilization also inched lower for the week. This report will have a significant bullish impact on oil prices.
    • Durable Goods (Advance)

    • New orders for durable goods rose 3.1% in June. The increase was faster than what the consensus forecast was expecting. May's increase was revised up to a 0.3% increase from a 0.2% decline. Core capital goods orders were weaker than expected, rising by 0.4% over the month. Shipments edged up only 0.1% and shipments of core capital goods fell by 0.2%. The headline number was boosted primarily by a surge in defense aircraft orders.
    • Existing Home Sales

    • Sales of existing homes continue to decline, with June’s 1.3% m/m drop in line with expectations. Running at 6.62 million annualized units, sales are also down on a year-ago basis by 8.9%. Median house-price appreciation is slipping sharply on a year- ago basis, with a gain of less than 1%. Inventories hit another record and the months of supply is nearing seven months. Conditions in the condo market are deteriorating faster than in the market for single-family homes.
    • New Home Sales (C25)

    • Sales of new homes are slowing even more quickly than anticipated. According to Census, new home sales are down to 1.13 million annualized units in June, a m/m decline of 3% and an 11% drop y/y. Moreover, Census revised downward the April and May readings. Nonetheless, second quarter home sales are up compared to the first quarter.
    • Employment Cost Index

    • Employer costs rose 0.9% in the second quarter of 2006, above expectations of a 0.8% increase. A surprise acceleration in wage costs to 0.9% for the second quarter drove the rise in total compensation costs. Benefit costs growth also accelerated in the second quarter. We are finally seeing more evidence of wage side inflationary pressure, which will surely catch the Fed's eye as well.

  • This Weeks Leads
    • Jimmy Jazz
    • Jimmy Jazz operates 60 locations throughout GA, IL, MD, MI, NJ, NY, PA and VA.
    • The name-brand urban apparel and footwear stores use 3,500 sq.ft. to 5,000 sq.ft. in malls, freestanding locations, strip centers and urban/downtown areas.
    • Plans call for 15 openings throughout the existing markets during the coming 18 months. Typical leases run 10 years.
    • For more information, contact: Abe Hanan, Jimmy Jazz, 43 Hall Street, Brooklyn, NY
    • R/C Theatres.
    • R/C Theatres Management Corp. trades as R/C Theatres.
    • The 22-unit chain operates locations throughout FL, MD, NC, PA and VA.
    • The movie theaters occupy spaces of 53,000 sq.ft. to 80,000 sq.ft. in entertainment and lifestyle centers.
    • Plans call for three openings throughout the existing markets during the coming 18 months. Typical leases run 10 years. A vanilla shell and specific improvements are required.
    • For details, contact: Scott Cohen, 231 West Cherry Hill Court, Reistertown, MD 21136
    • Web site: www.rctheatres.com
    • Massage Envy
    • Massage Envy Limited, LLC trades as Massage Envy at 110 locations nationwide.
    • The centers, which specialize in therapeutic massage, use 2,500 sq.ft. to 3,500 sq.ft. in freestanding sites and lifestyle, power and strip centers.
    • Plans call for 200 openings nationwide, exclusive of MT, ND, SD and WY, during the coming 18 months.
    • Typical leases run five years with two, five-year options. A vanilla shell is required.
    • Preferred demographics include a population of 60,000 within three miles earning $75,000 as the average household income.
    • Preferred cotenants include T.J. Maxx, Target, Whole Foods Market. The company is franchising.
    • For more information, contact: Joe Toth, Massage Envy Limited, LLC, 14350 North 87th Street, Suite 200, Scottsdale, AZ 85260, 480- 366-4131, Fax 480-366-4231
    • Emails: jtoth@massageenvy.com and realestate@massageenvy.com
    • Web site: www.massageenvy.com.

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