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November 6th

In This Issue

Economic Snapshot

Economic Notes:

This Weeks Leads:


 

Scorecard

Direct Taxable Retail Sales– July 2006

  • State-wide July increases were 11.3%
  • The top gainers include:
    • $50M + Cities:
      1. Uninc. SL Co+20.1%
      2. West Valley City +17.4%
      3. Orem +14.1%
      4. West Jordan +10.6%
    • $20 - $50M Cities:
      1. South Jordan+81.4%
      2. Vernal +24.8%
      3. Lehi +24.6%
      4. Lindon +22.9%
  • The “bottom losers” include:
    • Riverdale - 0.7%
    • Bountiful -4.7%

Sales by Major City – FY 2006

2006 Rank (05) CitySales July 2006 (000) July 05-06 % Change
1Salt Lake City$369,392+0.8%
2 (3)West Valley$154,13117.4%
3 (2) Sandy$150,8160.6 %
4Orem$149,78114.1%
5 Murray $133,3031.9%
6 St George $130,2454.4%
7 South Salt Lake $117,8064.4%
8(9) Ogden $97,7178.4%
9 West Jordan$97,69510.6%
10(8) Layton$92,4341.9 %
11Provo$85,1692.7%
12(13) Logan$54,3104.6%
13(12) Riverdale$52,411- 0.7%
14American Fork$49,7008.0%
15Midvale$47,98013.2%
16 Cedar City $44,3059.9%
17 Draper $42,16620.2%
18(24) South Jordan $38,00381.4%
19(20) Vernal $36,78124.8%
20(21) Lindon$35,5135.9%
21(18) Taylorsville$35,5135.9%
22(19) Bountiful$29,998- 4.7%
23(22) Park City $28,27713.2%
24(23)Tooele $25,809
25Springville$22,072 12.1%

Utah State Tax Commission, 10/06


Who Carries the Freight - 2004

Freight transportation plays a role in economic development and transportation quality and availability is critical to economic development policies and strategies.

  • Truck 69.1%
  • Rail 13.6%
  • Rail/Intermodal 1.3%
  • Pipeline 8.7%
  • Water 7.4%
  • Air 0.1%

Projected Freight Growth: 2004 - 2016

  • Truck +32.5%
  • Rail +24.5%
  • Rail/Intermodal +77.9%
  • Pipeline +22.3%
  • Water +25.9%
  • Air +74.6%

In Utah, trucks transported 85.5% of total manufactured tonnage in 2003.

Source: American Trucking Association and American Transportation Research Institute.

Super-Sized Industrial Facilities Take Shape

As the volume of imports from Asia continues to grow, so too do the industrial facilities that house the goods. Over the past decade, the definition of a large warehouse has climbed from approximately 300,000 sq. ft. to upwards of 1 million sq. ft. today. Imports from global manufacturing centers are largely fueling the demand for these massive industrial facilities.

Case in point: The Alter Group, a Chicago-based office and industrial developer last week announced more than 1 million sq. ft. of speculative industrial space split between Southern California and Indianapolis. The ambitious pipeline is a bet that demand will remain strong for high-volume distribution space for the foreseeable future. Logistics providers as well as retailers and others lease these facilities to process large volumes of imports. Alter Group’s 590,000 sq. ft. Calabash II, under development in California’s Inland Empire, will handle imported goods from the Ports of Los Angeles and Long Beach. The 440,769 sq. ft. Airwest Indianapolis, in the Airwest Business Park in Plainfield, Ind., is within a day’s drive of 65% of the U.S. population via convenient access to four interstate highways and the Indianapolis International Airport.

The developer also is eyeing new development opportunities in Chicago, and would like to add Atlanta and the East Coast to its big-box industrial program in 2007, says Patrick Gallagher, senior vice president at Alter Group. “We’ve got major buildings going up in about four cities right now, and we look to expand even more so in those strategic cities that are tied to national and international logistics networks,” says Gallagher.

Most large logistics projects are naturally located near seaports — where companies can unload large oceanic shipping containers, sort goods and then transport them via truck or rail to stores or regional distribution centers —and at major crossroads of highways, rail lines and airports, including Indianapolis.

Large-scale logistics space was rare a decade ago. But it may soon garner its own subcategory among commercial real estate product types, believes Bob Bach, national director of market research at Oak Brook, Ill.-based Grubb & Ellis: “There clearly is a subset of the warehouse/distribution category that I would call modern logistics space.”

Researchers are still setting parameters, but the new product type will be defined by its large size, ceiling heights of 32 ft. or higher, state-of-the-art fire suppression systems, a high ratio of dock-height doors to floor area, and other factors. Quick turnaround time also differentiates these facilities from their predecessors: Large truck courts enable truck drivers to park a full trailer, pick up an empty one and quickly get back on the road.

The vacancy rate for warehouse/distribution space was 8.2% at midyear, slightly higher than the 7.9% vacancy rate for all industrial properties. Bach attributes that slightly elevated vacancy rate to a high construction rate, and says demand continues to keep a heavy supply of new space from spinning out of control.

“In the Inland Empire, in particular, demand is torrid and vacancy is 3.8%,” Bach says. “That’s incredibly low, considering it has by far the most space under construction at 22 million sq. ft.”

Warehouse/distribution properties represent less than half, or 5.1 billion sq. ft., of the 10.5 billion sq. ft. of industrial real estate in North America, according to Grubb & Ellis. Yet warehouse/distribution space accounts for a full 70%, or 80 million sq. ft., of the total 115 million sq. ft. of industrial space under construction nationwide in October.

Source: NREI Newsline

Greetings!

July 2006 Major City Retail Sales Ranking

Transportation - Who's important for Economic Development?


  • Economic Snapshot
  • Economic Snapshot – Three Months FY2006-2007

    • Sales and Use Taxes +6.5%
    • Corporate Franchise Taxes +42.7%
    • Individual Income Taxes +14.4%
    • Individual Income Taxes: Withholding +14.4%
    • Severance Taxes +34.5%
    • Mineral Taxes: Withholding +29.7%
    • Uniform School Total +7.6%
    • Motor Fuel Taxes -5.1%

    Source: Utah State Tax Commission, 10/20/06

  • Economic Notes:
    • Slower US Growth

    • US economic growth slowed to an annualized rate of just 1.6 per cent in the third quarter of 2006, figures revealed, as a brutal correction in housing construction and an oil-fuelled rise in imports dragged down economic activity.
    • Factory Orders (M3)

    • New orders for manufactured goods rose 2.1% in September following a downwardly revised 0.3% drop in August. Durable goods orders, which had risen 7.8% in the advance release, were revised higher to show an 8.3% increase. Nondurable orders fell an outsized 4.6% during the month.
    • Senior Loan Officer Opinion Survey

    • The October Senior Loan Officer Opinion Survey shows weaker demand for real estate and consumer loans over the past three months, while demand for commercial and industrial loans was little changed. The changes in lending standards were mixed across segments, while credit terms were generally better.
    • Productivity and Costs

    • Nonfarm business productivity growth came in well below expectations, with no increase, 0.0% (SAAR), in the third quarter. There has been a rapid slowing in productivity growth in recent quarters. Unit labor costs grew an annualized 3.8% in the third quarter, slightly above consensus. Inflationary pressures from the labor market remain a concern.
    • Personal Income

    • Personal income rose 0.5% in September, above expectations and up from a 0.4% increase in August. Spending rose 0.1%, below expectations, and down from August’s 0.2% gain. The core PCE deflator rose 0.2%, while the top line deflator fell 0.3% due to tumbling energy prices. The saving rate rose to -0.2%.
    • Chain Store Sales

    • Chain store sales grew 3.0% in October, down from 4.0% in September, according to the ICSC chain store index. Results were in line with expectations, although they were mixed across retailers with a majority lagging forecasts. Falling gasoline prices, weakening housing markets and difficult comparisons were significant drivers of growth.
    • Agricultural Prices

    • The All-Farm Products Index of Prices Received by Farmers fell 1.7% in October from September. The crop index fell 4.9%, while the livestock was unchanged. In addition to price movements, the index is also affected by seasonal factors based on the mix of commodities sold. Farmers received lower prices for lettuce, broilers, cattle and tomatoes. Higher prices were posted for corn, wheat, turkeys and milk. The Index of Prices Paid by Farmers was unchanged from September, but 1.4% above the level of a year ago. Farmers paid higher prices for feed grains, nitrogen fertilizers, herbicides and feed concentrates and lower prices for diesel fuel, feeder cattle, gasoline and LP gas.
    • MBA Mortgage Applications Survey

    • Mortgage demand decreased 3.0% in the week ending October 27. Purchase applications decreased 1.8% and refinance applications decreased 4.5%.
    • Oil and Gas Inventories

    • Crude oil inventories rose 2 million barrels for the week ending October 27, according to the Energy Information Administration, slightly below expectations of a 2.7 million barrel build. Distillate inventories fell by 2.7 million barrels, while gasoline stocks fell 2.8 million barrels, both in line with expectations. Refinery activity accelerated some last week. This report will be shrugged off by the market.
    • Natural Gas Storage

    • Underground storage of natural gas decreased by 9 billion cubic feet during the week ending October 27. This was slightly less than the expected draw of 11 Bcf from storage. Inventories are now 8.7% above the five-year average. This report is likely to moderate pressure on prices.
    • Vehicle Sales

    • Vehicle sales fell again in October on a seasonally adjusted annualized basis, sinking to 16.1 million units from 16.6 million in September. The October number also falls below the average for the year thus far of 16.6 million units. Both car and truck sales fell but cars took a great hit as rapidly declining gas prices have again shifted consumers away from cars.
    • Construction Spending (C30)

    • Construction spending decreased 0.3% in September. Private construction decreased 0.7%, entirely due to weakening residential construction. In addition, public construction increased 0.9%.
    • Semiconductor Billings

    • Global semiconductor sales achieved a new high in September, recording an increase of 9.3% and an increase of 4.2% from September last year and August this year, respectively. A total of $21.4 billion worth of sales were recorded in September compared to $20.5 billion in August, according to the Semiconductor Industry Association. With the holiday season at the door, the near-term outlook for semiconductor sales is firm.

  • This Weeks Leads:
    • Ten Spot / Madrag
    • Ten Spot / Madrag operates 29 locations throughout CT, MA, NJ, NY, PA and RI.
    • The stores, selling discount women’s plus size and juniors apparel, occupy spaces of 4,000 sq.ft. to 6,000 sq.ft. in power and strip centers and urban/downtown areas.
    • Plans call for five openings throughout the existing markets during the coming 18 months.
    • Typical leases run 10 years with options.
    • A vanilla shell and specific improvements are required.
    • Preferred cotenants include Wal*Mart.
    • Preferred demographics include a population of 100,000 within three miles earning $35,000 to $50,000 as the average household income.
    • For more information, contact
      • Nathan Hoffman,
      • Ten Spot / Madrag,
      • 30 Seaview Drive,
      • Secaucus, NJ 07094;
      • 201-319-1400 Ext 118,
      • Fax 201-319-0111;
      • Email: Nathan@10spotplus.com;
      • Website: www.10spotplus.com.
    • Cache and Cache Luxe
    • Cache trades as Cache and Cache Luxe at 295 locations nationwide.
    • The stores, offering upscale women’s apparel and accessories, occupy spaces of 2,000 sq.ft. in upscale lifestyle centers and malls.
    • Plans call for 30 openings nationwide during the coming 18 months. Typical leases run 10 years.
    • Preferred cotenants include Nordstrom and Saks.
    • For more information, contact:
      • Dawn Balopole
      • Cache
      • 1440 Broadway, 5th Floor
      • New York, NY 10018
      • 614-939-5177
      • Fax 614-939-5189
      • Website: www.cache.com
    • Vans
    • Vans, Inc. trades as Vans. The 150-unit chain operates locations nationwide.
    • The stores, selling accessories, apparel and footwear, occupy spaces of 3,000 sq.ft. in malls and power centers.
    • Growth opportunities are sought throughout CA, FL and TX during the coming 18 months.
    • Typical leases run five to 10 years. Preferred cotenants include American Eagle, Hollister,
    • Journeys and Pacific Sunwear.
    • For details, contact:
      • Joel Patterson
      • Vans, Inc.
      • 15700 Shoemaker Avenue
      • Santa Fe Springs, CA 90670
      • 562-565-8267
      • Email: joel_patterson@vfc.com

  • BONNEVILLE RESEARCH
  • "Problem-solving" is not planning, and "Planning" is not the same as "problem- solving"

    Effective planning can not be done without addressing the problems that are critical.

    Not all problems deserve attention.

    Some just go away.


    BONNEVILLE RESEARCH

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