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Commercial Department: Spotlight: Kentucky: June 2017

 

Spotlight: Kentucky

The Bluegrass State bounces back from the recession.

Kentucky is one of the older states in the Union. It was admitted in 1792 as the 15th state and the first west of the Appalachian Mountains. The Bluegrass State didn’t transition to an urban-based economy until the past half-century, however.

The state’s rich history includes a vital role in the Civil War. Officially designated as a neutral state, Kentucky provided tens of thousands of troops to both the North and South. Two key figures in the conflict ­­— U.S. President Abraham Lincoln and Confederate President Jefferson Davis — were born in the Bluegrass State.

The infamous Hatfield-McCoy feud had one of its key moments in Pikeville, Kentucky, where nine members of the Hatfield family were convicted in 1888 for raiding and setting fire to Randall McCoy’s home, killing two of his children in the process.

Kentucky also is well known for its contributions to the sports world. Horse-racing fans have flocked to Churchill Downs in Louisville every May since 1875 for The Kentucky Derby, or “The Run for the Roses.” Boxing legend Muhammad Ali, a Louisville native, fought several of his early bouts at the Freedom Hall State Fairground in his home city. And the men’s basketball teams at the University of Louisville and the University of Kentucky in Lexington are perennial powers, combining for 11 national titles.

Kentucky Gov. Matt Bevin has focused in recent years on economic development efforts, implementing the Red Tape Reduction Initiative in July 2016 to “allow businesses to operate in a modernized regulatory system that provides them with the flexibility they need to serve their customers,” the initiative’s website states. As of this past April, the state had reviewed about 40 percent of its administrative regulations, repealing or amending more than 300 of them.

Several industries are thriving job producers and economic engines for the state. The automotive industry exported $5.5 billion in products in 2016, and Kentucky is the nation’s No. 1 per capita producer of cars, light trucks and sport utility vehicles.

Health care companies brought more than 2,000 jobs to the state last year, including many in smaller cities, like Anchorage and Covington. Online retail giant Amazon also has announced plans to invest nearly $1.5 billion and add 2,700 jobs in Kentucky by opening a new shipping facility in Boone County.

skip to 3 Cities to Watch>>  

Louisville office market

c_2017-06_Spotlight_chart1Louisville, with a metro population approaching 1.3 million, is seeing increased interest in its commercial real estate market from out-of-state investors. Last year, a total of 11 office properties sold for a combined total of more than $150 million, according to a report by JLL. Ohio-based Viking Partners, for example, purchased two office properties for a combined $30.4 million.

The combined vacancy rates for all office classes in the city decreased in 2016 for the sixth straight year, declining from 15.9 percent to 12.2 percent over the period, JLL reports. A growing industrial sector, new hotel and apartment projects, and inexpensive rental rates in the downtown core are among the positive commercial real estate trends Louisville is banking on for 2017.

Focus: Manufacturing

Kentucky’s manufacturing sector reflects the state’s overall economic recovery. The National Association of Manufacturers shows it added more than $12 billion in production from 2009 to 2015. That money filters down to the workforce as the average employee made more than $68,000 in 2015.The state exported more than $27 billion of its $37.8 billion output last year, driving jobs with trade partners like Australia, Mexico, Morocco, Singapore and South Korea. 

Pro Mach, a Covington-based packaging company for the food/beverage and pharmaceutical industries, made $533 million last year. Justice AV Solutions, an audio and visual equipment supplier based in Louisville, made a $20 million profit. Both made the Inc. 5000 List of America’s fastest-growing companies. The aviation and aerospace industries have sizable presences through General Electric, Kentucky Space, Star Aviation and Lord Corp.

Unemployment

c_2017-06_Spotlight_chart2Kentucky’s unemployment rate hit double digits near the tail end of the Great Recession, topping 10 percent every month from March 2009 through November 2010. It has rebounded impressively since then, however, finally dropping below 5 percent this past October, according to the U.S. Department of Labor. This past December’s unemployment rate of 4.8 percent ranks among the lowest levels the state has seen since 2001.

The state gained a total of 28,100 jobs during 2016, the Kentucky Education and Workforce Development Cabinet said. Trade, transportation and utilities is the largest employment sector, representing 20 percent of the workforce. Manufacturing jobs have declined by 4.6 percent over the past decade, but were up 3.1 percent in 2016 year over year. Other employment sectors that grew during the year were leisure and hospitality, educational and health services, professional and business services, and financial activities.

Sources: Bowling Green Daily News, City of Bowling Green, Churchill Downs, Commerce Lexington Inc., Cushman & Wakefield/Commercial Kentucky, Forbes, Georgetown/Scott County Chamber of Commerce, History.com, Inc. magazine, Insider Louisville, JLL, Kentucky Cabinet for Economic Development, Kentucky Department of Travel, Kentucky Red Tape Reduction Initiative, The Lane Report, Louisville Business First, National Association of Manufacturers, NAI Isaac, NCAA, Site Selection Magazine, USA Today, U.S. Census Bureau, U.S. Department of Labor, WKYT-TV



3 Cities to Watch

Bowling Green

The urban hub of South Central Kentucky, Bowling Green’s metro-area population has grown 7 percent in just the past six years to more than 171,000, according to U.S. Census figures. The home of Western Kentucky University, the community’s major economic drivers include education, technology, health care and museums. Nearby Hart County is looking to add a professional film studio to boost the economy.

Lexington

c_2017-06_Spotlight_lexingtonThe state’s second-largest city behind Louisville, its metro area boasts nearly 315,000 residents. Billed as the Horse Capital of the World, Lexington was chosen in 2016 as the nation’s fourth-best midsize metro for economic development by Site Selection Magazine. Fayette County and the seven neighboring counties that comprise the greater Lexington area are home to several large-scale employers, including Toyota, Conduent, Lexmark, Hitachi and Lockheed Martin.

Georgetown

Located in Scott County, north of Lexington, it’s the county seat and home to more than 32,000 residents. The state’s automotive prowess is due, in large part, to Georgetown’s Toyota plant, the company’s first U.S. vehicle-assembly plant, where about 7,000 people are employed. The economy also depends on Georgetown College, a private, liberal arts school; a community hospital; and a host of manufacturers serving the logistics, machining and warehousing sectors.

What the locals say

“Louisville and Lexington have been pretty active — Louisville in particular, with two new bridges being completed, one downtown and one on the east end, that add to the appeal of our central location geographically. … [In rural areas] there is still difficulty with unemployment being higher than it might be. But in the stronger economic cities of Louisville, Lexington, maybe Bowling Green and Owensboro, I think the unemployment numbers are fairly low. … In Louisville, we’ve had a few positive announcements of some jobs, [with companies] either growing or relocating to the city. We are relatively, compared to almost anywhere in the country, very inexpensive for office space and our wages are fairly inexpensive.”

c_2017-06_Spotlight_local

Sam English
senior director, Cushman & Wakefield/Commercial
Kentucky, Louisville 


 

Neil Pierson is editor in chief of Scotsman Guide Media. Reach him at neilp@scotsmanguide.com or (800) 297-6061.

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