Howard CountyEconomic Indicators Meeting

November 30, 2017

Data Review and Industry Members’ Comments

Committee Meeting AgendaWelcome 7:30am – 7:40am

Economic Overview 7:45am – 8:00am

Industry Member Updates 8:00am – 9:00am (3 minutes each)

• David Graf, W.R. & Grace

• Bill Stone, Mobern Lighting

• Nayab Siddiqui, Scientific Software Systems International

• Elizabeth Rendon-Sherman, LG-TEK

• Steve Poynot, Howard Bank

• Cole Schnorf, Jr., Manekin

• Craig Wyatt, Williamsburg Homes

• Nancy Cummins, Long and Foster Real Estate

• Chip Doetsch, Apple Ford Lincoln

• Barb Nicklas, The Mall in Columbia

• Kirit Parmar, Dunkin Donuts

• Donald Eames, The Airport Shuttle, Inc.

• Richard Clinch, University of Baltimore, Jacob France Institute

Howard County Employment TrendsQ2-2015 through Q2-2017

From Q2-2016 to Q2-2017,

our workforce added 1,793

new jobs.

Source: Maryland Workforce Exchange, QCEW

165,093 168,723 170,516

0

40,000

80,000

120,000

160,000

200,000

240,000

Q2-2015 Q2-2016 Q2-2017

# o

f Em

plo

yees

Howard County Employment by Industry SectorQ2-2017

Source: Maryland Workforce Exchange, QCEW

47% of jobs are in the top 2 industries

325

4,232

4,598

4,647

7,887

10,107

11,689

16,458

30,104

34,262

46,206

0 10,000 20,000 30,000 40,000 50,000

Natural Resources and Mining

Information

Other Services

Public Admin

Manufacturing

Financial Activities

Construction

Leisure and Hospitality

Education and Health Services

Trade, Transportation, and Utilities

Professional and Business Services

Howard County Employment by Industry SectorChange Q2-2016 to Q2-2017

Source: Maryland Workforce Exchange, QCEW

30

652

69

-12

80

240

158

717

277

-1,224

805

-2,000 -1,000 0 1,000

Natural Resources and Mining

Information

Other Services

Public Admin

Manufacturing

Financial Activities

Construction

Leisure and Hospitality

Education and Health Services

Trade, Transportation, and Utilities

Professional and Business Services A decline in Trade,

Transportation and Utilities employment was offset by gains in every sector except

Public Administration.

Q2-2017 saw net job growth

(1,793) compared to

Q2-2016.

Howard County Unemployment RateGeographic Comparison & Trends

Source: Maryland Workforce Exchange, LAUS

3.7%

4.8% 4.9%

3.2%

4.2%

4.8%

2.8%

3.5%

4.2%

0%

1%

2%

3%

4%

5%

6%

Howard County, MD Maryland United States

Rat

e (%

)

September, 2015 September, 2016 September, 2017

Howard County along with

Montgomery County, has the

lowest unemployment

rate in the State.

Source: CoStar

Howard County Commercial Vacancy RatesQ3-2016 vs. Q3-2017

7.0%

8.3%

7.5%

2.2%

6.8%6.2%

5.2%

2.2%

0%

2%

4%

6%

8%

10%

12%

Office Industrial Flex Retail

Rat

e (%

)

Q3-2016

Q3-2017

Property markets across sectors are very strong with low vacancy rates

both historically and

compared to other markets in the region.

Howard County Non-Residential Construction$ Value of New Building Permits Issued

Calendar YTD through June

Note: Figures are measured in thousands of dollars.

Source: Baltimore Metropolitan Council

$112,325

$76,018

$30,643

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

YTD 2015 YTD 2016 YTD 2017

Val

ue

of

New

Co

nst

ruct

ion

(1

,00

0 $

s)

The value of new non-residential

permits has declined despite

strong market conditions.

Some of the decline is due to

the timing of specific large

projects.

Howard County Residential Construction Building Permits

Calendar YTD through June

Source: Baltimore Metropolitan Council

579 563 539

262

1,110

78

0

300

600

900

1,200

1,500

1,800

YTD 2015 YTD 2016 YTD 2017

# o

f R

esid

enti

al U

nit

s

Multifamily

Single Family

841

1,673

617

The total number of building permits is

impacted by variability in the

level of multifamily

permits. The issuance of single

family permits has remained

steady.

Howard County Average Home Sales PriceAttached and Detached Homes

Calendar YTD through October

Source: MRIS

Home sale prices remain

steady for both attached and

detached homes.

Detached home sales

increased by 3.9% while attached homes

increased by 3.5% calendar

YTD 2017 compared to

the same period in 2016.

$531,968 $526,326 $547,028

$296,266 $306,316 $317,019

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

YTD 2015 YTD 2016 YTD 2017

Ave

rage

Sal

es P

rice

$s

Detached

Attached

Howard County Home SalesAttached and Detached Homes

Calendar YTD through October

Source: MRIS

The total number of

homes sold is up 2.8% YTD

2017 compared to

YTD 2016.

1,901 2,061 2,088

1,4211,604 1,681

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

YTD 2015 YTD 2016 YTD 2017

# o

f U

nit

s So

ld

Attached

Detached

3,3223,665 3,769

Source: MD Comptroller

Howard County Sales and Use Tax RevenueCalendar YTD through October

Sales and Use Tax Revenue

increased 2.0% calendar YTD

2017 compared to the same

period in 2016.

$153,570,580 $157,101,317 $160,193,212

$0

$40,000,000

$80,000,000

$120,000,000

$160,000,000

$200,000,000

$240,000,000

YTD 2015 YTD 2016 YTD 2017

Tota

l Tax

Rev

en

ue

$s

Source: MD Comptroller

County sales and use revenue

increased 2.0% change

calendar YTD 2016 compared to calendar YTD

2017.

$2,989,149

-$196,520

-$1,365,782

$407,803 $257,674 $282,395

-$215,408

$4,422$173,184

-$2,000,000

-$1,500,000

-$1,000,000

-$500,000

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

Tax

Rev

en

ue

$s

Howard County Sales and Use Tax Revenue by Revenue GroupChange Calendar YTD 2016 to Calendar YTD 2017

Committee Meeting Agenda

Welcome 7:30am – 7:40am

Economic Overview 7:45am – 8:00am

Industry Member Updates 8:00am – 9:00am (3 minutes each)

• David Graf, W.R. & Grace

• Bill Stone, Mobern Lighting

• Nayab Siddiqui, Scientific Software Systems International

• Elizabeth Rendon-Sherman, LG-TEK

• Steve Poynot, Howard Bank

• Cole Schnorf, Jr., Manekin

• Craig Wyatt, Williamsburg Homes

• Nancy Cummins, Long and Foster Real Estate

• Chip Doetsch, Apple Ford Lincoln

• Barb Nicklas, The Mall in Columbia

• Kirit Parmar, Dunkin Donuts

• Donald Eames, The Airport Shuttle, Inc.

• Richard Clinch, University of Baltimore, Jacob France Institute

Industry Member Updates• Talent Acquisition and Retention

• Hiring mostly at higher wage levels—MBAs, PhDs and BS degreed professionals. Howard

County’s quality of life assists with hiring. Projecting continued local employment

growth.

• Given high wage rates and challenging talent acquisition environment for production

workers, Company has moved 10-15% of production to Texas. Wages in Maryland will

be 40% higher than Texas when the minimum wage is increased to $10.10/hour in July

of 2018.

• It is very difficult to find good employees in the trades. Company is importing workers

from neighboring counties and Pennsylvania as local training programs are not meeting

skill needs.

• Federal contracting remains strong but talent acquisition is challenging.

• Other industries and companies (Google, LinkedIn) are competing for government cyber

talent.

• Sales and profits• YTD sales gains are up.

• While sales are down, profits are up due to service business.

• Margins are very thin as price appreciation has exceeded wage growth. New technology

has pushed prices and financing is becoming more creative to enable sales.

Industry Member Updates• Banking

• Banking has been growing through acquisitions and increased activity from current

customers.

• Lending in real estate investments has been strong. Growth in government contracting

has also occurred but margin compression has resulted from wage competition.

• Government Contracting• Federal contracting remains strong but talent acquisition is challenging.

• Despite Federal Government budget uncertainty, contracts with work related to cyber

security remain very strong.

• Challenges in finding talent that can get government clearances. Need to start early—ie.

high school.

• Commercial Real Estate• Investment capital is plentiful but land opportunities are scarce—redevelopment is the

focus. Industrial is the strongest sector.

• Office market is not as healthy especially outside of Howard County. Retail is fine in

prime sites, but otherwise very challenged.

Industry Member Updates

• Residential Real Estate

• The $1M plus new home market is doing well, but has long construction

periods. High land costs make the $500K to $600K market (“Buyers’ Sweet

Spot”) hard to reach.

• Company is looking at other land options outside Howard County.

• Large homebuilders are bidding up land prices due to limited opportunities.

The residential resale market is strong and steady. Inventory is low and if a

home is priced right, it often receives multiple offers.

• Buyers in the $1M plus range prefer new construction while millennials are

buying smaller, efficient homes oftentimes with a yard for their dogs.

Industry Member Updates• Retail

• Retail parent company is looking at automated services to reduce labor

costs and store sizes.

• Employee turnover is high. It is very difficult to attract entry level retail

talent and retain them for small retailers.

• The Mall in Columbia is doing well with approximately 140,000 SF of new

leasing coming on line between June 2017 and mid-2018. Uncle Julio’s,

the Main Event and a Barnes & Noble (which includes a restaurant) will

occupy the former upper level of the Sears store. Three other new

restaurants will open in the Outdoor Plaza: Shake Shack (December 2017),

Walrus Oyster & Ale House and Urban Plates.

• Access and parking continue to be issues at The Mall in Columbia. Retail

and security labor force recruitment is also difficult given the County’s low

unemployment.

• The Mall’s store sales are reflective of national performances. JCPenney

has changed its mix to include a full line of goods.

Industry Member Updates

• Hospitality• The turmoil in Baltimore City has impacted convention business. Uber has also posed a

competitive challenge. Finding qualified drivers is difficult.

• Business has shifted to DC market. Howard County market has become more attractive

for convention attendees and weddings.

• Howard County and State economies are strong in wage & job growth. Labor force

participation is up and unemployment is down.

• State Legislative Issues• Chamber’s focus will be on labor issues: Paid Leave, Fair Scheduling and Minimum

Wage.

• County Legislative Issues• Proposed APFO legislation may have a serious impact on the longer term ability to build

in Howard County.

• Proposed APFO legislation could influence retailers who are making a long term

investment in the community.

• APFO legislation could hurt the housing and employment market.

Industry Member Updates

• Howard County Upcoming Budget Issues

• Howard Initial projections are showing that County revenue growth will be

lower than last year.

• Income tax growth will be limited but property tax growth will be stronger. The

result will likely be a very stable county budget.

• County Planning & Zoning Issues

• DPZ has retained a consultant to analyze the County’s development review

process. Final report should be complete by spring of 2018.

• DPZ will begin the process of developing a new plan for Route 1 in early 2018.

A consultant team will be retained to create the plan.