FRANKLIN COUNTY RETAIL REPORT 2O16. An Analysis of Trends in: SALES TAX REVENUES EMPLOYMENT REAL ESTATE E-COMMERCE TRENDS & IMPACTS

Transcription

1 FRANKLIN COUNTY RETAIL REPORT 2O16 An Analysis of Trends in: SALES TAX REVENUES EMPLOYMENT REAL ESTATE E-COMMERCE TRENDS & IMPACTS

2 Commissioner John O Grady Commissioner Paula Brooks Commissioner Marilyn Brown President June 8th, 216 To the Residents of Franklin County and our partners in the Retail Sector: Welcome, and thank you for your interest in the 216 Franklin County Retail Report. The Retail Summit and report are innovations of the commissioners, and products of the ongoing collaboration between the Franklin County Board of Commissioners, our Economic Development and Planning Department, and the Columbus Chamber of Commerce. This yearly report offers readers a glimpse of retail reality, helping us to identify trends within the marketplace and gain up-to-date knowledge on the retail sector so that we can support it and ensure that it remains strong. For many years, retail sales has been a pillar of the regional economy. A healthy retail sector reflects a strong economy in general, and as much as any sector, retail helps drive Franklin County forward. Sales tax and property tax revenue help to fund local governments, providing the dollars we invest in public safety and justice, vital human services and, of course, economic development because good-paying jobs for residents is one of our top priorities. Franklin County continues to be the fastest growing urban county in Ohio, and our region continues to benefit from new businesses that are locating here, entrepreneurs who are building their own businesses here, and from a young demographic attracted to Central Ohio by our premier universities and staying in Central Ohio because it s such a great place to live, work, and raise a family. Those factors present ongoing opportunities for retailers. The 216 Retail Report shows that competition from e-commerce is not slowing, but that the local retail sector is resilient; businesses are hiring and investing, and consumers are spending. We know that supporting innovation and even risk-taking in retail will continue to be important to supporting the Central Ohio economy. Innovative initiatives like our Smart Works suite of economic development programs are helping to spur continued growth in the retail sector. Infrastructure Works helps local governments to build new, lasting physical infrastructure, which allows customers to access retail stores, and provides water, electricity, and data services to the stores themselves. Energy Works can help local companies, including retail, to reduce their environmental impact while saving money. People Works connects county social services clients with businesses who are looking for a trained workforce, and Downtown Works aims to revitalize the many smaller historic municipal downtown areas in our county, which are themselves often retail hubs. Investments in the growing multi-modal infrastructure at Rickenbacker International Airport also continue to reap benefits for the community, including the retail sector. The 216 Retail Report highlights many of the exciting opportunities that continue to present themselves in the retail economy of Franklin County, as well as some of the challenges. We know that a thriving marketplace benefits the entire community, and are excited to continue to work with retail and other industries in our region help extend the growth and success that we see throughout Franklin County. Thank you for all that you do for your businesses and your community, and remember to Buy Franklin County! Sincerely, John O Grady John O Grady Paula Brooks Paula Brooks Marilyn Marilyn Brown Brown President Franklin County Retail Report 216 1

3 Franklin County Retail Highlights This report covers trends in retail sales tax, employment, and real estate. Key highlights include: Retail-based sales tax revenue for Franklin County grew by 7.3 percent from 214 to 215. Controlling for changes in the tax rate, this marks the best performance year on year since 212. Despite the growth in retail sales, its share of sales tax revenue continues to decline (54 percent in 215) as the county collects more taxes from services and other nonretail categories. The number of retail jobs in the county remains a quarter (26 percent) below its early 2s peak. After a small recovery from 211 to 213, retail employment has been flat. Meanwhile, e-commerce continues to fuel employment growth in logistics. Development of new retail space continues to be opportunistic and spotty across the market. The vacancy rate found new lows in recent quarters, but rents are not rising. Sales Tax Revenues Franklin County s overall sales tax revenue, not including COTA s share, totaled $288.2 million in 215, 11.8 percent higher than the 214 revenue of $257.8 million. While retail sales tax revenue grew 7.3 percent from $145 million to $156 million, the revenue from accommodation and food services jumped 23.2 percent. Non-retail categories such as professional services also drove sales tax growth, rising 16.3 percent. Figure 1: Retail sales tax revenue ($ Million), FRANKLIN COUNTY, Other Accommodation and Food Retail Source: Ohio Department of Taxation Franklin County Retail Report 216 2

4 With the continued shift in the composition of the sales tax base, Franklin County s revenue from retail trade fell to 54 percent of its total sales tax revenue in 215, down 14 percentage points since 26. Figure 2: Retail and Accommodation & Food Share of Franklin County Sales Tax Revenue 1% 9% 8% 25% 7% 37% 6% 68% 5% 54% 4% 3% 2% 1% % Other Accommodation and Food Retail Source: Ohio Department of Taxation Franklin County s retail sales tax base grew from $11.64 billion in 214 to $12.49 billion in 215. Meanwhile, the base in accommodation and food grew from $1.69 billion to $2.8 billion, and other categories from $7.3 billion to 8.49 billion. Figure 3: Sales Tax Base ($ billion), Franklin County $25 $2 $8.49 $15 $1 $4.24 $11.68 $12.49 Other Accommodation and Food Retail $5 $ Source: Ohio Department of Taxation Franklin County Retail Report 216 3

5 EMPLOYMENT Retail employment in Franklin County is estimated currently at 68,763, flat from previous years despite the economic recovery. Employment in transportation and warehousing, a major beneficiary of the e-commerce boom, continues to grow and is now close to its 27 pre-recession peak. Figure 4: Employment in Retail and Transportation & Warehousing, Franklin County 1, 9, 93,42 8, 7, 68,763 6, 5, 4, 3, 27,571 38,256 Retail Trade Transportation and Warehousing 2, 1, Source: EMSI As some retailers use third-party logistics providers for parts or all of their e-commerce activity, what one might consider retail employment is increasingly shifting over to transportation and warehousing. A key indicator is the shifting seasonality of employment in each industry. After peaking at almost 12, in December 1999, the net seasonal employment effect on the Columbus metro area s retail industry has shrunk to approximately half of that peak (6,326) in December 215. Meanwhile, seasonality that barely existed in transportation and warehousing in the 199s reached a new peak of 3,359 in December 215. Figure 5: NET Seasonal Employment* in December, Columbus MSA 14, 12, 1, 8, 6, 4, 2, 6,468 6, ,359 Retail Trade Transportation & Warehousing Source: U.S. Bureau of Labor Statistics, Current Employment Statistics; Columbus Chamber *Net seasonal employment is calculated as the difference between seasonally adjusted and unadjusted employment. Franklin County Retail Report 216 4

6 Real Estate Since a peak of 13.2 percent in the second quarter of 29, the retail vacancy rate in the area comprising Franklin County and the adjacent six counties has steadily decreased to 6.6 percent in the first quarter of 216. Figure 6: Retail Construction, absorption and vacancy, Columbus market, Q2 29-q ,, , 12 Square Feet 6, 4, 2, Vacancy Rate (%) -2, 2-4, Construction completed Net absorption Vacancy rate (%) Source: Colliers International The falling vacancy rate has not translated into higher rents for retail space. Since mid-211, asking rents for available neighborhood and power center retail have hovered in the $11-12 per square foot range. Increasingly, there appears to be a permanent shift in the market due to pressure from e-commerce. Figure 7: Retail average asking Rents ($/SF), Columbus market, Q2 29-q1 216 $ per sq ft Neighborhood Power center Q2 29 Q3 29 Q4 29 Q1 21 Q2 21 Q3 21 Q4 21 Q1 211 Q2 211 Q3 211 Q4 211 Q1 212 Q2 212 Q3 212 Q4 212 Q1 213 Q2 213 Q3 213 Q4 213 Q1 214 Q2 214 Q3 214 Q4 214 Q1 215 Q2 215 Q3 215 Q4 215 Q1 216 Source: Colliers International Franklin County Retail Report 216 5

7 E-Commerce Trends and Impacts According to the Census Bureau, e- commerce's share of U.S. retail sales has risen from.9 percent in 2 to 7.3 percent in 215. While this may seem like a small slice of the overall retail pie, it represents a larger share of the industry s growth and profits. The figures are also higher in certain categories such as electronics and books. Figure 8: E-commerce share of retail sales, U.S., % 7% 6% 5% 4% 3% 2% 1% %.9% 7.3% Source: U.S. Census Bureau Franklin County Retail Report Prepared by Jung Kim, Managing Director of Research, Columbus 22 As Managing Director, Jung Kim leads the research team, which conduct economic and business research in support of Columbus 22 economic development efforts and provides support to Columbus Chamber members. Jung has a Master of Science in Regional and Urban Planning from the London School of Economics and a Bachelor of Arts in Sociology and Urban Studies from Northwestern University. His prior experience includes Community Research Partners, a nonprofit research center based in Columbus; the State of New Jersey s Office of Smart Growth; and Strategic Planning Advice, an economics and planning consulting firm in the UK. He is a member of the American Planning Association and the Urban Land Institute. Jung Kim, AICP jk@columbusregion.com Franklin County Retail Report 216 6

8 FRANKLIN COUNTY RETAIL REPORT Presented by Franklin County and the Columbus Chamber Franklin County Board of Commissioners As the administrative head of Franklin County government, the Board of Commissioners sets the strategic direction and fiscal priorities for the 3th largest county in the nation. John O Grady, Paula Brooks and Marilyn Brown have established the Economic Development & Planning Department to promote organized growth supported by the principles of economic vitality, social equity, progressive land use, planning, and environmental responsibility. For more information on business development assistance in Franklin County please contact: James Schimmer, Director Department of Economic Development & Planning 15 South Front Street, FSL Suite 1, Columbus, Ohio Development.FranklinCountyOhio.gov edinfo@franklincountyohio.gov Columbus Chamber Columbus business has been our business since Our connections and resources will help you reach your goals. The Columbus Chamber of Commerce is a resources-based non-profit organization serving over 1,3 businesses in Central Ohio, representing nearly half a million Central Ohio employees. Providing support in areas such as research, marketing, talent advisement, networking and government relations, our team guides businesses to make meaningful connections and insure they thrive and succeed. Find out more about the Columbus Chamber Columbus.org