PrintPrintAt the end of the second quarter of 2009, the staff of the Charleston Regional Business Journal takes a look at some of the numbers and information shaping the area’s economy.
Published July 6, 2009
At the end of the second quarter of 2009, the staff of the Charleston Regional Business Journal takes a look at some of the numbers and information shaping the area’s economy.
Tourism: Worst behind us?
Hotel room sales began slipping early last year in Charleston County and accelerated as the economy took a dive last fall. That downward trend continued this spring.
Through May, demand for local hotel rooms was 6% below where it was last year. Occupancy rates, which take into account the increasing supply of rooms along with demand, were down about 9% through May.
Charleston County hotels averaged 67% occupancy during the first five months of 2009. That’s slightly lower than the 2008 year-end average occupancy of 69%.
“It’s certainly not where we would like it to be, but we’re essentially operating at about 2006 levels,” said Perrin Lawson, deputy director of the Charleston Area Convention and Visitors Bureau. “And 2006 was a good year. It just wasn’t as good as 2007 and 2008 turned out to be.”
This year, hotel room rates began to tumble. Through May, rates are down an average of 7%.
Many hotel managers try to avoid a drop in room prices late last year. They focused instead on adding value through special packages, saying it would be difficult to raise rates again and that slashing prices diminishes the Charleston brand.
With an increase in room supply and the national economic fallout, Lawson said: “There was no way we could avoid having some deterioration in rates because they had increased dramatically in recent years.”
Lawson said interest in booking corporate and association meetings — an industry that nearly stopped as the economy sank — has picked up in the past two to three months.
The outlook for business travel isn’t clear, but Lawson expects more leisure travel activity over the next year from people who have put off vacation plans.
“Everything we’ve seen would seem to indicate that the worst is probably behind us,” he said.
Trade: 19.3% fewer containers
The S.C. State Ports Authority board signed off on a new fiscal year budget last month that anticipates another 6% decline in container traffic over the next 12 months, on top of an expected 19% drop in the current fiscal year that ended June 30.
In the current fiscal year, through May 31, the SPA handled 731,866 pier containers, compared to its planned 879,050 containers, leaving the agency 16.7% under its 2009 fiscal year plan. In 2008, the SPA handled 892,663 boxes.
After taking in June’s numbers, the port anticipates it will have handled 19.3% fewer containers this fiscal year than in 2008’s fiscal year.
Operating revenues for the port through May 31 are about $16.5 million less than planned for the year-to-date.
The SPA anticipates operating revenues in the 2010 fiscal year to be $127.4 million, an expected $9.9 million drop compared to projected operating revenues in the 2009 fiscal year.
Those numbers include Maersk Line’s current four weekly ship calls, down from an original seven calls. Maersk has threatened to leave Charleston in 2010, but negotiations continue to keep that business. Even if Maersk leaves, its contract runs through December of next year, which would fall in the 2011 fiscal year.
Paul McClintock, the SPA’s new chief commercial officer, said the port’s objective is to best those planned numbers.
“We certainly believe we will finish the year better than that,” McClintock said. “There’s plenty of business out there; we just have to bring it to the port.”
The SPA has set out on an aggressive new mission to lure break bulk, non-containerized cargo for the ports of Charleston and Georgetown, McClintock said. That’s not necessarily a big money-maker for the port, but it helps fuel jobs because bulk cargo requires more manpower than containerized cargo.
Housing: Better but not great
Home sales started to rebound late spring, but are still off considerably from last year.
In the tri-county, 2,553 homes sold between January and May, compared to 3,487 in the first five months of 2008.
In 2007, 4,983 homes sold and in 2005, a peak year, 6,143 homes sold, according to figures from the Charleston Trident Association of Realtors.
The median sale price of homes has also rebounded in recent months, but remains below prior years. It currently sits at $181,901. Last year, the median sale price was $201,777.
On a positive note, home sales jumped more than 30% from April to May in the Charleston area. The month ended with 678 closings, up from 518 in April and 568 in March. The median price for homes rose slightly to $187,000, up from $181,303 the previous month. The association said the consistency in the numbers suggests the market is stabilizing in Charleston.
“We’re no longer seeing the significant drops in units sold that we saw at the end of last year, and we continue to see the median prices level out — prices have fluctuated just 6% since January,” said association President Ralph Wetherell.
The inventory of homes for sale in the Charleston market remained relatively steady at 10,057, compared with 10,271 in April.
“While it is definitely premature to say that the housing market has hit ‘bottom,’ the market appears to have responded positively to recent low interest rates and other economic factors in the community,” Tim Allen, the director of the Carter Real Estate Center at the College of Charleston, said in a news release.
College of Charleston Home Value Index
The index indicates that the value of a typical home in the Charleston area was +8.61% in May 2009. In comparison, the change in the index value was -3.38% in March, and -5.17% in April. The index tracks the value of a “typical” home in each geographic area over time.
Dorchester County
Sales in Dorchester County hit an eight-month high, with 155 closed transactions. Median prices increased for the third month in a row, climbing to $168,000. The majority of the market activity took place in the southern part of the county, with 64 homes sold at a median price of $189,860. Blackberry Creek and Legend Oaks showed the most activity among subdivisions.
Charleston County
Charleston County posted 363 sales in May, the highest number of sales since August. The median sales price continues to hover above $200,000, with May closings coming in at $215,000. The area south of S.C. Highway 41 in Mount Pleasant showed the most sales. Sales on James Island doubled compared with previous months, with a total of 54 sales resulting in a median price of $204,500.
Berkeley County
The Berkeley County market remains stable, with 138 residential properties selling at a median sale price of $150,964. The highest volume of sales occurred in Brickhope Greens.
Employment: Beating the state average
Unemployment rates in Berkeley, Charleston and Dorchester counties have risen each month for the first five months of 2009, like much of the state and nation, but the region as a whole has beaten the state average, which topped out at 12.1% in May. Every month this year, that rate has inched up, starting from 10.4% in January.
Berkeley County has held the highest percentage of unemployed workers in the region, according to January to May data from the S.C. Employment Security Commission. Berkeley County went from 9.5% in January to 10.6% in May after seeing a slight decline in jobless numbers in March and April.
Job counts
The state’s total job count at the end of May was down 90,300 from May 2008, but the number of jobs in South Carolina grew for the third consecutive month.
Leisure and hospitality jobs grew by 7,100 as tourist activity picked up for the summer.
Financial jobs grew by 1,700.Retail jobs grew by 1,400. Education and health services grew by 1,100. Construction jobs increased for the first time since July 2008 with the sector gaining 1,200 jobs as specialty trade contractors added workers for remodeling and repair jobs.
Manufacturing, a sector that has shed 29,000 jobs over the past year, continued to lose more. In May manufacturers eliminated another 2,200 jobs.
Roosevelt T. Halley, executive director of the S.C. Employment Security Commission, said the rise in seasonal jobs was welcome, though the increase was less than in recent years. That, along with the continued decline in manufacturing jobs, does not bode well for a short-term recovery in the state, he said.
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