According to Reid Cummings, director of the Center for Real Estate and Economic Development (CREED) at the University of South Alabama, the first quarter of 2018 saw dynamic activity from both a national and regional real estate market perspective in several key metrics.
“We close the first quarter reflecting on a few key indicators that bear watching amid today’s policy-rich environment,” Cummings said. “Even though quantifiable effects from tax reform are not yet possible, considering the buzz running up to and continuing past its passing, reaction to the tax code changes was expected. For many, concerns focus on possible effects from any number of the different versions of proposed or implemented tariffs.”
Cummings went on to say tariff discussions in particular bear watching locally because of area manufacturers’ reliance on the influx of competitively priced raw materials, and NAFTA discussion outcomes are critically important for the region.
“U.S., Canadian and Mexican officials are framing new policies, which, for many years, will affect our own Port of Alabama and the wide-ranging regional economy it influences. As anticipated, the Federal Reserve continues to signal higher costs of money. That means the capital-dependent housing and construction industries bear watching as well,” Cummings said.
According to Cummings, beginning in Q1 of 2016 the U.S. trade deficit was $43.4 billion. Staying within a tight range, it ended Q3 of 2017 at $45.3 billion, a 4.38 percent increase over seven quarters. In the most recent release by the U.S. Bureau of Economic Analysis, the trade deficit in February 2018 widened to $57.6 billion — the largest monthly deficit in more than nine years. This is an increase of 24.95 percent in five months.
“The news is eye-catching, and it is important to watch how this key indicator moves from here as U.S. trade policies continue to evolve,” Cummings said.
On the local front, year-to-date sales of new homes in Mobile County experienced the biggest decline, down 25 percent, followed by condominiums, down 17.2 percent. Existing home sales were down 7.5 percent.
When compared to the same period in 2017, condominium sales in Baldwin County showed the largest decline, down 22.2 percent. Existing home sales were down 9.3 percent and new home sales were down 0.6 percent.
“Real estate data suggest a different picture, yet concrete explanations remain unclear. Although nationally residential real estate markets showed a somewhat positive, slightly sluggish gain in February, locally the story was different,” Cummings said.
He noted that a look at the yield on the 10-year treasury note and home mortgage rates may offer explanations. With the key benchmark finishing March at 2.74 percent, mortgage rates followed suit, finishing at 3.90 percent and 4.44 percent for 15- and 30-year mortgage rates, respectively. Per Cummings, all the aforementioned rates are at their highest levels in more than four years.
To review the full report on CREED’S Q1 2018 economic snapshot, go to visit USA’s Mitchell College of Business website.
Kimberly-Clark invests $100 million in local expansion
Kimberly-Clark Corp. recently approved a capacity expansion project at its Mobile manufacturing facility that will support the company’s continued bath-tissue category growth in North America, according to a news release.
“The Mobile team is excited about the role we will play in supporting the projected growth of the bath tissue category in North America as a result of this capacity expansion project,” Todd Visscher, mill manager for Kimberly-Clark’s Mobile operations, said. “This investment, the commitment of our employees and the community support will together bolster Mobile mill’s competitive position within Kimberly-Clark.”
“This investment is a testament to the strength of Kimberly-Clark’s Mobile facility and its workforce,” Bill Sisson, president and CEO of the Mobile Area Chamber of Commerce, said.
The Mobile Chamber’s economic development team reportedly worked closely with Kimberly-Clark to facilitate the realization of this expansion plan, according to sources familiar with the transaction. With an estimated investment of more than $100 million, the two-year project is expected to deliver improved capacity, greater manufacturing efficiency and enhanced product quality.
Less than a year ago, Kimberly-Clark announced another significant investment in the Mobile plant with the construction of an onsite combined heat-power plant and various other production enhancements.
“It’s rewarding to see Kimberly-Clark make another significant reinvestment in its Mobile mill, which has been a major employer in the area for more than two decades,” Greg Canfield, secretary of the Alabama Department of Commerce, said. “We’ve forged a great partnership with Kimberly-Clark over the years, and the state and local teams will continue to support the company’s future successes.”
“This expansion by Kimberly-Clark is about more than just jobs — it’s about a global, Fortune 500 company reinvesting in our city and deepening a partnership that dates back more than 20 years,” Mobile Mayor Sandy Stimpson said. “When existing businesses are thriving in combination with new jobs and investment, that’s a winning formula. That’s how we’re transforming Mobile into the most business-friendly city in America.”
Kimberly-Clark (NYSE: KMB) currently employs nearly 700 at the Mobile facility. It first established a local presence in 1995 via the acquisition of the former Scott Paper Co. plant and surrounding property. Key brands in the K-C Professional division (produced locally) include Kleenex, Scott, WypAll, Kimtech and Jackson Safety.
Other well-known brands found within 146-year-old company’s portfolio include Huggies, Kotex, Cottonelle, Poise, Depend, Andrex, Pull-Ups, GoodNites, Intimus, Neve, Plenitud and Viva. Market share is reportedly either first or second in 80 countries worldwide for the multinational firm. More information about the company can be found on its website.
Commercial real estate move
• An out-of-state investor recently purchased a fully leased property located at 109 Sutherland Drive in Chickasaw for $975,000. Intertek, an international company providing testing services to the petrochemical industry, leased 100 percent of the property. Robert Cook of Vallas Realty represented the seller, and Pete Riehm of NAI Mobile worked for the buyer.