Howard CountyEconomic Indicators Meeting

February 28, 2018

Data Review and Industry Members’ Comments

Committee Meeting Agenda

• Richard Clinch, Ph.D., University of

Baltimore, Jacob France Institute

• Holly Sun, Ph.D., Budget

Administrator

• Barb Nicklas, The Mall in Columbia

• Chip Doetsch, Apple Ford Lincoln

• Donald Eames, The Airport Shuttle,

Inc.

• Elizabeth Rendon-Sherman, LG-TEK

• Craig Wyatt, Williamsburg Homes

• Nancy Cummins, Long and Foster

Real Estate

• David Graf, W.R. & Grace

• Bill Stone, Mobern Lighting

• Leonardo McClarty, Howard County

Chamber of Commerce

Welcome 7:30am – 7:40am

Economic Overview 7:45am – 8:00am

Industry Member Updates 8:00am – 9:30am (3 minutes each)

Howard County Total Employment2nd Quarter 2008 to 2017

Source: U.S. Bureau of Labor Statistics, QCEW

149,801

144,894147,486

151,569

159,647 160,024 160,293

165,817

169,271170,906

130,000

135,000

140,000

145,000

150,000

155,000

160,000

165,000

170,000

175,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Tota

l Jo

bs

Howard County Employment by Industry SectorChange Q2-2008 to Q2-2017

Source: U.S. Bureau of Labor Statistics, QCEW

-1,481

-214

-32

2

21

102

174

175

788

1,179

1,565

1,884

4,542

12,398

-3,500 -1,500 500 2,500 4,500 6,500 8,500 10,500 12,500

State Govt.

Trade, transportation, utilities

Information

Unclassified

Fed Govt.

Natural Resources & Mining

Construction

Other services

Local Govt.

Manufacturing

Financial activities

Leisure & hospitality

Education & health services

Professional & business services

46,199

33,788

18,589

16,457

14,695

11,686

10,041

8,230

4,598

3,904

1,712

630

374

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

Professional & business services

Trade, transportation, utilities

Education & health services

Leisure & hospitality

Local Government

Construction

Financial activities

Manufacturing

Other services

Information

State Government

Federal Government

Natural Resources & Mining

Howard County Employment by Industry SectorQ2-2017

Note: Unclassified employment (3) is not displayed. Source: U.S. Bureau of Labor Statistics, QCEW

47% of jobs are in the top 2 industries

Howard County Unemployment RateGeographic Comparison & Trends

Source: U.S. Bureau of Labor Statistics, LAUS

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Dec2008

Dec2009

Dec2010

Dec2011

Dec2012

Dec2013

Dec2014

Dec2015

Dec2016

Dec2017

Rat

e %

December Unemployment Rate

Howard County Maryland U.S.

Source: CoStar

Howard County Commercial Vacancy RatesQ4-2016 vs. Q4-2017

Property markets across sectors are very strong with low vacancy rates both historically and compared to other markets in the region.

8.1%

7.2% 7.2%

2.1%

8.7%

5.3% 5.4%

2.0%

0%

2%

4%

6%

8%

10%

Office Industrial Flex Retail

Rat

e %

Q4-2016

Q4-2017

Howard County Commercial Construction

Total Square Feet and Number of Issued Commercial Building Permits

2013 - 2017

Source: Howard County Department of Planning and Zoning

30

45

60

75

90

105

120

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2013 2014 2015 2016 2017

# of P

erm

itsSq

uar

e F

ee

t P

erm

itte

d

Square Feet Number of Permits

Howard County Residential ConstructionIssued Residential Building Permits

2013 - 2017

Source: Howard County Department of Planning and Zoning

671509 514 583 486

614

435628 478

295

1,024

509478

1,414

404

0

500

1,000

1,500

2,000

2,500

3,000

2013 2014 2015 2016 2017

Tota

l # o

f P

erm

its

Apt/Condo

Townhomes

Single Family Detached

Howard County Average Home Sales PriceAttached and Detached Homes

2015 - 2017

Source: MRIS

Detached home sales increased by 2.7% while attached homes increased by 3.5% in 2017 compared to 2016.

$528,195 $531,144 $545,316

$296,075 $305,338 $315,915

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

2015 2016 2017

Ho

me

Sale

s P

rice

$s

Detached

Attached

Howard County Home SalesAttached and Detached Homes

2015 - 2017

Source: MRIS

The total number of homes sold is up 0.7% 2017 compared to 2016.

2,237 2,442 2,414

1,6901,909 1,969

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2015 2016 2017

# o

f U

nit

s So

ld

Attached

Detached

3,9274,351 4,383

Source: MD Comptroller

Howard County Sales and Use Tax Revenue by Revenue Group

2017 Share of $192,573,893

30%

5%

18%7%

6%

10%

2%4%

18%

Food and Beverage

Apparel

General Merchandise

Automotive

Furniture, Fixtures, and Appliances

Building and Industrial Supplies

Utilities and Transportation

Hardware, machinery, and Equipment

Miscellaneous

Source: MD Comptroller

Howard County Annual Sales and Use Tax Revenue

2008 - 2017

$150,000,000

$155,000,000

$160,000,000

$165,000,000

$170,000,000

$175,000,000

$180,000,000

$185,000,000

$190,000,000

$195,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Tax

Re

ven

ue

$s

Source: MD Comptroller

Howard County Sales and Use Tax Revenue by Revenue GroupChange 2008 to 2017

$16,581,282

-$49,939

$3,425,405

-$53,974

-$3,148,873

$1,653,823

-$6,404,402

$1,401,195

-$2,204,494

-$9,000,000

-$6,000,000

-$3,000,000

$0

$3,000,000

$6,000,000

$9,000,000

$12,000,000

$15,000,000

$18,000,000

$21,000,000

Tax

Rev

enu

e $

s

Federal Procurement in Howard County

Top Federal Vendors in Howard County, FFY2017

Company/Organization Mil. $s % of Total

John Hopkins University / APL $864.2 42%

Magellan Behavioral Health, Inc. $118.7 6%

SRA International, Inc. $80.0 4%

Life Science Logistics, LLC $78.8 4%

Agentase, LLC $73.1 4%

Nester Consulting LLC $44.2 2%

KBRWYLE Technology Solutions, LLC $41.5 2%

Motorola, Inc. $41.0 2%

AT&T Corporation $39.9 2%

L B & B Associates INC. $37.5 2%

Impaq International $37.1 2%

Office Depot Inc. $36.8 2%

NewWave/NewWave-GDIT, LLC $36.6 2%

FEi Systems $31.0 2%

DNT Solutions, LLC $24.4 1%

Presidio Networked Solutions LLC $23.2 1%

Newwave Telecom and Technologies, Inc. $19.2 1%

Norseman, Inc. $17.9 1%

Northrop Grumman $17.9 1%

Advanced Programs Inc. $17.5 1%

All Other $374.6 18%

Total $2,055.0 100%

Source: FPDS

Federal Procurement in Howard County

Source: Richard Clinch, Jacob France Institute

Committee Meeting Agenda

• Richard Clinch, Ph.D., University of

Baltimore, Jacob France Institute

• Holly Sun, Ph.D., Budget

Administrator

• Barb Nicklas, The Mall in Columbia

• Chip Doetsch, Apple Ford Lincoln

• Donald Eames, The Airport Shuttle,

Inc.

• Elizabeth Rendon-Sherman, LG-TEK

• Craig Wyatt, Williamsburg Homes

• Nancy Cummins, Long and Foster

Real Estate

• David Graf, W.R. & Grace

• Bill Stone, Mobern Lighting

• Leonardo McClarty, Howard County

Chamber of Commerce

Welcome 7:30am – 7:40am

Economic Overview 7:45am – 8:00am

Industry Member Updates 8:00am – 9:30am (3 minutes each)

Industry Member Updates• Talent Acquisition and Retention

➢ Skilled trades remain difficult to recruit. Search for candidates has expanded to Pennsylania and

North Carolina.

➢ An increase in wages has attracted base level talent.

➢ Labor shortages and higher labor costs have caused production to shift to Texas.

➢ Skilled trades are hard to find with fewer replacement workers for those that are retiring. This

labor shortage could have a big impact in the coming years.

➢ Howard County’s attributes assist in hiring higher level talent.

• Sales and profits

➢ 2017 was best year ever in sales (2 Committee Members).

➢ Rising interest rates have had an impact on consumer based sales.

➢ Technology is altering the product acquisition process and this requires great flexibility in

operations. Future revenues will be driven more by product service rather than the upfront

purchase.

➢ 2017 sales were good, but expecting more conservative year for 2018. Profit margins are very

tight.

➢ Sales growth has been healthy with international expansion into China and India.

➢ Pricing and margins in local markets have been impacted by foreign competition.

Industry Member Updates• Government Contracting

➢ Overall outlook is positive.

➢ Federal procurement drives a large portion (70%-80%) of the jobs in the Professional

and Business Services segment in Howard County.

➢ Federal procurement amounts to around $2B, but that does not include any figures

from the NSA as that data is confidential.

➢ Johns Hopkins APL is by far the largest recipient of federal procurement dollars in

Howard County. The top 20 contractors account for over 80 percent of federal

procurement in Howard County.

➢ There are plenty of federal contracting jobs available. 2019 should be very strong in

this sector as a current backlog of federal contracts are released.

➢ A new Director of NSA/Cybercommand is expected in the coming year.

Industry Member Updates• Commercial Real Estate

➢ Autonomous vehicles will have a major impact on land use and the commercial real estate sector,

however, it is very unclear as to the timing of large scale shifts in autonomous vehicle usage.

➢ Industrial property remains the strongest industry sector in terms of tenant and investor demand.

➢ Howard County continues to outperform the region in suburban office and retail occupancy levels. Rising

interest rates have had little impact on commercial retail thus far, in part because rates are still at

historically low levels.

• Residential Real Estate

➢ Commercial financing remains tight even in better market conditions.

➢ The increase in mortgage rates to 4.5% has impacted some sales, however, rates remain historically

low.

➢ The resale market is marked by a very low inventory level. Multiple offers and bidding wars are

common.

➢ Price escalation has been strong but steady and not nearly as high as the 2004-05 period.

➢ Home appraisals have improved with use of local appraisers vs. out-of-county appraisers in past years.

Industry Member Updates

• Retail

➢ Traffic and sales at The Mall in Columbia were higher in December and January than the

same period in the previous year.

➢ The food category has performed well at the Mall. New restaurants include Shake Shack

and Uncle Julio’s opening in April. In May, the Main Event will open along with the Walrus

Oyster and Ale House. In August, Urban Plates is scheduled to open.

➢ GGP has focused marketing resources on The Mall in Columbia and will also be adding

4,200 solar panels to its existing array of solar panels.

➢ The County celebrated the Lunar New Year at the Mall, drawing the attention of visitors

and celebrating the culture of the County’s growing Asian population.

Industry Member Updates• Hospitality

➢ Baltimore tourism has improved with a national convention slated for June and an additional

cruise line operating out of the City.

➢ The area’s three airports compete very strongly for travelers.

➢ Local hotels/restaurants benefit from business travel to corporate headquarters.

• State Legislative Issues

➢ State legislature continues to focus on labor regulation.

➢ A number of key legislators will be retiring which may lead to more regulation on businesses.

• County Budget Issues

➢ The County has a projected $7M shortfall in this fiscal year’s budget driven by a lower revenue

base due to shortfalls in projected income tax receipts.

➢ The County is actively addressing this shortfall with a hiring freeze and cutbacks in non-

essential spending.

➢ The County is projecting a 2.2% increase in revenues for FY19, lower than increases in past

years.