Loading...
HomeMy WebLinkAbout4.1 Economic Development Inquiry/Business Update Business/ Inquiry To: Honorable Mayor Bailey and EDA Members From: Christine Costello, Acting Community and Economic Development Director and Matt Wolf, Economic Development Specialist Date: January 3, 2019 Activites that have taken place in the community that may have a potential impact on economic development activity: Discussion Staff Action Industrial & Economic Acting Community and Economic Development Director Development Summit, Costello took part in a panel discussion on the interaction of November 15, 2018 industrial development and municipalities. The summit was an opportunity for Cottage Grove to promote its Business Park and specifically speak to its recent success with the development of North Star Sheets to over 250 brokers and developers that were in attendance. Meeting with Landform, Cottage Grove met with Steve Sabraski of Landform to November 20, 2018 discuss the potential for creating a master plan for the Shoppes at Cottage View. A proposal has been requested to determine the feasibility. DK Design Meeting, Acting Community and Economic Development Director November 20, 2018 Costello and Interim City Administrator Levitt met with DK Design to discuss the redevelopment of the former Cottage Grove City Hall proposed property. PIPELINE Workforce Economic Development Specialist Wolf met with Kathleen Program, November 28, 2018 Gordon of the Department of Labor and Industry to discuss the PIPELINE Program that is offered through the State of Minnesota. An introductory email on the program will be sent to our businesses in our Business Park. Park High School – Inventor Economic Development Specialist Wolf and Washington Space, November 28, 2018 County CDA Director Chris Eng met with Park High School at their brand-new Inventor Space to discuss future collaboration on creating an advisory board made up of Cottage Grove businesses and promotion of manufacturing positions in High Schools. School District 833 Meeting Acting Community and Economic Development Director to discuss workforce issues, Costello and Economic Development Specialist Wolf met November 30, 2018 with School District 833 to discuss workforce development and working together to address education development as it relates to the Cottage Grove Business Park. Meeting with Brian Beeman Acting Community and Economic Development Director of IAG Commercial, Costello and Economic Development Specialist Wolf met December 4, 2018 with Brian Beeman of IAG Commercial to discuss available Development Inquiry Update November 7, 2018 Page 2 industrial, commercial and multi-family housing land available for development. Minnesota Rail Conference, Acting Community and Economic Development Director December 5, 2018 Costello attended the Statewide Rail Conference, which included topics on the economic development of rail sites and the state of national passenger rail system. Lodging Tax Meeting, City Administrator Levitt and Economic Development December 5, 2018 Specialist Wolf met with the Cottage Grove Area Chamber of Commerce to discuss the EDA Workshop on the Lodging Tax on January 8, 2019 rd Minnesota Marketing Economic Development Specialist attended the 3 trimester Partnership Meeting, Minnesota Marketing Partnership Meeting from the December 10, 2018 Department of Employment and Economic Development. Livable Communities Act Economic Development Specialist Wolf attended the Livable Program Workshop, Communities Act Program Workshop presented by the December 11, 2018 Metropolitan Council. To hear and discuss various grant programs offered through Metropolitan Council to help fund infrastructure improvements that include multi-family and commercial developments. McDonald’s Ribbon Cutting The City of Cottage Grove took part in a McDonald’s VIP December 18, 2018 event to celebrate the grand reopening of the McDonald’s. Business Park Meeting with Acting Community and Economic Development Director WAG Farms, December 20, Costello and Economic Development Specialist Wolf met 2018 with WAG Farms owners to discuss current and potential projects in the Business Park. Orange Theory Fitness The City of Cottage Grove hosted a ribbon cutting for Ribbon Cutting, December Orange Theory Fitness at 8621 East Point Douglas the 31, 2018 location of the former Payless Shoe Store. Federal Reserve Bank of Minneapolis Summary of Economic Activity Ninth District economic activity increased moderately since the previous report. Employment grew moderately, with hiring demand remaining robust, but a tight labor supply was restraining employment growth. Wage pressures were moderate overall, while price growth remained modest. The District economy showed growth in consumer spending, construction, residential real estate, manufacturing, and energy. Commercial real estate activity was mixed, while agricultural conditions remained weak. Employment and Wages Employment grew moderately since the last report. Hiring demand remained robust, but a tight labor supply was restraining employment growth. Job postings tracked by district states were higher overall in October compared with the same period a year earlier. Minnesota and North Dakota saw particularly strong growth in job postings, while South Dakota and the Upper Peninsula of Michigan had small declines. Ad hoc surveys of businesses in Minnesota, Montana, and South Dakota, conducted in late October and November by the Minneapolis Fed, found that a significant majority of respondents' firms were hiring; many were hiring to both increase total headcount and replace turnover. Numerous construction contacts in Minneapolis-St. Paul said they were hiring, and most were looking to increase total headcount. However, tight labor availability was making it difficult for firms to find necessary workers. Surveys by the Minneapolis Fed found that labor availability was widely seen as the biggest obstacle to short-term growth. Unemployment insurance claims have also continued to drop; over the most recent six-week period (through early November), both initial and continuing claims saw a cumulative decline of 12 percent across District states compared with the same period a year earlier. A Montana contact noted that seasonal layoffs for male-dominated industries like construction have been pushed back this year. "This hasn't happened before in the years that we've been watching." Wage pressures were moderate overall, with some evidence of stronger pressures for certain industries and worker skills. Several ad hoc surveys by the Minneapolis Fed showed wage increases coalescing around 3 percent over the past 12 months. A small majority of Minnesota and South Dakota firms reported wage increases below 3 percent; however, a small majority of Montana firms reported increases above 3 percent, as did about 70 percent of Minneapolis-St. Paul construction firms. A Minnesota services company announced it was raising its base wage from $12 to $14 per hour in hopes of hiring 300 people by year's end. A tight labor market for high-tech skills in Minneapolis-St. Paul has led to double-digit wage increases for some information technology and other STEM positions over the past 12 months. There were also reports that more companies, especially those in construction trades, were picking up a greater share of workers' health insurance premium costs to attract and retain employees. Prices Price growth remained generally modest since the previous report, though input prices saw more pressure. In a recent survey of large firms, about 30 percent saw input prices rise by 3 percent or more over the past 12 months, but 41 percent believe they will rise by 3 percent or more over the coming 12 months. Several contacts reported notable increases in freight and transportation logistics prices. Retail fuel prices in District states as of late November were substantially lower than a month earlier. However, home heating costs were expected to increase faster in District states than nationally this winter, largely due to rises in the prices of heating oil and natural gas, as the average temperature forecast is roughly flat from last year. Prices received by farmers for corn, wheat, hay, and cattle increased in September compared with a year earlier; prices for soybeans, hogs, milk, chickens, eggs, and turkeys decreased. Consumer Spending and Tourism Consumer spending grew moderately since the last report. Taxable sales have seen strong growth in South Dakota this fall compared with a year earlier; Wisconsin also saw sales growth year over year, but at slower rates than those seen over summer months. In Minnesota, hotel demand rose, with higher occupancy and revenue per available room in October compared with a year earlier. Tourism activity was solid in Montana, with October visits to Glacier National Park seeing a 9 percent increase. Total enplanements at Montana's two largest airports were also up 9 percent over a year earlier. Attendance at national parks elsewhere in the District were mixed. Total visits in October were down at Mount Rushmore, as well as at Pictured Rocks in Michigan's Upper Peninsula, and vehicle crossings at the U.P.'s Mackinac Bridge have been lower this fall compared with a year earlier. Construction and Real Estate Commercial construction activity grew moderately since the last report. Industry data showed that total construction spending in October was higher across much of the District compared with a year earlier. Industry data showed that both new commercial projects and total active construction projects in the District as of early November were slightly higher than a year ago. However, there was also some evidence that the number of active projects may be elevated to some degree by the inability of construction firms to find available labor. Overall, commercial permitting in October was strong in Minneapolis-St. Paul, but otherwise mixed among the District's other metro markets. Several industry contacts in Minneapolis-St. Paul said project pipelines were full heading into the end of the year and early part of 2019, and industrial and medical construction sectors were said to be strong. Another construction contact also noted significant activity in the energy segment in Minnesota. Residential construction activity saw moderate growth. October single-family permitting was higher in a notable majority of District metros compared with a year earlier, while multifamily permitting was mixed. Commercial real estate activity was mixed since the last report. In Minneapolis-St. Paul, industrial and multifamily sectors both continued to show healthy leasing demand, with low vacancy rates despite significant new construction. However, both retail and office vacancy rates have been increasing. Several national retailers announced closures in Minnesota, and one specialty retailer announced the closure of eight stores in the state. Consumer shifts to online retailers have contributed to rising vacancy rates in retail space, but have also contributed to lower industrial vacancies due to increased leasing of industrial warehouse space in Minneapolis-St. Paul. Residential real estate activity rose moderately. Closed sales in October were mostly higher compared with a year earlier across most of the District. October home sales were particularly strong in western and northern counties of Wisconsin. Sales in Montana's larger markets were mixed, but softer overall. Manufacturing District manufacturing activity increased modestly since the previous report. An index of manufacturing conditions indicated increased activity in October compared with a month earlier in Minnesota and the Dakotas. An industrial equipment producer announced a large expansion that would nearly double capacity at a plant in Minnesota. However, multiple contacts have reported putting capital spending plans on hold due to uncertainty in their outlooks. Agriculture, Energy, and Natural Resources District agricultural conditions remained weak. According to results from the Minneapolis Fed's third- quarter survey of agricultural credit conditions, roughly three in five lenders surveyed reported that farm incomes decreased in the third quarter relative to a year earlier, while a similar proportion reported decreased capital spending. While early indications were for very strong production in much of the District, in some areas heavy rains and unseasonably cold weather were complicating harvests. District oil and gas exploration activity as of late November increased moderately relative to the last report. North Dakota oil production increased to a new record in September. A major natural gas processing plant began operations in North Dakota.