This monthly newsletter serves to reflect on the past year’s successes and challenges. Two thousand eighteen was a record-breaking year for Black Diamond and many other companies in north central WV. We exceeded our annual goals and added two strong team members, Chris Waters and Jeff Wise. North central West Virginia continues to be the shining star for the state and other areas are seeing growth as well.
A recent article in the Dominion Post announced the improvement of West Virginia’s quality of life rating from 46th to 44th nationally (Source: United Health Foundation’s America’s Health Rankings 2018). We feel encouraged by this growth and remember that West Virginia’s story will continue to evolve over time. Consistent growth, while maintaining a focus on the big picture, is imperative to keep West Virginia moving forward. What does the big picture look like? What should we focus on? Many believe economic growth should focus on recession-resistant industries such as healthcare, education and government. Concurrently, we need to increase the number of technology jobs and promote the continued growth of the energy sector.
Momentum is building. Click on the button below to visit some of the key takeaways from 2018.
Top 10 Economic Observations from 2018:
1. WVU Medicine is leading by example and has aggressively been expanding its footprint. “WVU Medicine is the largest healthcare system in the State of West Virginia, anchored by J.W. Ruby Memorial Hospital in Morgantown. The system consists of an academic medical center, four community hospitals and three critical access hospitals with 1,625 licensed beds. WVU Medicine also manages a community hospital in Maryland and has a formal affiliation with another community hospital in WV,” according to www.moodys.com/credit-ratings/West-Virginia-United-Health-System-credit-rating-806684509.
Furthermore, WVU Medicine has a clinical presence in 39 out of 55 WV counties. The number expanded in 2018 and will continue on a growth trend in the coming years. For a state that has consistently ranked poorly in measures of health, WVU Medicine’s commitment to changing West Virginia citizens’ quality of life is refreshing.
2. The internet has drastically changed the world we live in over the past 20 years. Online retail’s increased popularity and user-friendly options has hurt big box retailers, as we predicted in 2017 – https://blackdiamondrealty.net/2017/11/30/retail-apocalypse-not-among-us/. Several large retailers closed their doors during 2018 in popular north central WV shopping destinations that include Meadowbrook Mall (Harrison County), Middletown Mall (Marion County) and Morgantown Mall (Monongalia County). Some of the brand casualties included Sears, Kmart, Belk and Toys “R” Us.
3. Interest rates ticked up but remain relatively low. The Feds adjusted the rate four times in 2018. This has a negative effect on values. Regional banks are still being aggressive in pursuing commercial real estate deals.
4. As our baby boomer population continues to age, securing high quality, reasonably priced senior housing is becoming more pressing. Represented by Black Diamond Realty, Smith Packett is investing $40 million+ to address this regional issue. The first project is a 175 unit, three-story senior housing project on Point Marion Road in Morgantown. The development will have three senior living options that include independent living, assisted living and memory care. The second project is a 100+ unit development, located on 5 acres, within White Oaks Business Park. Click to learn more about The Crossings Morgantown and The Crossings Bridgeport.
5. Investment sales remained strong. Real estate investing is a great tool to accomplish asset growth and wealth accumulation. Most are familiar with the adage of “buying low, selling high” while collecting a dividend along the way. Similar to stock investments, real estate investing offers the opportunity for appreciation and cash flow (real estate’s version of collecting dividends). In addition to providing the opportunity to recognize these two characteristics, real estate investments offer tax advantages and equity build opportunities.
6. The office market is a mixed bag depending upon locale. Bridgeport’s office market was strong with a 95%+ occupancy rate. Morgantown’s office market was weaker, primarily due to increased supply over the past 2-3 years, but is stabilizing with new users entering the market partially sparked by the resurgence of O&G activity.
7. Housing stock is an important component necessary to encourage growth. This region, with specific focus on Morgantown, has a significant need for affordable single-family housing in the $200,000 to $300,000 range. Black Diamond Realty sold 62 (+/-) acres this year to a southern WV housing developer. Other successful developments are in various stages of development throughout the region.
8. Infrastructure is paramount to secure economic growth. Governor Justice leveraged future revenues, which effectively avoided a significant tax increase, to tackle a “never-ending” problem. Governor Justice’s “Roads to Prosperity” program gave West Virginians hope that the future infrastructure is bright. To read in greater detail, CLICK HERE.
9. The Appalachian region has very challenging terrain. It is expensive to move mountains. To encourage large-scale redevelopment and economic progress, creative solutions are often required to make a project economically feasible. Tax Increment Financing (TIF) is an excellent tool that has many success stories including White Oaks Business Park, Gateway Development and Morgantown Industrial Park.
10. The unemployment rate is very low in this region. On the face of things, this is positive but if you look at labor force participation in the state of WV, it is the lowest in the nation. This stunts potential future growth as employers see a diminished labor pool as a significant challenge. If an employer is unable to get comfortable with their ability to secure a reliable workforce, they will target other markets for their expansion project.