APARTMENT PERFORMANCE AND EMPLOYMENT DISTRIBUTION
A STUDY OF TWO CITIES
by
Daniel
A.
Pedrotti,
Jr.
Bachelor of Business Administration
Texas Agricultural and Mechanical University
1984
SUBMITTED TO THE DEPARTMENT OF ARCHITECTURE
AND THE CENTER FOR REAL ESTATE DEVELOPMENT
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS OF THE DEGREE
MASTER OF SCIENCE IN REAL ESTATE DEVELOPMENT AT THE
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
SEPTEMBER,
(D
Daniel A.
1988
Pedrotti,
Jr.
1988
The Author hereby grants to M.I.T.
permission to reproduce and to distribute publicly copies
of this thesis document in whoe or in part.
Signature of the Author
Daniel A. Pedrotti, Jr.
Department of Urban Studies and Planning
29 July 1988
Certified by
Lecturer,
M
Louargand
Department of Urban Studies and
lanning
Thesis Advisor
Accepted by
Michael
Wheeler
Chairman
Interdepartmental Degree Program in Real Estate Development
SEP 2019b8
LIBRARIES
APARTMENT PERFORMANCE AND EMPLOYMENT DISTRIBUTION
A STUDY OF TWO CITIES
Daniel A. Pedrotti, Jr.
29 July 1988
TABLE OF CONTENTS
ABSTRACT....................
CHAPTER ONE
INTRODUCTION................
.......................................................................
..
.
.
.
.
..............................
1
2
CHAPTER TWO
DIVERSIFICATION INDEX....... ..................................................... 6
DENVER.................................................7a
PHOEN I X . . . . . . . . . . . . ...................................
aw aa aa a a a a a
aaaaa aaaa a10
CHAPTER THREE
ECONOMIC MAKEUP ....................
TOTAL EMPLOYMENT GROWTH - US, DENVER AND PHOENIX......11
.13
EMPLOYMENT TRENDS BY SECTOR...
.
.. .
. ..
.14
.. .
.
. ..
UNITED STATES............
.16
. ..
EMPLOYMENT GROWTH BY SECTOR.. .
.. .
.. .
DENVER...................
.23
.
. ..
.27
.. .
. ..
EMPLOYMENT GROWTH BY SECTOR.. .
.32
. ..
.. .
PHOENIX..................
.
.32
.. .
. ..
EMPLOYMENT GROWTH BY SECTOR.. .
.40
.
. ..
.. .
SUMMARY OF EMPLOYMENT TRENDS..
CHAPTER FOUR
.43
.43
.45
CORRELATIONS BETWEEN RENTS AND DIVERSIFICATION INDEX .48
CORRELATIONS BETWEEN RENTS AND EMPLOYMENT LEVELS.... .50
.52
.........
a
a
.............................................
DENVER a a a a
.56
. . . . . . ..
PHOENIX ........................
.60
DENVER SUMMARY .............................................
PHOENIX SUMMARY..................................... .60
CHARACTERISTICS OF RENTAL INCOME................ ......
THE DATA........................
CORRELATIONS..................................... .
CHAPTER FIVE
CONCLUSIONS
......................................................62
STRATEGIES............................................
REFERENCES...............................
.................
..
............
64
TABLES AND GRAPHS
CHAPTER 2
FIGURE 1: DENVER DIVERSIFICATION INDEX..........
FIGURE 2: PHOENIX DIVERSIFICATION INDEX.........
.. ... 8
9
..........
CHAPTER 3
EXHIBIT 1: TOTAL EMPLOYMENT LEVELS..............
12
.... ....
TABLE 1: UNITED STATES EMPLOYMENT DISTRIBUTION..
15
FIGURE 3: UNITED STATES GROWTH SECTORS..... ..... a
17
FIGURE 4: UNITED STATES LOW GROWTH SECTORS.
TABLE 2:
........
....
.
DENVER EMPLOYMENT DISTRIBUTION....
18
. 24
FIGURE 5: DENVER GROWTH SECTORS............
25
FIGURE 6: DENVER LOW GROWTH SECTORS........
26
TABLE 3:
PHOENIX EMPLOYMENT DISTRIBUTION...
33
FIGURE 7: PHOENIX GROWTH SECTORS...........
34
FIGURE 8: PHOENIX LOW GROWTH SECTORS.......
......
...
..
35
CHAPTER 4
TABLE 4: DENVER RENT DATA SUMMARY......... ................ 44
TABLE 5: PHOENIX RENT DATA SUMMARY........
...
...
...
44
TABLE 6: UNITED STATES RENT DATA SUMMARY..
.............. 46
FIGURE 9: AVERAGE RENT COLLECTED PER UNIT.
47
FIGURE 10: RENT COLLECTED PER UNIT........ .............
49
APARTMENT PERFORMANCE AND EMPLOYMENT DISTRIBUTION:
A STUDY OF TWO CITIES
by
Daniel A.
Pedrotti, Jr.
Submitted to the
Department of Architecture
and the
Center for Real Estate Development
29 July 1988
in Partial Fulfillment of
the Requirements for the Degree of
Master of Science of Real Estate Development
ABSTRACT
and evaluates the relationship
This study examines
rent
sector and
employment by
levels of
between
the
follows
The
study
two
cities.
of
levels
over a
several thousand apartments
performance of
Phoenix,
Colorado and
in Denver,
of time
period
Arizona.
The study examines actual rents collected
salary employment
wage and
juxtaposition with
in
the
in
addressed
questions
The
specific
data.
research process include:
How do the local economies of each study
area differ from the United States? from
each other?
Do different
returns?
economies create different
What is the relationship between
employment distribution and rent
is
the
focus
of
analysis
The
diversification in the local economy
property performance.
levels?
of
influence
in residential
Thesis Advisor: Marc Louargand
Title: Lecturer in the Department of Urban Studies
and Planning
1
CHAPTER
ONE
INTRODUCTION
INTRODUCTION
examination of a city's economy,
Upon beginning an
first
asked
questions
employer
in
to wn?".
Given
the answer,
typically make a
prejudgment as to that
future prospects
for viability.
equal
of
share
diversification
stab le growth.
consistent
because a
sectors.
desirable
city
J.
each
is
It
the
Par ry Lewis writes
observer
suggested
will
notion
that the
diversity with an
sec tor.
is believed
can avoid dependence
predominant
eco nomy's current and
is maximum
in
employment
the
t he
Many have
the question
preferred answer to
is
"What sector
is
one of the
that
that
on one or
a
What
it
this
makes
promotes
occurs
few economic
(8),
The prescription for stability of employment has
several
ingredients.
The goods
and
services
as diverse
exported by
the residents should be
as possible.
Any specialization in market or in
product
makes
these
residents
vulnerable
to
(p.
25)
particular fluctuations in demand.
Some further
Werner Z.
insight
Hirsch
into
this train of thought
is offered by
(5):
that
to
mean
is
likely
Unstable
growth
capacities and expectations are generated in the
rapid growth phase which
cannot be fulfilled in
the
slow growth
phase, resulting
not only
in
hardship in the latter
phase, but probably also
in a lower overall
performance in the long run.
In addition, unstable
economic performance very
often
contributes
to
such
ills
and
inefficiencies
as,
for
example,
excessive
migration
(and
reverse
migration),
periodic
financial difficulties of
local government, and
inability
to plan
for
pleasing and
efficient
263)
(p.
city building.
2
Stable growth
is
entire system
study
of
similar
Attaran
(1)
seen as the preferred path for
logic
to the
looked at
income-based
is flawed
one
conducted
diversity
indicators
of Columbia.
in two counts.
for
in this
indices and
a city.
This
First,
in a
paper,
Moshen
unemployment
all fifty states
and
and the District
Attaran found that,
..no strict assumptions can be made regarding a
clear
relationship between
diversification and
economic growth and stability.
(p.
44)
Secondly, diversification
that economies
constant
theorists do
are reactive
is change.
the recent
global'economic
influence means that a
to forces that
are not only beyond
What a
is flexibility and agility
to changes
in
The results
the
a few sectors varies
entire
mix.
that,
John B.
"local
effect.
In
economy
its control
more
is subject
but beyond
that strong
its
performance in
more closely with rents
Corgel and
economies are
varied
toward
local economy should strive for
suggest
hypothesis
dominant economic sector".
sector
local
trend
The only
larger economies.
one or
study by
into account
in order to respond more efficiently
of this paper
This
take
and dynamic creatures.
Further,
planning capabilities.
not
is
supported by
Gerald
D.
Gay
than
findings
(2).
in
across economies
other words, the
also saw that
and
varied
this
by a
"dominant"
in magnitude
degree to which a
a
They found
typically heavily influenced
They
the
local
of
economy
can make efficient use of its competitive advantage varies from
city to city.
3
Another
of
a
important aspect of economic performance
city to
determinant when
housing.
attract
new
residents.
discussing a
Bertrand Renaud
This
is the ability
is
a
correlation with any
(10)
critical
aspect of
observed,
... population
movements
are
predominantly
determined
by
employment
opportunities
and
income
levels.
The economic
base
determines
private sector demands and
an important part of
the public resources needed to meet them.(p.
7)
This connection
Growth
in a
These new employees will
for non-base
sectors and
the
industries which
idea in mind that
will
in time cause growth across
is the best route
contends
that
to shed some
a comparison was
the Denver
used
to
and
to economic growth,
out.
diversification is
light
as to
about diversification's ability
alternative for promoting economic
an attempt
influx of new
there is considerable doubt
is also significant doubt
author
this discussion.
in turn create new demand
to promote stability, as Attaran pointed
The
in
influence rents.
whether diversification
there
relevant
single sector generally requires an
employees.
With
is particularly
not
performance.
the
best
This paper
on this contention.
To
is
that end
made between the employment
distributions in
Phoenix versus United States.
These data were
estimate a diversification
the Diversification
Index
index.
The examination of
includes an extensive
4
discussion of
three employment
the
by sector.
growth rates
study examines and
Subsequently, the
large apartment portfolios
performance of a few
discusses the
respective employment
distributions and
in the metropolitan areas.
Given the apparent conflict
between
performance
economic
Taking average per unit rents collected
portfolios
as a
measure of
employment.
and
in some large apartment
return, the
further examines the relationship between individual
sectors and
study
Number
of
the same rents
the
study documents
and rents collected.
relationships between divers-ification
collected.
it
to examine the
formulate some sort of test
was appropriate to
relationship
in the theories discussed above,
It
employment
The significance of the
lies in the discovery of what tracks rents more closely.
of persons employed by sector
diversification.
The
is an
input
diversification index
into the
is
used
facilitate the examination of the differences between the
economies.
This in
individual sectors.
the basis
of a
between apartment
turn,
leads
into an
The combination
discussion on
examination of
5
to
local
the
of these discussions form
the correlation
performance and respective
employment.
index
and covariance
distributions of
CHAPTER TWO
DIVERSIFICATION INDEX
DIVERSIFICATION INDEX
This chapter
introduces a diversification
index.
This index
is
an attempt
to measure the difference between the United States'
employment
distribution
and
the local
employment distribution
for Denver and Phoenix respectively.
Beginning with
the
the idea
entire United
given sector,
that
States represents
the index value for
measure of systematic risk.
of
specific
the employment
risk.
Any
That
variation
the diversification
absolute
from 1.
a relative
a
from
local
this
distribution
economy
less likely
index
deviation from the US
is the sum of sector by
distribution subtracted
This produces a number that ranges from almost 0
On this scale,
as the index
distribution approaches
approaches
the US
never actually reach 0 because
in at
the US would be
least
in any
like the US economy.
Mechanically,
sector
total employment
is it represents the absence
introduces specific risk and makes
to perform
distribution for
1
the
1.
local
employment
The
index will
distribution.
there will
to
always be employment
one of the sectors.
This is a dynamic
measure in that an employment
a matter of constant change.
distribution is
As one sector slows significantly
the employment base moves out of that sector and
6
into
others or
goes
into unemployment.
If all
sectors suffer decline then the
total employment changes and the distribution remains similar.
As shown
in
figures
1 and 2,
diversification index
In Phoenix, over
over
the years
ranges from
1971
to
80.7% to 88.7%,
the years 1974 to
it
1987,
1987 the
in Denver.
ranges from 80.6%
to 84.5%.
DENVER
In
the
Denver
throughout
the
time period
1971
the first
major turn was in
diverse.
There were two years
index followed
strong
down
in
to
1987.
During
increased
this period
1973 when Denver began to get more
of considerable increase in the
by five years
turn
generally
index
diversification
of slow increases.
the early
eighties
increases in the Oil and Gas aspect
due
There
was a
primarily
to
of the Mining sector.
Once
this sector began contracting the economy showed a strong
trend
towards diversification.
shows
that the
increased
this index
a sector
employment
decline,
decline is
economy
diversity.
The discussion
may not
It is very
out of
employment
occurring
the
important
proportion
and subsequently
total
off
be better
to keep
negative reasons.
can increase for
had grown
in the
goes
may
index
suffering.
7
into
next chapter
due to
this
in mind
that
example,
For
with the
rest of
an extended
the
period of
decline.
While this
is rising
but
the
if
overall
economy is
FIGURE 1: DENVER DIVERSIFICATION INDEX
0.89
0.88
0.87
x
0.86
z
z
0.85
0.84
Li
0
0.83
0.82
0.81
0.80
,
1971
1973
1975
1977
1979
YEAR
1981
1983
1985
1987
0 .8 5
-
0.85
-
0.84
-
La
0
0.84
-
o
0.83
-
Ii-.
0.83
FIGURE 2: PHOENIX DIVERSIFICATION
INDEX
.... ..............
z
0.82
0.82
0.81
0.81
1974
1976
1978
1980
YEAR
1982
1984
1986
PHOENIX
In Phoenix the
index is
subject
no discernible overall
decline in
What was observed
the index value- from
equally strong
by
trend.
another
increase
substantial
influence in
economy.
It
Denver.
decrease
substantial
the
study
a
will
growth in
1982.
a
through
employment
demonstrate
This serves to differentiate
as both
of these had
overall
growth rate
that
sectors
study
period.
Total
employer was
employment
growth
annually, was well above the US or
What follows is an in depth
sectors
serve
distributions
to
from
discussion serves
degree of
look
United
10
this
base than
Phoenix
over the
had
study
manner as the
patterns.
Phoenix
tremendous over
in Phoenix,
the
at 6.86%
at how the trends in specific
these
States'
local
in rents.
employment
distribution.
to delineate which sectors
influence on the trends
in
Denver.
differentiate
the
and
it from the US and Denver
less volatile growth
as an
1985
less diverse employment
variety of
by an
There appears to be some
period with Construction moving in a very similar
index.
was a strong
This was followed
from 1982
1987.
There was
to 1979 followed
distribution of
appears to be
The
1977
from 1979 to
again an increase from 1985 to
cyclic
to dramatic swings.
This
have the highest
CHAPTER THREE
ECONOMIC MAKEUP
ECONOMIC MAKEUP OR EMPLOYMENT DISTRIBUTION
This
part of
growth
the discussion
trends
begins with
in total employment
and Phoenix.
What follows
each area's total
in each sector.
is
of the
in the United States, Denver
a sector by sector
distribution and
Exhibit 1
an overview
a
look at
analysis of
the growth trends
shows the employment
levels
in each
of the study areas.
TOTAL EMPLOYMENT GROWTH - US, DENVER AND PHOENIX
Total employment
rate of 2.4%
points
1975 to
in
The
for
the period
1979
through
last period
Denver
the
growth
inflection points.
than
in the
years 1979 and
This
1983 to
in
The major
inflection
1983.
From
growth was considerably
1983 when the rate
averaged only 0.1%.
a return
to faster growth
1987.
total
Generally
in the United States as
an annualized
1987.
in the study showed
from
grew at
1975 to
the rate was 3.9%.
at a rate of 3.1%
In
United States
this trend were
1979
less from
in the
the
employment
growth was
a whole.
this SMSA was 3.4% from 1975 to
1987.
did not slow down during the 1979 to
had
slightly faster
The annualized rate for
Denver
employment growth
1984 period
as did
It progressed
at a fairly steady rate of 4.5% until
1984 through
1987 total employment
rate of only 0.3%.
11
different
the US.
1984.
From
growth flattened out
to a
EXHIBIT 1: TOTAL EMPLOYMENT LEVELS
1.10
1.00
0.90
(I-
z
0
I-.'
L
C',
0.80
IL. 0
0
0.70
z
0.60
0.50
0.40
75
0
76
U. S. /
77
100
78
79
80
81
+DENVER
82
83
84
85
SPHOENIX
86
87
Phoenix
growth
had substantially
in total
rate
the national
similar
employment
growth rate.
to the
some of the slow
in employment.
From
inflection points very
1975 to
1979 Phoenix
the incredible rate of 9.3%.
growth as
in the US trend
1982 when local
Phoenix then returned
to
employment
The
three times
was 6.5%, almost
Phoenix had
US trend.
employment grew at
from 1979 to
higher growth
total
It did exhibit
but
it
only slowed
grew at a rate of 2.2%.
its growth pattern from
1982 to
1987
at a rate of 6.9%.
EMPLOYMENT TRENDS BY SECTOR
In
an attempt
to
explain the
States trends and the Denver
what follows
in
that
these
The growth
A
coincide.
and
sectors
It
is
act
decline phases
good understanding requires
analysis examines
share
of
important to
total
and
employment
compares
and
the
One must
differently
do not
a close
points of inflection and the growth rates between
This
United
trends in employment,
the overall performance of the sectors.
mind
economies.
and Phoenix
is an analysis of each sector.
look first at
keep
between the
variation
across
necessary
look
at
the
these points.
each sector's
relative
growth
trends
in
each
total
non-agricultural
sector's employment.
The
sectors
employment.
discussed
It
represent
is obvious that
the US distribution and a given
in
mind
that this
part
of
variations
SMSA.
the
13
It
will
is
analysis
occur between
important to keep
is based
on
the
percentage employment per sector and number of persons employed
in each sector.
It
dates relating
is also
to changes
important
in the various
eight major non-agricultural
1.
2.
3.
4.
5.
6.
7.
8.
to make
careful
note of
distributions.
The
sectors are:
MINING
CONSTRUCTION
MANUFACTURING
TRANSPORTATION AND UTILITIES
RETAIL AND WHOLESALE TRADE
SERVICE
FINANCE, INSURANCE AND REAL ESTATE
GOVERNMENT
UNITED STATES
The
largest
employment
were Manufacturing,
magnitude
across
this
these
the
order
Government.
Service
is displayed
By
was
in
was
and
that
Government
in
because one
total
and
due
declining
or
16.71%
The
21.2%,
17.7%
to growth
in
the
and
16.3%
By
order.
in Government.
in
14
that
then
the Trade
and
sector.
1987 employment had
Trade;
Manufacturing
By
this
in
Trade, 18.72%
time
These shifts
grow faster or
employment.
and
Manufacturing
in Service, 23.56
a few sectors
1970
distribution
Service
rank was Service,
distribution was 23.64%
Manufacturing
1.
Manufacturing,
decline
the
in
and Service in order of
Government remained relatively stable.
shifted such
States
distribution had changed such
This happened
and
United
Table
27.3%,
1980 this
Trade,
sectors
in the
Trade, Government,
sectors
respectively.
sectors
slower
the
in
occur
than does
TABLE 1:
MINING
UNITED STATES EMPLOYMENT DISTRIBUTION
CONST
MFG
TRANS/
UTILS
TRADE
SERVICE
FIRE
8OVT
5.14%
17.71%
18.09%
18.10%
17.88%
18.11%
19.08%
18.73%
18.34%
18.08%
YEAR
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
5.06%
27.32%
0.85%
5.20%
5.28%
0.84%
0.89%
0.98%
0.98%
0.99%
0.98%
1.07%
1.14%
1.25%
1.26%
1.06%
1.02%
0.95%
0.79%
0.73%
5.34%
5.14%
4.58%
4.50%
4.67%
4.88%
4.97%
4.81%
4.59%
4.36%
4.38%
4.64%
4.79%
4.92%
4.93%
26.15%
25.99%
26.25%
0.88%
0.86%
25.65%
23.81%
23.93%
23.87%
23.65%
23.42%
22.44%
22.13%
20.97%
20.44%
20.51%
19.75%
19.07%
18.72%
6.37%
6.29%
6.16%
6.06%
6.04%
5.90%
5.77%
5.71%
5.68%
21.22%
21.56%
21.65%
21.63%
21.70%
22.18%
5.72%
5.69%
5.67%
22.48%
22.47%
22.54%
5.67%
5.49%
5.46%
5.37%
5.26%
5.27%
22.84%
23.15%
23.39%
23.66%
23.67%
23.56%
22.37%
22.45%
22.54%
16.29%
16.57%
16.66%
16.74%
17.17%
18.05%
18.33%
18.56%
18.75%
19.05%
19.79%
20.43%
21.25%
21.83%
22.01%
22.56%
23.19%
23.64%
SOURCE: BUREAU OF LABOR STATISTICS - MONTHLY LABOR REVIEW
15
5.30%
5.30%
5.27%
5.30%
5.41%
5.38%
5.42%
5.45%
5.54%
5.71%
5.81%
5.96%
6.06%
6.02%
6.11%
6.32%
6.45%
17.75%
17.96%
17.59%
17.68%
17.59%
16.96%
16.81%
16.78%
16.71%
Over
the
study period 1975 to
growth in Service
Trade (2.9%).
(4.8%),
1987,
FIRE
These were
Construction
(3.0%) and
the sectors
that showed
growth at
the rest
sectors and
average
sectors
which were
growth or
were
in
Mining
Transportation and
of these
employment
This makes a delineation
in Figure 3.
sectors
This
(2.4%) as is evident
periods of
either slower
These slow
growth
Manufacturing
(1.4%) and Government
is shown
"growth"
between these
contraction.
lost relative
total employment.
in
(-0.12%),
Utility
above average
(3.9%),
rates above the growth of total
than
the US had
(0.4%),
(1.3%).
to their respective
All
shares of
in Figure 4.
EMPLOYMENT GROWTH BY SECTOR
MINING
US employment
in
1970.
It
declined to
confirms
much
Which
The general
period.
peaked
.73% in
the
industry.
in the Mining sector
In
in about
1987.
1981-82 at
This
publicized
is as
trends
is a major subset
trend
in this sector
1975 there were
was .88% of total employment
This was well above the total
-6.9% from
1,139,000
in
the
Oil
to
persons in
over
growth between
Gas
the entire
1981
to only
in this
1975 and
employment
1987 dropped off
This represents an annualized growth
16
and
it only
and
752,000 persons employed
was 7.2%.
from 1981
expected and
was negative
The annualized rate of
However,
1.26%
of Mining employment.
industry.
of 2.6%.
-
1.25
1981
growth rate
at a rate of
741,000 in 1987.
rate of -0.12%.
FIGURE 3: UNITED STATES GROWTH SECTORS
9.00
8.00
7.00
(f)
z
6.00
0
L
LL
c
5.00
0
0
elf
4.00
ILL
D
z
3.00
2.00
1.00
0.00
1975
o
1976
1977
SERVICE
A
TRADE
1978
1979
1980
1981
1982
1983
1984
SOURCE: U.S. BUREAU OF LABOR STATISTICS
+
FIRE
c CONSTRUCTION
X
TTL EMPLOYMENT/100
1985
1986
1987
FIGURE 4: U.S. LOW GROWTH SECTORS
wii
z
0
(0"
0)
-
Cw
0
22
21
20
19
18
17
16
15
14
13
12
11
.................
.....
-.....
k
-.......
-I
..............
.............
-.............................
10
9
8
7
6
5
4
3
2
1
0
0::
D
z
,E3-
1975
0 MINING
1976
-
B
1977
E3
..............
i
Ei
1978
E3
........
..........
-B
I
I
I
I
I
I
I
1979
1980
1981
1982
1983
1984
1985
SOURCE: BUREAU OF LABOR STATISTICS
+
MANUFACTURING
0 TRANSPORT / UTILITY
A GOVERNMENT
X TOTAL EMPLOYMENT/10
1986
I
1987
CONSTRUCTION
Construction
as
a component
represents over 5%
of the
of
total.
only in the early seventies did
as much as
slight
definitely
US employment
In the period
rarely
1970 to
1987,
the construction sector made up
5.34% of the total.
but
total
Variation
cyclic.
The
has been relatively
cycles
appear
approximately 5-6 years from trough
to trough.
From 1975 to
in this sector
1979, persons employed
to
be
grew at an
annualized rate of 6.1%.
This period of growth was followed by
a period
from 1979
of contraction
took place at
1982.
a rate of -4.4% annually.
the US construction
Over the entire
rate was
to
employment
period
3.0% which
1975 to
The contraction
From
grew 5.2% per
1987 the
is above the
1982 until
1987
year on average.
average annual growth
national
average
for
total
employment growth at 2.4%.
MANUFACTURING
The US has always had a much
in
this field
to 21
This
when compared to
million
to 27.3% of
is
the two cities.
people employed in this sector,
the total employment
due
in
influence
in the
percentage
of
seventies and
early
larger portion of total
large measure
Midwest
total
eighties.
seventies but
With about
the
US had
18.7
the manufacturing sector.
to
the
employment
heavy
This
declined
was a
manufacturing
slight
sector as
throughout
increase
it has shown a decided decline since.
19
18
in
and northeast.
There
employment
a
the
in the
Manufacturing grew at an annualized
years
1975 to
rate of only 0.4% over the
1987 considerably less than the
employment.
During this
consecutive growth.
time period
1975 to
1979
there were
in total
4 years
exhibited a growth
3.5% which was just over the rate for total
However, from 1979 until
growth
of
rate of
employment at 2.4%.
1987 there was only one year of slight
growth.
TRANSPORTATION AND UTILITIES
Nationally, this sector has declined
every year
terms of share of total employment.
in 1987
Even
From 5.9%
since 1975,
in
in
1975 to 5.27%
it showed a slow but steady decrease.
as
this
employment
sector
was
losing
distribution, it
1975 this
was growing
industry employed
1987 it had
about 4.5
employment
1.4%,
growth rate at
in
the
as an
national
employer.
million people
approximately 5.4 million.
annualized growth rate of only
the total
position
This
and
In
in
translates to an
which was a
about half of
2.4%.
TRADE
The
national
steady
upward
percentage employment
trend
throughout
evaluated.
There
deceleration
period about
never
been as
appear
to
every
in
the
this
entire
shows
time
slight
contraction
six
years.
Although
either
a
period
be
large on a percentage basis as
20
sector
or
it has
Denver or
Phoenix,
it has been growing as
a faster
rate than
percentage
either of
numbers
Between 1/5
in
1/4 (19.9%
non-agricultural
employees
The reason the
increasing
of 2.9%
that
in 1971
in
and Retail
very
23.6%
in
country
at
The
significant.
1987)
of all
are employed
in
Trade.
is at
US employment
least a
employment which
in Denver,
are
to
this
share of total
this
employment
metropolitan areas.
sector
is because the US Trade
and
total US
the two
this
and
Wholesale and Retail
a share of total
little
is 2.4%.
Phoenix, and
trade sector
sector
in
this sector
is growing at a rate
rate for
faster than
It
is
is important
the US as a
whole,
to note
the Wholesale
is growing.
SERVICE
The
service sector
almost
at
all
areas of the US.
the percentage
employer nationally.
the total.
employees
employment
This
of total
was a
major
for
is very apparent when looking
employment data.
It
is
a major
It has employed between 16.3 and 23.6% of
That was nearly
one quarter
of the non-agriculture
in the US.
The Service
sector demonstrated the fastest
three of the study areas.
In this study,
growth rate of
about 4.7%
in the number of
this
This
sector.
employment
growth area
is
nearly
twice
in the US over the same period.
21
growth across all
the author found a US
the
people employed
rate
for
in
total
FIRE
In
the US
as
a
whole the
stronger position
in total
never rose above 6.5%.
It
each consecutive year
only 5.1%
of
FIRE
sector
employment.
From
did however
increase
growth
areas covered
1987 it
its percentage
In
1970 it was
in
this study.
industry in all
The US showed
rate than did either Phoenix or Denver,
year
in the period
was fairly constant at
well above
a
the total employment.
positive growth each
growth
1970 to
during the same period.
The FIRE sector represents another growth
of the
gradually gained
3.9%
but
the total employment growth
a slower
it exhibited
studied.
from 1975 to
three
The rate of
1987.
This is
rate of 2.4%
GOVERNMENT
Nationally, from 1976 until
the percentage of
government.
employment
16.7%.
In
in
This
people employed by
1975 there was as
this sector.
is
to
administrations trying
the deficit.
mean there
there was a steady decline in
1987
be
to
much as 19.1%
expected
with
the
earlier this does
the total
was only
past
few
not necessarily
decline in government employment,
slight contraction
always showed a small
of
1987 this percentage
only mean that there was a slower growth
Besides a
state and federal
lower government spending and control
As mentioned
is any real
By
local,
from
positive
22
1980
than
total
to
1983,
growth rate.
From
it may
employment.
this sector
1975 to
1980
growth was 2.0%.
1.3%
the rate
From 1983 to
1987 the rate was only
of employment growth
1/2 of the growth rate for total
from
1975 to
employment
At
1.8%.
1987
is about
in the US.
DENVER
The
over
employment distribution
the
study
period.
employment showed
FIRE
(See
only
(4.9%),
Service
3.3% over the
a slight
occurred
2)
Generally
(4.8%),
(3.6%).
the
in this sector.
fact
3.4% as
than this rate
Trade
The Mining
study period.
slowing,
Denver
growth rate of
The sectors that grew faster
Transportation and Utility
rate of
changed significantly
Table
an overall compound
mentioned earlier.
were
for Denver
(3.6%)
sector grew at a
While this seems
is
that
and
a major
to be
upheaval
(See Figure 5)
The three remaining sectors grew at rates that were slower than
total
employment.
These
were
Construction
(2.0%) and Government
The
economy
Denver
sectors.
Besides
distributed
employers
major Railroad
(2.0%).
There
are
including a
Inc. and
terminal.
the major
Denver
23
the
Federal
ski
levels
total
several
(2.2%),
(See Figure 6)
healthy employment
the Mining sector,
well.
in Denver
Mint, Coors,
has
Manufacturing
in
employment was
other
significant
Reserve Bank,
resorts.
most
It
is
a U.
S.
also a
is rather well diversified.
TABLE 2: DENVER EMPLOYMENT DISTRIBUTION
MINING
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1.10%
1.17%
1.25%
1.42%
1.61%
1.69%
1.81%
2.02%
2.10%
2.51%
3.17%
3.36%
2.97%
2.60%
2.37%
1.87%
1.59%
CONST
6.45%
7.57%
7.82%
6.66%
5.37%
5.34%
5.66%
6.09%
6.28%
5.78%
5.41%
5.87%
6.28%
6.07%
5.80%
5.17%
4.56%
MFG
17.14%
16.88%
16.93%
16.76%
15.58%
15.69%
15.65%
15.89%
15.97%
15.55%
15.55%
14.87%
15.02%
14.74%
14.19%
13.75%
13.59%
TRANS/
UTILS
7.30%
7.41%
6.94%
6.95%
6.73%
6.46%
6.43%
6.76%
6.94%
6.94%
6.99%
7.23%
7.30%
7.01%
7.12%
7.13%
6.94%
TRADE
24.68%
24.67%
24.29%
24.36%
24.50%
25.13%
25.22%
24.34%
24.23%
24.07%
23.85%
23.85%
24.93%
24.49%
24.62%
24.62%
25.12%
SERVICE
18.18%
18.40%
18.83%
19.37%
20.29%
20.28%
20.47%
20.32%
20.41%
21.09%
21.68%
21.94%
23.06%
22.69%
23.31%
23.92%
23.83%
SOURCE: COLORADO DEPARTMENT OF LABOR AND EMPLOYMENT,
COLORADO LABOR FORCE REVIEW
24
FIRE
GOVT
6.12%
19.03%
18.27%
17.53%
18.03%
19.36%
18.89%
18.19%
17.89%
17.28%
17.29%
16.45%
15.81%
16.16%
14.92%
15.10%
15.75%
16.53%
6.23%
6.41%
6.46%
6.57%
6.52%
6.57%
6.69%
6.78%
6.76%
6.89%
7.07%
7.50%
7.47%
7.50%
7.79%
7.84%
FIGURE 5: DENVER GROWTH SECTORS
240,000
220,000
200,000
180,000
(n)
z
0
160,000
(n)
CL
IL
mu
0
cii
0::
140,000
120,000
100,000
D
80,000
z
60,000
40,000
20,000
0
1975
1976
0
A
TRANSPORT / UTILITY
1977
FIRE
1978
1979
1980
1981
1982
1983
1984 1985
SOURCE: COLORADO DEPARTMENT OF LABOR
+ SERVICE
TRADE
X MINING
V TOTAL EMPLOYMENT/5
1986
1987
FIGURE 6: DENVER LOW GROWTH SECTORS
180,000
170,000
160,000
150,000
140,000
0I
z
0
130,000
120,000
(L
0
110,000
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
1975
0
1976
1977
O
MANUFACTURING
GOVERNMENT
1978
1979
1980
1981
1982
1983
1984 1985
SOURCE: COLORADO DEPARTMENT OF LABOR
+
CONSTRUCTION
A
TOTAL EMPLOYMENT/5
1986
1987
EMPLOYMENT GROWTH BY SECTOR
MINING
In
Denver,
In
total
1971
This
rose every
1.56% by 1987.
in the
16.5%
1982.
From 1982 to
translates to a growth rate of
to
1987,
just under
1981,
Denver
continued
rate over this period was
1987 the rate was -12.8%.
This
3.3% for the entire period
1975
the growth rate for
which was 3.4% and considerably
for total
this is over
introduction (5).
The annualized growth
in Denver.
it
declined dramatically to only
from 1975 to
Where the US showed growth
through
of
is the classic example of volatile growth,
This
spoke about
which Hirsch
It
1.1%
1982 when
year until
employed 3.36% of the non-agricultural employment,
three times the 1971 figure.
much
US as a
to the
in this sector comprised
the employment
employment.
represented a
when compared
total employment
larger share of
whole.
has always
Mining sector
the
faster
total
Denver employment
than the US rate, 2.4%,
employment.
CONSTRUCTION
The Denver
share of employment
than the
when construction was only
employment
in Denver
is
interesting
national average.
4.56% of the total
(US was 4.93%).
in Denver show much more
It
held a
construction sector has consistently
to
that
27
from
in this sector
the national
1981
in 1987
non-agricultural
The cycles
variability than
note
Except
larger
to.
1987
cycles.
Denver
to move counter -
appeared
The percent of
total
cyclically when compared to
employment
in construction
the US.
has ranged as
high as 8.14%.
The
cyclic
nature
of
tracking employment.
about 10.5%
There was
7.2%
industry
From 1975 to
annually but from
growth from 1981
and contraction
entire
this
period
considerably
less
rate
was
which
to
from
1975 to
1979
1987
than the
3.0%.
1979
to
1984
1984
is
to
the
very
it grew at
1981
is
rate of
at an annualized
1987
at
-9.3%.
well
rate of
Over
annualized rate
also
employment growth rate for Denver
a
when
the rate was -4.1%.
US construction
It
evident
was
the
2.0%,
employment growth
below
the
total
(3.4%)
MANUFACTURING
This is
lower
the single sector
percentage
of
in which Denver has
total
employment
a consistently
than
Manufacturing has employed between 13.6 and
17.1%
total
However
employment during the
very similarly
is behaving
losing
its share
of total
decline than nationally, it
This decline
for
this
throughout
study period.
to
in that
the US
employment.
the
in
13 year
sector was growing
of
US.
the Denver
this sector
it
is steadily
While this
is a slower
is clearly a strong trend.
is occurring despite the fact that
sector
the
Denver
period.
has
been
Until
1984
at a rate of 4.0% which
28
the growth rate
basically
positive
the Manufacturing
is slower
than the
Denver
From
to
total
employment
1984 to
rate of 4.5% for the
1987 when the Denver
nearly zero
growth,
slight contraction.
total
employment
the Manufacturing
Over
same time frame.
sector
the study period
the
this sector was 2.2%, about half of the total
rate of 3.4%.
share
loss
levelled off
suffered
a
growth rate
in
employment growth
Consistently slower growth has caused
discussed above,
even though
Denver
the market
Manufacturing
has grown much faster than US Manufacturing.
TRANSPORTATION AND UTILITIES
Denver has shown
industry.
the largest percentage of
Except
always had 7%
or
for a
better
utility employment
1983 and
for
few years
in
this sector.
share showed
was fairly flat from
an area
that has
Utility sector must
this sector,
one can see that
1986 and
Transportation
of annualized
employment
relatively
This
is
growth.
growth for
level
in
1987.
1978
it has
The transportation and
trend'from
1967.
as the
This
1977 to
is typical
Transportation and
the number of persons
it
employed
has grown every
Over
the time frame
year
This
is
Denver.
just above
This
of
three times
the same sector.
29
is why
total
in
in the
1975 to
and Utilities have produced
percentage
also about
1983 to
to
in this
keep up with the growth.
the growth
Denver
1975
a growth
good growth
In examining
study except
from
employment
1987,
a 3.6% rate
the rate
of total
it has maintained a
employment
the growth rate for
in
Denver.
the US
in
TRADE
In Denver,
stable
the wholesale and
throughout
the
employment
in Denver,
employment
from 1971
As with
retail
years.
With
to
quarter
of
total
1987.
a continual pattern of growth in
Trade industry
employment.
employees at a
rate of 4.6 %,
Until
1984 the sector
a figure
of Denver total
the growth pattern was quite
well
employment.
was adding
above the average
From
flat at only 0.7%.
industry grew at a rate of 3.6% or
total
a
it has maintained a 24-26% share of total
the US, Denver showed
annual growth
trade sector has been very
1984
to
1987
Overall,
this
just above the 3.4% rate for
employment.
SERVICE
In
Denver the
growth
employment was just
to
1987 it
in this
less than
2%,
the years 1975
sector grew at
than the
growth
rate for
for
share.
to
1987 still
employment.
30
It made up
in the Service
of 5.7% which
is much faster
the next
considerably
From 1971
employment
in
two
Denver.
above
In
years.
average growth rate for Service sector employment
1975
total
1/5 of the total.
to 1985, Denver
total employment
flattened out
in its
about
an annualized rate
percentage of
(1.94%) per year.
showed a steady increase
18.2 to 23.8% of employment or
During
sector's
1985,
The
the
overall
was 4.8% from
the rate
for
total
FIRE
In Denver
6.1%
the FIRE sector
was slightly more significant with a
to 7.8% share of total
employment.
It did not
grow every
year but did exhibit a decidedly positive trend.
The Denver
From
1984.
to a rate
1984,
grew at
1.4%.
Given the
the annualized rate over
one and
employment
a rate of
6.1%
from
one half
significant
the study period
times greater
1975 to
deal
a great
to 1987 this sector slowed down
1984
of only
is almost
total
FIRE sector
growth through
was 4.9%, which
than the
rate for
in Denver.
GOVERNMENT
Government
is
always a significant
employed between
enough, Denver
15.8 and
upswing
always
in
From
of
in this
gains
showed
recent years.
most
19.7%
1984
to
the percentage employed
important
employer and
the
total.
area of
1987
it
Interestingly
employment
there was
in
the
a definite
It
by the government.
that the government
to remember
Denver
in
is
often moves
independently of market forces.
In
Denver
almost
rate of
the growth
exactly
2.0%.
trend
like the
It has
and a similarly small
of
line for
the
government employment
the US.
It has an annualized
same contraction from
positive growth rate.
31
looks
1980
to
1983
PHOENIX
The growth
changes
these
in all sectors
are
shown
total
in
some substantial
exhibited
a
have made
areas studied.
The slow
Denver
rates than
it very
by growth
in
in
(10.0%),
Service
(9.1%),
Utilities
(6.5%).
Trade
than average
growth for
rate
Trade was
significant
industries
the US.
(3.4%) and
exceeded
growth
in
the study period
of
growth.
6.2%, a
either
The
rate which
of
the other
(See Figure 7)
growth
or
was matched or
here because for much of
faster
rate of
the study period
The extraordinary
Transportation and
should be mentioned
would
3.
These were Construction
(7.2%) and
annualized
Table
employment
four sectors.
it
led to
in the distribution of employment over
Phoenix
FIRE
in Phoenix
Government
in
They
Phoenix were different
were
(3.2%).
Manufacturing
All
in either of the other two
(5.3%),
three of these
areas.
than
in
Mining
had faster
(See Figure 8)
EMPLOYMENT GROWTH BY SECTOR
MINING
In Phoenix, the Mining sector has
of total
was only
employment.
.09%
.04-.05% and
For
never been a significant part
instance,
of the total.
in
1974 Mining employment
This declined
in
increased through the eighties to
32
1978-79
.07%.
to only
TABLE 3: PHOENIX EMPLOYMENT DISTRIBUTION
MINING
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
0.09%
0.09%
0.09%
0.08%
0.04%
0.05%
0.06%
0.06%
0.08%
0.09%
0.09%
0.07%
0.07%
0.07%
CONST
7.46%
5.65%
5.30%
6.40%
8.15%
9.21%
7.95%
MFG
19.05%
16.96%
17.10%
17.11%
16.94%
17.38%
17.90%
7.52%
17.82%
6.73%
7.84%
8.71%
9.21%
17.07%
16.18%
16.28%
15.52%
14.93%
14.87%
8.93%
7.58%
TRANS/
UTILS
5.40%
5.37%
5.25%
5.10%
4.77%
4.76%
4.83%
5.11%
5.45%
5.30%
5.02%
4.88%
4.98%
5.37%
TRADE
25.54%
26.22%
26.30%
26.25%
25.74%
25.37%
25.46%
25.77%
25.74%
25.41%
25.19%
25.58%
25.14%
25.30%
SERVICE
17.84%
19.00%
19.38%
19.60%
19.80%
20.15%
20.87%
21.35%
22.27%
23.21%
24.01%
24.03%
24.78%
25.38%
SOURCE: ARIZONA DEPARTMENT OF ECONOMIC SECURITY,
MARICOPA COUNNTY LABOR FORCE AND EMPLOYMENT
33
FIRE
7.17%
7.51%
7.27%
7.14%
6.95%
6.99%
7.06%
7.20%
7.40%
7.42%
7.30%
7.51%
7.96%
8.20%
GOVT
17.48%
19.19%
19.31%
18.32%
17.62%
16.09%
15.84%
15.18%
15.25%
14.58%
13.39%
13.21%
13.23%
13.25%
FIGURE 7: PHOENIX GROWTH SECTORS
240,000
220,000
200,000
180,000
(n)
z
0
160,000
140,000
0
el
120,000
LiU
100,000
80,000
z
60,000
40,000
20,000
0
1975
A
1976
1977
0 CONSTRUCTION
TRANSPORT / UTILITY
1978
1979
1980
1981
1982
1983
1984
1985
SOURCE: AZ DEPT OF ECONOMIC SECURITY
+ SERVICE
o
FIRE
X TRADE
V TOTAL EMPLOYMENT/5
1986
1987
FIGURE 8: PHOENIX LOW GROWTH SECTORS
140,000
130,000
120,000
110,000
100,000
(I)
z
0
90,000
to
0.
80,000
L.
IL
Lf
70,000
0
0Z
60,000
50,000
z
40,000
30,000
20,000
10,000
0
1975
c
1976
1977
1978
1979
1980
1981
1982
1983
1984
SOURCE: AZ DEPT OF ECONOMIC SECURITY
0
MANUFACTURING
+
MINING
GOVERNMENT
A
TOTAL EMPLOYMENT/10
1985 1986
1987
The growth
in this sector has not mirrored either Denver or the
US.
Most
years have been
either
the study
period the rate
was 3.4%
total employment
(At
Phoenix
its
positive.
or about half
Over
of Phoenix
growth.
This sector employed
1987
0 growth or
peak
only 400 persons in 1975 and
there
were as
many as
only 600 in
700 persons).
In
the quarry operations are the only significant employer
in the Mining
track Denver
sector.
This helps explain why
the trends do not
and the US more closely.
CONSTRUCTION
Phoenix
construction
percentage of
Denver.
In
employment
the total
working
sector.
33.2%!
consecutive
annually.
The
Three
12.3%.
in total
at
a
higher
the
US or
two entire cycles.
of total
in Phoenix grew
years of rapid
During
either
downturns have
of decline
employment
also
been
the US or
from
was
most
Denver.
1975 to
1979 at a
growth was followed
by three
an
average rate
growth
and one
of
-7.9%
slower growth
1987 construction employment declined at
During the
annualized rate
growth
in
observe almost
This tremendous
years
year followed.
a rate of
than
in Phoenix as compared to either
Construction employment
rate of
represented
in 1985, as much as 9.21%
in this
pronounced
the
employment
Since 1976, one can
1979 and
has
entire period from
of growth
employment
was 10.0%.
for Phoenix
36
to
1987
This exceeds
the
(6.5%).
1975
MANUFACTURING
Phoenix on
It was
lose
the other hand
not until
1982
that
its share of total
manufacturing
still
left
growth
this
faster
than
national
employment.
in all
years except
a declining
sector
as
large share of either of the
the tremendous
growth rate
growth
in
1982 and
1983 have
of total
a component
this a very
to
the
It has always been a major employer with
An annualized
this sector
began to
From 1982 forward Phoenix
employment.
however
definite trend.
the manufacturing sector
even
19% of total
Uninterrupted
not had such a
employment.
declined
manufacturing sector.
14.9 to over
has
of 5.3% would have made
other two economies,
Phoenix
(6.5%)
has allowed
lose its share of the total.
TRANSPORTATION AND UTILITIES
Phoenix
had
industry.
the smallest
The
employment
employment has peaked
in
1979 and
percentage
once
here
as
of
a
employment
percentage
in 1982 and has
1985.
As a trend
its highest point
it was only
of
this
total
bottomed out twice
line the graph
5.4%
in
is quite flat.
of the total
At
employment and
at the low point it was 4.8%.
In
terms
of actual
positive trend
steady 6.5%
.
growth
Throughout
growth rate.
this
sector exhibited
the years
1975 to
This explains
percentage time series.
37
a
strong
1987 there was a
the flatness
of the
TRADE
As
with Denver
employs one
quarter
been between
26.2%.
and recently
25.1
of
While
there has
its people
a very
US as
in
25.8% except
and
Phoenix has
in the
a whole,
Phoenix
this business.
It has
in 1975
flat trend
been little
when
line in
variation
it
it
rose to
this sector.
does exhibit
some
subtle cyclic tendency.
In Phoenix
the actual
quite fast
from 1975
levelled off from
and grew at
year,
to 1981
1981
to
in
the Trade
producing a
1983 but,
a rate of 7.0% through
1987 was 6.2%.
due to
employment
rate of
in 1983
1987.
industry grew
it took
7.0%.
It
off again
The rate from 1975 to
Once again a sector shows tremendous growth but
the 6.5% growth
the sector
in the Phoenix
loses part of
total
employment
every
its share.
SERVICE
Phoenix had
of
total
the
largest
employment.
employees were
working
increases in the
Service sector share
In
of
1974,
in
the service
percentage had risen to over
The actual
number
very rapidly.
1975 it grew
industry
of 9.1%
to employ 231,600 by
38
in this
annually
in Phoenix.
non-agricultural
sector.
1/4 of the total
of people employed
At a rate
fastest growth
17.8%
By
1987 this
(25.4%).
sector also grew
it was
the second
From only 81,700 people in
the end of
1987.
FIRE
Phoenix' FIRE employment grew faster
than Denver's or
However,
to
total
it did
not grow fast enough
employment.
not vary much.
employment
Over the
in this sector from
and 8.2% of
percentages did
largest
1974
In
to
1983.
Phoenix
share of
1986 and
1987
had between 7.0
its non-agricultural employees in this field.
in Phoenix grew
from 1976 to
1982.
From
dramatically to 9.1%.
in employment
1982 through
This
the annualized
contributor
its share of
Phoenix had the
lead in this regard.
This sector
boosted
study period the
In the study,
it regained the
increase
the US'.
a rate
of 6.7%
1987 this rate increased
last five years of increased growth
rate to
to the growth
at
7.2%.
This
in Phoenix' total
is also
a major
employment.
GOVERNMENT
Government represented employment
the total
during
decreased
its share of total
faster
level
At
for between
the years studied.
13.3 and
Phoenix' government sector
employment.
In fact
than any of the other areas in this study.
off from
3.2%,
exhibits
government
employment.
comparison
to the
local
employment.
of total
it decreased
It seemed to
1984 to 1987.
Phoenix
total
19.3% of
the
While
this is
other two
This
employment faster
fastest
areas,
is
rate
somewhat favorable
grew slower
why government
in Phoenix
39
it
growth
lost
than elsewhere.
for
in
than the
its share
SUMMARY OF EMPLOYMENT TRENDS
DENVER -
Looking back
at
the
review presented
employment sectors behaved rather
Major
differences
occurred
subsequently in the overall
to take advantage of an
industry, the
began
cut
in
backs
in
1982
in
Mining
growth.
sector
in the price
shale
the new
with the rest of the
of natural
never recovered and brought
Oil
and
Denver was able
and gas market and
However, along
employment.
centered in Denver
the
employment
severe drop
1981 or
similarly to the US sectors.
inflated oil
economics of exploration.
above, Denver
gas which
on massive
production
but this type of production
was
also
was not enough
to support the down turn in employment.
The question
left Denver
with
the
is whether the
or went
in
employment
Denver from about
assume that
Mining
very
the
Denver did
sector.
strong
These
1984 forward.
lose many
contraction but did not fall
Mining sector.
off
In fact, Denver
diverse employment base
It
Denver
in the
Due to
did
not
did have a significant
any where near
as fast
may well benefit from
in the future.
40
One can safely
not debilitating.
completely collapse as an employer.
in all
at total
of the people employed
other sectors,
Even
and FIRE
growth
Looking
is evident.
losses were
in
employment.
levelling off of
same trend
performance
Mining sector
in the Trade, Service
a consistent
levels,
leaving the
other sectors for
strong growth trends
sectors, there is
sectors
into
people
as the
a more
PHOENIX -
When compared to the US and Denver, Phoenix performed
quite differently.
in most every
With exceptionally strong
sector
as indicated by the
During
Phoenix also had a
fluctuations in
growth patterns
more volatile economy
its diversification
the study period, Phoenix was still enjoying the remnant
benefits
of
the
developed some
sunbelt
migration
momentum and
mega-trend.
was still
rate in virtually all employment
fueling a
This
sectors.
one can see similarities
sector
until
but Construction and,
the
variations
employment
interest
base
is
1982 to
slowly
1986
across most
However,
this
Phoenix,
the
sector
makes
US'.
in
in
grew
it
at
the
lost
Phoenix from
Denver and grew
growth is occurring
was subject
to
rate
share
Construction gained.
41
very dramatic
the growth pattern
opposite way.
its
added
in Phoenix.
in Phoenix
same
particular
The author sees this as a natural
The influence of
exactly
It
Phoenix'
Construction
employer
declined
Of
in the Transportation and Utility sector
almost
sector
that
strong growth economy when
every sector as
in every
in Manufacturing.
sector.
as an
when the same sector
cycle changes.
evident
sectors
Construction
in the US as a whole.
1984,
from
its position
extension of a
an
these
so different
the
dramatically to
in
had
high growth
Comparing Phoenix to the US,
is
index.
While
as
of
the
the total
total
is quite
which moves in
Transportation
employment
employment
in
when
The Manufacturing
Phoenix
occurred
area.
in
sector may be
the next growth area
A pronounced surge in
1984 at which
significant contractions.
time
Manufacturing employment
the US and Denver
This is in no small
to the Phoenix' desire to cultivate employment
42
for the
both showed
way attributable
in this sector.
CHAPTER FOUR
CHARACTERISTICS OF RENTAL INCOME
CHARACTERISTICS OF RENTAL INCOME
THE DATA
In this study, rent collected
the apartments.
vacancy and
These
This is most appropriate
discounts.
was income and
The source
of
of for
represent
profit
because
the rental
expense summaries from a
portfolios
course
is used as a measure of return to
few
and
income data
large portfolios.
apartments built
development
it reflects
in
held under
the
normal
continuous
ownership.
The Denver
data came
apartment complexes.
given
year.
from continuously held,
There
These
buildings in
were as many as 32
apartments
complexes of
were
58 to 360
apartments in
number
in the years 1981
1977.
These are
the Denver
through
units.
The
two
story
majority of
There were between 1207
data
1987.
shown in Table 4.
complexes in a
typically
these complexes were 200 to 300 units.
and 2974
privately owned
base with
the latter
The figures go back
The actual
to
source was the
owner'?s income and expense summaries for each complex.
A summary of
the rent
Phoenix data came
and expense
data
came
data for
from two sources.
summaries from
from
apartments each.
Phoenix
eleven
is
First,
a major apartment
different complexes
They were
typical
43
low rise
in Table
5.
The
there were
income
manager.
These
of
135
to
buildings.
402
TABLE 4:
YEAR
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
DENVER RENT DATA SUMMAY
MEAN
RENT/UNIT
SAMPLE
SIZE
2,320.44
2,594.82
2,968.43
3,316.50
3,857.19
4,407.11
4,419.50
4,762.16
4,476.79
4,436.29
4,230.28
1207
1437
2037
2440
2974
2974
2974
2974
2974
2974
2974
TABLE 5: PHOENIX RENT DATA SUMMARY
YEAR
1980
1981
1982
1983
1984
1985
1986
1987
MEAN
RENT/UNIT
SAMPLE
SIZE
3,371.02
3,469.36
3,715.90
4,222.03
4,157.74
4,198.73
4,242.54
3,916.07
784
991
991
1,038
2,792
3,771
4,190
2,671
44
The second source of data was a major local
This data was taken from property tax
covered
ten complexes.
buildings with 200
the period from
1980 to
per
(IREM)
square
membership
also
complexes of two story
The Phoenix data spanned
series
The
(12).
data
Institute
of Real Estate
This data was
collected rent
is
taken from
(Certified Property Managers)
from
1986 the
1973 to
are summarized
the
Institute's
on a voluntary basis.
1976 represent average
figures are median
comparison, the rent per square foot
750 square feet
This data
1987.
data came from an
foot.
The figures
1977 to
protest forms.
to 300 units each.
United States rent
Management
These were
management company.
to arrive at
rents.
rents.
For
From
purposes of
figures were multiplied by
a rent per unit
value.
These data
in Table 6.
CORRELATIONS
UNITED STATES
First
the study
levels in
What
these.
coefficient
(R)
the correlation
correlation
was that
US
between the
each of the cities
there were
significant
correlations
Phoenix
displayed
of 0.927.
Between
Denver rents and
coefficient was 0.936.
between
the trends
diversification
in
There
rent
(See Figure 9)
index
45
rent
in the study.
and
studied and the US totals.
a higher
the relationship
the entire US and
was found
between
examined
a
correlation
US rents
was significant
in the
two
cities
Denver generally had
than did Phoenix.
This may be
TABLE 6:
UNITED STATES RENT DATA SUMMARY
YEAR
RENT/S.F.
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
2.34
2.48
2.61
2.78
3.09
3.24
3.58
3.88
4.45
4.83
5.05
5.57
5.55
5.48
RENT/UNIT
1,755.00
1,860.00
1,957.50
2,085.00
2,317.50
2,430.00
2,685.00
2,910.00
3,337.50
3,622.50
3,787.50
4,177.50
4,162.50
4,110.00
(ASSUMES 750 S.F. PER UNIT)
(1973 TO 1976 are average rents)
(1977 to 1986 are median rents)
SOURCE:
INSTITUTE OF REAL ESTATE
46
FIGURE 9: AVERAGE RENT COLLECTED/UNIT
$4,800
$4,700
$4,600
$4,500
$4,400
$4,300
$4,200
Q
$4,100
IU
La
$4,000
-J
$3,900
0
U
I-
$3,800
w
p
$3,700
z
Id
$3,600
$3,500
$3,400
$3,300
$3,200
$3,100
$3,000
$2,900
1980
0
US RENTS
1981
+
1982
DENVER RENTS
1983
1984
1985
0TEPHOENIX RENTS
1986
evidence
that
influence
sector
the
on
by
degree
of diversification
rent levels.
sector
However,
basis
is
has
further
necessary
a
direct
analysis on
to
evaluate
a
this
possibility.
DENVER AND PHOENIX
Looking at rents
1987,
it
in Denver and Phoenix over
is easy
between
the
two
to
see the
cities as
differences occurred during
the
time they
growth
and
vast differences
seen
in Figure
1983,
1984 and
to perform
During
years 1980 to
in performance
10.
The
1985.
trend
biggest
The rest of
similarly.
showed the strongest positive
for Phoenix.
all.
appeared
the
In 1983
the
in the study period
Denver on the other hand, had almost no growth at
1984, Denver
in Phoenix
increased
the rent
rent
levels dropped
levels at a good rate
slightly.
1985
saw
Denver rents dropping quickly while Phoenix rents increased.
CORRELATION BETWEEN RENTS AND THE DIVERSIFICATION INDEX
With respect
index
to the
and rents collected per
showed
a
strong
ideas put forth
suggested,
any
relationship between
such
the diversification
unit, neither
relationship.
This
is
Denver nor Phoenix
consistent with
in the beginning of this study.
there was
correlation.
no reason to anticipate
In
fact,
As Attaran
(1)
the existence of
the respective
correlation
coefficients were 0.42 for Denver and 0.37 for Phoenix.
48
the
FIGURE 10: RENT COLLECTED PER UNIT
$4,800
$4,700
$4,600
$4,500
$4,400
0
Id
H
U
La
$4,300
$4,200
-J
-J
$4,100
0
C)
H
$4,000
zU
$3,900
$3,800
$3,700
$3,600
$3,500
$3,400
$3,300
1980
+
1981
DENVER RENTS
1982
1983
o
1984
PHOENIX RENTS
1985
1986
1987
CORRELATION BETWEEN RENTS AND EMPLOYMENT LEVELS
Examining
the rent
levels attained over
in the various employment sectors some
are
found.
For
instance,
when
time and the variations
interesting correlations
looking
at
the
US
total
employment and average rents the correlation coefficient
quite high at
causal
0.9342.
relationship,
While this statistic
it
does
merit
is not
(r)
is
proof of any
closer examination.
To
begin this examination, both average US rent per unit and total
US employment
over
these series'
is definitely positive except
1984
to
1986
time were
when
compared.
took
rents
a
The trend
in
during the period
slight
downturn.
correlation is strong but
the
is unexplained.
required now is systematic
What
is
of the information
in the
coefficients
each
employment
for
recent slowing
previous chapter
sector.
distribution
and
This
the
distributions of Denver and Phoenix
is
both of
The
of the rent trend
evaluation
and the correlation
done
for
respective
the
US
employment
in an attempt to pin point
the closest relationships.
There were several strong
the US
as a whole,
between the Service
expected
as
employers
the highest
r was 0.9783.
sector and rents.
the Service sector
in the United States
particularly
sector,
correlation coefficients found.
probably to be
fastest growing
over the study period.
strong correlation
this was also a major
This occurred
This is
is one of the
coefficient was
growth sector
50
For
Another
in the
in the US.
FIRE
Both of
these sectors along with the
(r
.9522) tracked rents
=
years
1984 through
The combination
of
recent
trend
has shown
eighties
in
trend
in
rents.
with rents.
many as
employment
Oil
the Mining
the strong
1980.
inflation.
What
tracked rent
employment
occurred was
the new price
the
is
Until
that time,
Mining
It
closely even
employment.
effect of Oil
sector and
explosive growth
on
in employment
levels which made Natural Gas exploration
for Denver.
up at
It
as
between Mining
is the
This brought
of new job seekers and basically represented
rents
a negative
sector.
levels very
in the
and production very profitable.
industry
industry.
any of the other sectors.
for this relationship
on
early
This is still not
correlation
through
a very
only sector
left the
it only makes up between 0.7-1.25% of total
Gas prices
due to
1979.
50-55%
since the
and Gas dependent Mining
look at
The probable cause
and
is the
has also exhibited
Mining tracked rents closer than
though
This
356,000 people
and US average rents
seems that
the
track the
sector shows
negative trend
losing 2,046,000 people since
pronounced as the
comprises about
The Mining
Manufacturing which
interesting to
during
the US and yet they do not
a consistent
when as
Along with
very closely except for
of these three sectors
interesting correlation
that
trade sector
1986.
the total employment
most
Wholesale and Retail
same
The same
time new
51
increase in
employees
in a
large number
the birth of a new
inflation pushed
were
looking
for
housing and
maintained
as such
at
higher rent
least for a
than coincidental.
levels were
time.
established and
The connection is
More valuable insight can
looking closely at the two cities
less causal
be gleaned from
in the study.
DENVER
TOTAL EMPLOYMENT
A close look
steadily
at the
decreasing growth
growth spurt
employment
surge,
Denver employment performance
in
was flattening
employment
decreased slightly during
Rent levels
there was
1984,
on the
something of
was growth
pattern of
a
that total
to the
out
and
1984
even
1986.
in the
although
rent
to
Subsequent
completely flattened
the trend was negative through
unusual
out.
other hand grew
an abrupt stop
there
There was
the year 1984 however, previous
growth
total
rate.
presents a
steadily until
growth.
1982 when
Then, from
it soon turned back
1987.
levels?
of the correlation coefficients
down and
What contributed
What follows
1983 to
to this
is a discussion
for Denver rents collected per
unit and each sector's employment
in order of significance.
MINING
The most
likely candidate in
consists
earlier
of
in
largely Oil
Denver
and
Gas
the chapter on economic
52
is the Mining sector which
employment.
make up,
As
discussed
the trend
in the
Denver
Mining
sector
negative through
easy
was
1987.
to explain
positive
through
In relation to
the flattening
of rent
in rents during
It
anything that
sector.
The
resemble
the
Denver economy
occurred
was experiencing
This other
by the tremendous surge in
sector declined,
it
is
even the
in the
in this
growth
in
mining
and rents
case
is that
several other
growth was somewhat obscured
the Mining sector.
the other
then
1984 is more difficult.
What may have happened
sectors concurrently.
rent
levels and
correlation coefficient between Mining
was only 0.6448.
and
the Mining sector,
downturn, but the surge
does not
1982
sectors were
So as the Mining
able to
support
the
levels for a time.
TRANSPORTATION AND UTILITIES
In the Transportation and Public Utility sector
quite significant.
trends
varied
in
direction of the
1985 when
did not.
At 0.9600 this
an
statistic says that the two
exceptionally
similar
two trends was the same for
rents began
the r value was
declining and
There was some difference
this
manner.
all
The
years except
sector's employment
in the rate at which these
trends grew and contracted but they are the most similar of all
the comparisons made.
Again note the
The high correlation coefficient
aspect of growth
sector.
the force
The
is what
non-physical
in the year
1983.
is as expected as the physical
drives the Transportation and Utility
aspect
(i.e.
rates.
that drives rental
that population growth
incline
increases demand
53
employment
Renaud
(10)
is
growth)
pointed
out
for public resources.
SERVICE
The Service sector employment
trend
in Total
resemble
the
growth
trend
again-points
employment
The
correlation
the Service sector
was 0.9277.
in the year
strong downward move in rents but
increased significantly.
out the similarity
which
the service sector had
this
year
the
rents.
difference which occurred
year there was a
service sector
for
rents and
There was only one major
That
most closely resembles the
Employment for Denver, was also found to closely
coefficient between
1985.
which
in the year
The study
1984
previous to
been growing much slower.
characteristic
up
turn
During
mentioned
earlier
occurred.
FIRE
Finance Insurance
trend that
and Real
Estate
inspection
visual
the
FIRE sector
period.
sharply
uninterrupted
during
the
had
shows
but
the
1984
slope
the year
FIRE
A
1964
sector
particularly
when
the
occurred.
54
In fact
was 0.9164.
the trend
throughout
between the FIRE trend
in
growth.
that
exhibited a
in rents.
the two series
a positive
evident
year
for
of the plots
The differences
trend became
down
the trend
was quite similar to
the correlation coefficient
as an employer
when the
and
A
line for
the
study
the rents
rents turned
employment
continued
similar variation
previously mentioned
was
uptick
TRADE
The Wholesale and Retail
varied
in a very similar pattern.
of 0.9138.
rents
Trade sector employment
This sector
as can
be
seen
This resulted
increased
in the
at
graph
of
1987.
years The trade sector
What was
between these
trends was
this year
two
the
rate than
the trends.
trends appeared
while rents declined.
in an r value
a much slower
differences between the
In both of these
in Denver also
in the
years
Major
1985 and
employment grew
striking about the relationship
the growth
shared
in
1984.
trends grew at almost exactly
During
the same rate
7.25% for Trade employment and 7.73% for rents.
MANUFACTURING
There is considerable
Manufacturing
0.8146,.
Although
in
The graph
is
Manufacturing
particularly
emerge as
trends shows
before that
leveling
rents from
later.
1984 to
employment.
notable but,
what
see that
employment
every
did
other
coefficient
1983,
concurrent with
was a decline in
similarities
show
sector
55
is,
is interesting
not
,which begins
rents during
1984.
is
the similarities.
1987 there
during
increase in this year.
in
That
The
a systematic uptick
Construction
correlation
Manufacturing employment
a close similarity
in
in the variance. of rents and
their
of these
the decline in
the decline
will
employment,
1982, occurs
there
similarity
are
not
is what
will
While
Mining and
this surge,
the reader
except
Government had
an
GOVERNMENT
Another sector
which was expected
the Government as an employer.
and reacts
to move more
However,
in a manner which -is totally
forces.
The author
relevance
in the
is of
this sector
that there
in the
The facts bear
this opinion out as the r
employment
rent
and
coefficient
levels
is the second
often acts
independent of economic
the opinion
trends of this sector
similarly was
is little
matter at hand.
value for Government
is only 0.6338.
This correlation
lowest.
CONSTRUCTION
The Construction sector varies
levels.
The r value here is only 0.1915.
of these two
roughly
Other
is
quite differently from
trends reveals
cyclical,
than at
no
the
rents perform
the beginning
similarity.
the reason.
and
The
Looking
the rent
at the graph
While construction
as
described
earlier.
end of the study period,
author
explanatory power to this sector
does
not
is
there
attribute
any
in Denver.
PHOENIX
Looking at
Phoenix
trend
the employment and rent relationships
tells
a considerably
in rent
positive
trend from
rates of growth.
year
of
levels
is
1980
different story.
quite unique.
to
1983
follower
56
by
To
strong
with progressively
higher
two
There
begin, the
is a
This accelerating growth
contraction
in the city of
is
years
followed by one
of
very
low
increases.
The effect of this period was to hold 1986 rents to
1983
levels.
year
of strong contraction at the rate of approximately -6.0%.
TOTAL
This flattening of
EMPLOYMENT
Comparing the
total
the trend was followed by one
trend discussed above
employment suggests
relationship.
In
comparison
only 0.6535.
is
fact,
that
the
1982 the
at a
there
In Phoenix,
rate.
compounded
growth rate was
is
only
in Phoenix
a very
correlation coefficient
growth happened at a very fast
employment grew
to the growth
the
for
6.9%.
annually.
this
employment
After the year
rate of
only 1.5%
total
loose
1982,
From
While
the
1980 to
there is
little explanatory value in this comparison, there were sectors
that seemed
to move more like the trend
in rents.
MINING
example
One such
less
than
virtually
any
0.1%
is
of
the
0.9100 is
total
inconceivable that
importance between
However,
sector.
the Mining
employment
there
rents and
in Phoenix
is a causal
trends
in
correlation coefficient
it
is
relationship of
the Mining
the relationship is definitely strong.
the highest
it represents
Since
sector.
The r value of
in
the Phoenix
analysis.
CONSTRUCTION
Construction was a very
of the Phoenix area.
significant contributor
As an employer
57
to
the economy
of as much as 9.2% of the
total,
it can
economy.
In
Construction
bring
examining
the
are
somewhat
comparison produces
an r
influence
graphic
sector employment
similarities
rents and
considerable
and
the trend
to
the
of
the
in rents,
the
discern.
0.7263 which
Construction employment did move
While there are several
bear on
representation
difficult
value of
to
This
suggest
that
together somewhat.
dissimilarities, there are a few points
of similarity such as in the years 1985 through
1987.
Also,
in
1983 they grew at almost the same rate.
MANUFACTURING
When
looking at
little or
trend.
no
the trend
in Manufacturing
conclusive similarity
The
correlation coefficient
lowest score
in comparison to
of
only
(excluding government) of all
is the Manufacturing sector
sector there
is the least
0.5066
the rent
is
the sectors.
similar
is
the
That
trend compared
to rents.
TRANSPORTATION AND UTILITIES
The
next sector
sector
examined was
which exhibited
an r
particularly helpful
as an
only
graph
look
correlations
Beyond
that,
at
the
value
and Utility
of 0.6201.
This is
indicator of rents either.
except perhaps
the trend
the Transportation
to
see
in the
in employment
positive growth.
58
that
there
years 1980
are
not
One need
no
real
through
1982.
in this sector
is a steady
TRADE
to the Wholesale
Going on
notes a
few similarities.
0.6423 this sector
two
although
relationships.
years 1981
With a correlation
should vary more closely
there
the author
and Retail Trade sector
will
be
no
coefficient of
than the previous
particularly
strong
In fact, the only similar movements were
and
in the
1986.
SERVICE
An examination along the previous
sector begins
second
with
an r
highest score
in this sector
as 25.4%
of the total
232,000 people.
value of 0.6912 which
excluding
relevance
lines applied to
is the
Certainly this
Mining sector.
fact
that
The real
it comprises as much
in Phoenix.
This
is nearly
is a force that could
housing
prices.
However,
the similarities end there.
The
represents the
the
employment
the Service
similarity
is
striking
influence
through
1983.
FIRE
The final sector
is FIRE.
In
studied in the Phoenix section
Phoenix
does not mirror
this
the growth
is a growth
in
industry
similar to overall
total
is not one of the
area at
It
less than 8%
but
rents a great deal.
characteristics more
employment.
of this paper
of the total.
59
growth
its growth
It displays
in the Phoenix
larger employers
in the
DENVER SUMMARY
There
are certain
characteristics
contribute
to the
marked
employment
growth
and
interviews of
it
is more
typical
completion.
the
local
of
vacant new
cause it
rent
to
levels.
This also means
to crash suddenly.
regulation in effect.
in
the Denver
market has learned to do
large swings in the rent
market.
This
also forces
economic forces
more
to make decisions about to
based on
that an overly
This custom is quite
the entire complex on
the
they are nearing
large number
sort
and
of self
the opposite of the
In the
Southwest the norm
the market
at
one time.
is to effectively
levels that appear
a more direct
current
the market
This constitutes a
is to put
during
author found that
not overwhelm
the Southwest.
trends in
instance
the project
apartments will
normal procedure
For
lease buildings out as
of
market that
between the
apartment builders, the
the balance
leasing activity.
the Denver
similarities
This enables a builder
timing of
in
What
level out
in the Phoenix
relationship between
and apartment rents because
they builders are
in touch with the leasing market.
PHOENIX SUMMARY
A large part of what has happened
difference that becomes more
Through
became
discussions
apparent
that
with
in
in Phoenix
is due to a basic
apparent when compared to Denver.
apartment builders
most
of
in
the Southwest
Phoenix
the
it
normal
procedure is to complete an apartment project before an earnest
leasing program
is put
in place.
60
What
this opens the door for
is a
lot of units
also an
hitting the market
is
undercurrent of permissiveness throughout
the Phoenix
the
addition of
metro area.
This permissiveness
apartments to go
the number of
has allowed
somewhat unchecked.
do not track employment as closely
forces.
There
at one time.
Thus the rents in Phoenix
as Denver or
apartments is not driven by
These forces would, as
thus promote rent
levels.
61
in Denver,
the US because
the proper
economic
control building and
CHAPTER-
FIVE
CONCLUSIONS
CONCLUSIONS
This
study
that
shows
in
economic performance as
no
is
between
diversification and this performance.
into
the individual
correlation between
employment
exists
as
As
The
degree
to
level
given
of
be broken down
there
is
certainly
one or a few
which
there
However,
This must
see that
and
distribution
a
this performance and
sectors.
is largely
sectors to
significant
some
the Denver example.
correlation
apparent
be
city's employment
a
between
relationships
may
there
this
of the
relationship
affected by the flow of stock
into a market
in the Phoenix analysis.
in
Denver,
correlation
sectors.
the
rents
coefficients
The
collected
when
overall r value
per unit
compared
for total
showed
with
strong
the
employment
various
and rents
collected was very high.
There were a few strong r values just
under
Service,
that
such
relationships do
For
as
not
FIRE
and
all have to be strong
to be
instance, Construction was expected to show
correlation.
should
rents.
increase
This
exhibited
Looking
This
is
based on
competition and
proved to be
the idea
Trade.
These
informative.
low or negative
that new construction
thus put
downward pressure on
consistent with
the findings
as it
low correlation to rents.
at
Phoenix,
the
rents
correlate particularly well with
62
collected
changes
per unit
did
in employment.
not
There
were no strong relationships between either total
any one of
the most
the sectors.
significant sector.
the process of
effort
the
economy.
this level
of
one of
However,
the
rent
of
is an economy that
It
is possible
of growth,
Phoenix
the
the
unfettered increase
that
pointed out as
no one
construction of new apartments.
constituency
regulation
This
tremendous growth.
to maintain
regulate the
that
Construction has been
most
apartment
do
not
that in the
is willing to
It
would
was in
seems likely
be
against
significant sectors
in the stock
levels
employment or
owners
should
of apartments
closely mirror
is
of
be.
any
the
The
the reason
the
increased
economic activity.
STRATEGIES
These
findings suggest
correlation between
rent
levels.
steady,
an
virtually all
is key
to
can and
this consistent
from this analysis
First, evaluate
employment
distribution.
individual
sectors
least
the
Along
should
relationship between the returns
sectors
and
the
performance was a
the
prudent
two general
overall
with
be
strong
increase in stock.
is that
take into consideration at
economy.
should be
employment
economically viable flow in the
What follows
should
What
that there
aspects of
diversity of
this
examined
investor
analysis
closely.
the
the
The
and
"volatile" growth sectors
and the contingent effects on overall
expected growth should be
63
scrutinized.
This will
offer a
potential
for growth and the
downturns
in individual sectors.
Beyond
the
this sort of analysis
classical
barriers
environment will
in returns.
nature but
growth
and
the
investor must
competition.
likely be more conducive
simply based
of the
economy's
ability of the economy to survive
This regulation may
economy
thus a
to
good view
a
tendency
regulated
governmental
practice.
In
in
a strong
toward over-building
tendency toward diseconomy in rents.
64
more
to sustained growth
not even be
on customary
there appears
A
look closely at
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