Atlanta Market Report – April 2018

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Growth Momentum in Atlanta’s Labor Market Continues to Sustain in 2018

2017 was a stellar year for Atlanta in terms of job growth and economic activity. The federal tax cuts combined with Georgia’s business-friendly policies have been a huge plus for Atlanta.

Metro Atlanta ended the year with 2.79 million jobs, making it one of the best performing regions in the entire country last year. With nearly all the key indicators trending in the right direction, the city is poised for a year of steady growth in 2018 as well.

Job Growth in Atlanta in 2017

Atlanta started 2017 on a fairly strong note with 2,710,900 jobs in February – a 3.6% increase from the previous year. [1] By July, the number stood at 2,742,800 – a 3.2% increase from the previous year. [2] By December, the total number of jobs had climbed up to 2,791,400. [3]

The metro area added a total of 55,600 jobs in 2017, accounting for two-thirds of the employment opportunities generated in Georgia last year. [4] Professional and business services industry topped the chart by adding 16,200 jobs, followed by education and health services industry which added 13,300 jobs. Hospitality industry added 7,100 jobs, making it the third-best performing industry in the region last year.

The Growth of Hospitality Sector in Atlanta

Atlanta’s hotel market witnessed a steady rate of growth in 2017 and the average room rate went up by 3.8%. [5] While this is down from the 6% increase in hotel room rates the previous year, partly due to inadequate supply, hoteliers believe that the industry will pick up pace in 2018 and continue to strive for new heights.

Data from the hospitality industry shows that there was a 3.7% dip in the total number of hotel rooms under construction in December 2017 compared to the previous year. One of the reasons behind the decrease in supply is that banks have been very particular about providing construction loans, as a result of which many contractors have had difficulties starting new projects. [6]

The situation, according to industry insiders, is likely to change now as more and more debt funds are venturing into the construction financing sector and contractors should no longer have any difficulty in getting funds for their projects.

The Growth in Luxury Hotel Industry

Interestingly, the decrease in construction lending has not affected the luxury hotel industry by and large. On January 16th, the much-anticipated Hotel Avalon and Alpharetta Conference Center opened in the city. [7]

The $112 million property was five years in the making and is one of the largest hotels in the Southeast. More such mega hotel projects are in the pipeline, with the Hyatt Place Centennial Park and a dual-branded Marriott hotel expected to come up in the city in the coming months. [8]

Hotel owners believe that the low cost of gasoline could play a key role in the growth of the hospitality sector in the city in the coming years. With the price per gallon hovering under $3, more people are willing to drive to Atlanta from neighboring cities.

Thanks to cheap gasoline, air travel has also become more affordable, since fuel is the second largest expense for airlines after salaries. So, many hotel owners are of the opinion that the influx of seasonal tourists is likely to increase in the near future and the industry will have to expand its footprint to cater to their needs.

The Increase in Demand for Office Space

Atlanta has become an IT hub and is home to a large number of corporate offices as well. The city has a relatively lower cost of living compared to many other metro regions in the country and has a large, highly skilled labor force. So, a large number of businesses are expanding their presence and many corporations are opening up a branch in the city or moving their headquarters here.

In the first three months of 2018, 840,000 square feet of office space has been occupied, which goes to show just how in-demand the city is. [9] The rapid growth in tech and corporate sectors mean more business meetings, more conventions, and more corporate and social events, to cater to which the hotel industry will have to step up its game.

A Strong Start to 2018

Atlanta has had a promising start to 2018 with the total non-farm employment figures standing at 2,734,400 in February – an increase of 52,600 jobs compared to last year. It was a 2% increase, which is better than the 1.6% increase in national employment figures during the same time period. [10]

Education and health services super sector was the largest employment generator in the city between February 2017 and February 2018 – with 12,900 jobs. The hospitality industry was in second place with 11,200 jobs – a 4% increase from last year. Nationwide employment figures in the leisure and hospitality industry increased only by 2% during the same time period, which goes to show that Atlanta’s growth is driven by regional factors and a strong local economy.

The rate of unemployment in the city was 4.9% in February 2018 – down from 5.6% in February 2017. The total number of employed residents in the Atlanta area in February 2018 was 2.97 million – an increase of 116,029 employed residents compared to the previous year, with 46,862 being added in the month of February alone.

Given here is a table of unemployment figures in the state over the past 14 months. [11] It is noteworthy that the unemployment rates in the period September 2017 to February 2018 have been significantly and consistently lower than the rates in the period January 2017 to August 2017.

Unemployment Rates in Atlanta 2017-18

Month Unemployment Rate in Atlanta
February 28, 2018 4.90%
January 31, 2018 5.00%
December 31, 2017 4.80%
November 30, 2017 4.70%
October 31, 2017 4.60%
September 30, 2017 4.5%
August 31, 2017 5.30%
July 31, 2017 5.60%
June 30, 2017 5.60%
May 31, 2017 5.20%
April 30, 2017 5.10%
March 31, 2017 5.20%
February 28, 2017 5.60%
January 31, 2017 6.20%

Job Growth in 2018

Economic forecasts predict that the city is likely to add another 52,000 jobs in 2018, continuing to generate employment opportunities at a steady pace like it did in 2017. Experts also point out that jobs in Atlanta, particularly in the corporate sector, pay well compared to most other cities in the country. [12]

There are a large number of modestly-paying jobs available in other sectors as well. So the city continues to attract people with different types of skills, educational qualifications, and backgrounds.

The availability of skilled labor, relatively affordable housing, and business-friendly political climate make Atlanta a favorable destination for a number of businesses including T-Mobile, AIG, Goodyear, Starbucks, Honeywell, Colonial Pipeline, and many more.

Also, many believe that the migration of qualified professionals from California, New York, and other such high-tax states (and expensive and struggling northeast cities that are not that business friendly) to places like Atlanta is also likely to continue for the foreseeable future. A combination of all these factors makes Atlanta one of the top destinations in the country for businesses and job seekers alike.

Sources

  1. https://www.bls.gov/regions/southeast/news-release/2017/pdf/areaemployment_atlanta_20170405.pdf
  2. https://stats.bls.gov/regions/southeast/news-release/2017/pdf/areaemployment_atlanta_20170830.pdf
  3. http://wbhfradio.org/metro-atlanta-sets-record-for-jobs-in-2017/
  4. https://www.ajc.com/business/metro-atlanta-job-growth-for-2017-solid-growth-sputtering-finish/5440S7mursngFgRdtzM9zI/
  5. https://www.bisnow.com/atlanta/news/hotel/atlanta-hotel-business-surged-in-december-84323
  6. https://rebusinessonline.com/strong-economy-propels-hotel-industry-forward-but-construction-lenders-remain-cautious/
  7. https://www.hospitalitydesign.com/news/hotels-resorts-wellness/hotel-avalon-debuts-atlanta/
  8. https://atlanta.curbed.com/2018/3/12/17109914/georgia-aquarium-downtown-atlanta-hotel-hyatt-hotels
  9. https://www.bisnow.com/atlanta/news/office/2018-office-market-to-be-strong-despite-rents-sticker-shock-86258
  10. https://www.bls.gov/regions/southeast/news-release/areaemployment_atlanta.htm
  11. https://ycharts.com/indicators/atlanta_ga_unemployment_rate
  12. https://www.myajc.com/business/next-year-looking-good-for-growth-and-jobs/MGfo7aiISJtXMKzVTizQNO/
2018-04-12T19:32:38+00:00 Atlanta, employers|0 Comments

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