The rate of employment growth in the Southeast/Caribbean region for the 12 months ending November 1997 was 2.4 percent over the same period during the previous year. South Carolina led with an increase of 5.1 percent, as the State continued to attract major new economic investment. The $5.5 billion in new capital investment in 1997 marked the third consecutive year that investment in South Carolina exceeded $5 billion. Kentucky and Georgia also had strong employment growth rates of 4.4 percent and 4.1 percent, respectively. Marginal declines in total employment were reported in Tennessee and Puerto Rico during the 12-month period. Unemployment rates as of November 1997 remained below the national level except in Mississippi, Puerto Rico, and Tennessee. North Carolina and South Carolina had the lowest rates of unemployment, with each State reporting 3.5 percent. Among major metropolitan areas within North Carolina, the Raleigh-Durham metropolitan area reported an unemployment rate of only 1.8 percent. Some observers predict slower employment growth in North Carolina due to the extremely tight labor markets, especially in the State's largest metropolitan areas.

Of the more than 525,000 new nonagricultural jobs added in the region during the 12-month period, more than 270,000 were in the services sector. Florida and Georgia led the region in the number of jobs added. The construction and services sectors were responsible for the largest increase in new jobs in Florida. In Georgia, airline transportation, trucking, and warehousing contributed to strong growth in the transportation/utility sector, while employment in trade increased by 6.8 percent during the 12 months.

In 1997 single-family building permits in the Southeast totaled 292,028 units, just 1 percent less than a very active 1996. Only Kentucky and North Carolina had increases in single-family permits in 1997. Georgia reported the largest decline, 7 percent, despite a 3-percent increase in the Atlanta metropolitan area. Atlanta continued to be the Nation's leading new home market, with 38,478 units. The only other Southeast market in the top 10 was Orlando, with 13,597 single-family units.

Manufactured housing is also an important part of the sales market in the Southeast region. From 1990 through 1996, manufactured housing shipments to dealers in the region totaled nearly 780,000 units. In 1997, 149,011 units were shipped to markets in the Southeast, more than 40 percent of all shipments nationwide for the year.

Existing home sales remained strong throughout the region in 1997 and median sales prices continue to rise. Sales in both Mississippi and South Carolina were up 9 percent compared with 1996. Lower interest rates and high consumer confidence buoyed by very strong local economies are credited with the increase in sales. Full employment and low interest rates have fueled near-record levels of home sales in North Carolina markets, where the most active segment is the new home market priced above $200,000. Existing sales in North Carolina in 1997 totaled 231,400 a 5-percent gain over 1996.

Multifamily housing activity continued to show strong growth, hitting a record for activity in the 1990s. Permits were issued for 104,703 units in 1997, almost 9 percent more than in 1996. Florida reported the biggest increase, 28 percent, to 42,945 units. Florida markets are experiencing widely varied trends in apartment construction, however. Production in Orlando increased by more than 200 percent to 7,696 units as the result of a booming economy and plentiful sources of financing for developers. Increased multifamily activity in the Miami area largely reflected a recovery from a poor year in 1996, which was caused by developers' banking permits in 1995 in the face of rising fees. The Miami area has also benefited from the resurgence of luxury condominiums supported by buyers from Latin America. Multifamily housing production in the Pensacola area declined by 72 percent in 1997 as builders adjusted to the overly aggressive production level in 1996. Apartment building in the Jacksonville area fell by almost 60 percent in response to concern about the previous year's high level of production and early reports of increasing vacancy rates.

Significant increases in multifamily housing permit activity in 1997 were also reported in North Carolina, up 22 percent to 17,774 units. Activity in the Raleigh-Durham and Charlotte-Gastonia markets was very strong in 1997. Multifamily units were up 54 percent in Raleigh-Durham to 4,821 after 2 consecutive years with an average of 3,500 units annually, returning production close to the 4,900-unit level of 1994. Activity in Charlotte-Gastonia for the year totaled 5,779 units, the second-best year of the 1990s. Georgia and South Carolina also recorded increases in activity for the year.

In the Jackson, Mississippi area, where apartment construction was very strong from 1994 through 1996, occupancy is approximately 95 percent and new units continue to be readily accepted by the market. The Mississippi Gulf Coast apartment market appears to have improved during the past year as a result of reduced construction activity. Recent apartment occupancy was estimated to be 96 percent. Nashville ended 1997 with a 94-percent occupancy rate, the same as for year-end 1996, despite the completion of more than 5,000 units.

The Raleigh-Durham area, which has typically absorbed about 2,500 units annually, will see an estimated 3,850 units come on the market during the next year. This unusually high level of production is expected to result in an increase in the apartment vacancy rate, now at 3.9 percent. An increase in the vacancy rate in both the Greensboro/Winston-Salem/High Point and Charlotte market areas is also expected as the large number of units under construction in those markets is completed. Huntsville, Alabama, has an estimated vacancy rate of 11 percent. The apartment vacancy rate in Greenville, South Carolina, was approaching 9 percent in November 1997, and there were an estimated 1,900 units under construction.

Spotlight on Atlanta, Georgia

Recent employment gains in Atlanta have been very modest, although the population has increased slightly, reversing a two-decade trend. Rental housing market conditions have softened in the city since the 1996 Summer Olympic Games. Encouraged by the prospect of high rents, apartment construction more than doubled in 1995 to 1,826 multifamily units and increased again in 1996 to 2,839 units before falling to 1,362 during the first 11 months of 1997. Atlanta also experienced a spurt of interest in converting nonresidential space to loft apartments in the period leading up to the Olympics. These conversions added about 1,550 rental units to the stock in 1995 and 1996. Many of the rental units, both the new and converted ones, were leased at very high rents during the Olympics.

The Atlanta Apartment Market Tracker, by Dale Henson Associates, Inc., noted declining occupancy for year-end 1996 in the northern part of the city; this decline apparently resulted from the departure of temporary workers and the loss of a significant number of corporate renters related to the Olympics. Recently there has been some improvement and the same source reports that occupancy increased during the first half of 1997. The rate of absorption of rental units in the city remains modest, however, compared with the number of units recently completed and under construction.

Developer interest in the city remains strong and focused on the Midtown submarket. Sites were recently purchased in Midtown for construction of a new rental development and expansion of an existing high-rise apartment development. Two additional large developments currently in the initial planning stage may have a significant impact on the city's prospects as a location for rental housing, although neither is likely to move forward in the near future. The zoning request for the former Atlantic Steel site near downtown proposes 5.5 million square feet of office and retail space and 2,400 residential units. Atlanta's rapid transit system, MARTA, is accepting proposals for a mixed-use development as a demonstration project for high-density development on a 47-acre site adjacent to its Lindbergh Station in northeast Atlanta.