Spending on tourism grew faster than the economy in the first quarter 2012 with an annual growth rate of 3.4%, compared to #GDP growth at 1.9%. Those areas dependent on tourism should continue to see better than average growth.  New Orleans is a good example of how cities have capitalized on tourism spending, shifting the driver of their economy away from oil to tourism. The change originated in the early 1980's with the building of the required infrastructure: one of the largest convention centers in the US. New Orleans commercial real esate benefitted from the movement to heavily market the city as a destination tourist attraction for business meetings followed by fine dining and fun.  Hotels have adapted to the movement and now offer large ballrooms for meeting space, capitalizing on the trend away from national meetings toward regional gatherings.

Tourism spending is shown by the blue column and gross domestic product (GDP) is the red column. The last blue column showing the rate of tourism spending depicts a decline for the 1st quarter 2012 from the 4th quarter 2011, but the growth rate is still higher than GDP, shown in the red column.

Real spending on travel and tourism increased at an annual rate of 3.4 percent in the first quarter of 2012 after increasing 4.4 percent (revised) in the fourth quarter of 2011. By comparison, growth in real gross domestic product (GDP) increased 1.9 percent (second estimate) in the first quarter after increasing 3.0 percent in the fourth quarter. The increase in real spending on tourism primarily reflected increases in traveler accommodations and in food services and drinking places.

In the first quarter of 2012, total current-dollar tourism-related spending was $1.4 trillion and consisted of $848.6 billion (59 percent) of direct tourism spending — goods and services sold directly to visitors — and $577.9 billion (41 percent) of indirect tourism-related spending — goods and services used to produce what visitors buy.

Total Tourism-Related Employment was 7.6 million in the first quarter of 2012 and consisted of 5.4 million (71 percent) direct tourism jobs — jobs where workers produce goods and services sold directly to visitors — and 2.2 million (29 percent) indirect tourism-related jobs — jobs where workers produce goods and services used to produce what visitors buy.

Source: US Bureau of Economic Analysis

Over the last three months, New Orleans' commercial real estate has experienced an 8% increase in the supply of industrial square footage for sale, an 8% increase in shopping centers and a 17% increase in land, but a 5% decline in retail properties.

This additional supply in square footage of industrial and land is confirmed in the table below by the percent change in the number of listings, but not in the shopping center sector where the square footage increased 8.33% and the number of listings fell 8.64%. The explanation is that small size properties were leased or sold and large size properties were added.

The big surprise to most commercial property sellers is the number of days a property sits in the marketing phase, as shown in the table below. Multi-family takes the longest, at almost two years to transact, since it is an investment sale that requires more complex cash flow analysis and is usually a higher value transaction.

Somebody must have leaked to Obama today's release of manufacturing profits showing a 9.45% increase in after-tax profits, from 134 billion in the 4th quarter of 2011 to 146 billion in the 1st quarter 2012, which caused him to claim the private sector is OK. Drill down to the specific industries and you will see that the private sector is not OK.

It's true that after-tax profits were higher than in any 1st quarter period since 2008, as shown in the blue column in the chart below.

However, not all industries are doing well. In fact there is a wide dispersion, with the following distinctions:

1. Motor vehicles and parts industry's after-tax profits declined $11 billion.
2. Computer systems declined one billion.
3. Publishing and broadcasting declined over 500 million.

These numbers are just for the last three months, from the 4th quarter 2011 to the 1st quarter 2012.

The good news is that some industries did very well, increasing after-tax profits by:

1. $15 billion-Telecommunications.
2. $5.8 billion-Pharmaceuticals.
3. $5.3 billion-Mining.
4. $3.3 billion-Chemicals.
5. $1.4 billion-Petroleum. Communications did well mostly because in the 4th quarter of 2011 the industry recorded losses exceeding $7 billion. The bottom line from today's release of after-tax profits for industry is that the only industry doing well today is the pharmaceutical industry.

Source: http://www.census.gov/econ/qfr/

Quarterly Financial Report (QFR)
Manufacturing, Mining, Trade, and Selected Service Industries

The Bureau of Economic Analysis released GDP growth by state today, showing Louisiana ranking in the bottom 40% and Mississippi in the bottom 20%,  among all 50 states. Broken into quintiles, or 5 groups with 20% each, Louisiana ranked in the 2nd quintile and Mississippi in the lowest quintile. The map below shows GDP growth by state with the highest growth shown in the dark blue states and the slowest growth shown in the orange states. GDP increased in 43 states and overall US GDP grew in 2011 by 1.5% compared to 2010 which grew by 3.1% over 2009.

Broken down into regions, GDP growth was highest in the Southwest region with 2011 GDP growth of 2.7%, led by Texas with a 3.3% GDP growth in 2011 over 2010.

In our Southeast region, the highest 2011 GDP growth was in West Virginia with 4.5% growth, followed by Tennessee, North Carolina and Georgia.

Louisiana experienced the fastest GDP growth in 2010 at 9.4% compared to US growth of 3.1%. In 2011, Louisiana ranked 36 and experienced growth of .5%, compared to the US GDP growth of 1.5%.

copyright 2012.  Louisiana Commercial Realty. LLC.New Orleans' Commercial Real Estate.