Interim Meeting #2

CUMBERLANDECONOMIC DEVELOPMENT STRATEGY

Interim Meeting #2

CUMBERLANDECONOMIC DEVELOPMENT STRATEGY

August 5, 2014

Presented By:Kyle Talente, Vice President and PrincipalLauren Callaghan, Market Analyst/Planner

RKG Associates, Inc.

Kickoff meeting and first round of stakeholder interviews Review of background materials Demographic conditions and trends Economic conditions and trends Preliminary quality of life metrics Preliminary strengths, challenges, issues and opportunities Preliminary project goals Interim Meeting #1 Real Estate Market Analysis Target Industry Analysis

Work Completed To Date

2

Goals

3

To create jobs that pay above median income for Allegany County

To add wealth that grows the middle class To create new image for Cumberland that can be marketed To encourage entrepreneurship and small business

development To define a tangible, multi-year plan that can garner support To identify a strategic approach to addressing blight and

redevelopment To reverse negative attitude in community To educate decision makers and community stakeholders on

the purpose and value of economic development To create a business case for moving past the “the way it was”

mentality Continued development and growth of the Arts and Tourism

Real Estate Market AnalysisDevelopment Profile/TrendsReal Estate Market AnalysisDevelopment Profile/Trends

5

Retail/ Service, 56.5%

Restaurant/ Lodging, 7.5%

Automotive, 6.1%

Office, 15.3%

Commercial/ Office Condo, 0.6%

Mixed Use, 0.4% Manufacturing, 3.0%

Warehouse, 10.5%

Non-Residential Land AreaCumberland, Maryland

Total Acres: 491.4Total Acres: 489.1

6

Retail/ Service, 36.2%

Restaurant/ Lodging, 7.6%

Automotive, 6.3%

Office, 24.1%

Commercial/ Office Condo, 0.8%

Mixed Use, 1.9%

Manufacturing, 6.0%

Warehouse, 17.1%

Non-Residential Building Square FootageCumberland, Maryland

Total SF: 4,900,375

7

Retail/ Service, 35.0%

Restaurant/ Lodging, 11.3%

Automotive, 5.1%

Office, 36.0%

Commercial/ Office Condo, 1.4%

Mixed Use, 1.8% Manufacturing, 2.4%

Warehouse, 7.0%

Non-Residential Assessed ValueCumberland, Maryland

Total Value: $211,893,075

8

Commercial < 1 Acre, 11.2%

Commercial 1 - 10 Acres, 20.8%

Commercial 10 - 65 Acres, 65.5%

Industrial, 2.5%

Non-Residential Vacant Land Area Cumberland, Maryland

Total Acres: 254.4

Development Trends

9

Majority of development occurred prior to 2005 689 of 703 properties

14 non-residential properties developed since 2005 Properties scattered throughout Cumberland – no

concentrations of development Most properties are Retail/Service or Office Majority are along one of the Allegany County Trails System

and well-traveled roads Notable Non-Residential Development:

Western Maryland Health Systems Hospital (2009) Fairfield Inn & Suites (2009) CareFirst Blue Cross Blue Shield (2011)

Pattern suggests development is seeking available properties

Implications

10

Retail development steadily been developed outside of Downtown Land available for development Proximity/access to well traveled roads Close to I-68

Limited available land for green-field development Places emphasis on infill and redevelopment Economics More challenging Focus needs to be flexibility (form based code?)

Recent development has been institutional or corporate Market conditions risky for smaller developers to invest

Over speculation in building investment stalled market Challenge until market conditions return to pre-downturn

levels Strategic investment paramount

Real Estate Market AnalysisNon-Residential AssetsReal Estate Market AnalysisNon-Residential Assets

12

13

Cumberland Job Inflow/Outflow, 2011

14

Allegany County Job Inflow/Outflow, 2011

0

1

2

3

4

5

6

7

$0 - $5 $5-$10 $10-$15 $15+

Available Properties - Lease Rates/Square FootCumberland, MD

Retail/ Service Office Mixed Use Warehouse

15

16

17

0

5

10

15

20

25

30

$0 - $25 $25-$50 $50-$75 $75-$100 $100-$120

Available Properties -Sales Price/Square FootCumberland, MD

Retail/ Service Office Mixed Use Warehouse

Non-Residential Broker Interviews

18

What we have heard thus far: The non-residential market has seen little activity since the

2008 Recession. There is no single type of non-residential property that is

strong in the Cumberland market. Recent inquiries about properties Downtown and near the

GAP Trail indicate an increase in interest in Cumberland by visitors/potential investors.

Regional/National chains are willing to invest near Cumberland, but only if market criteria is met.

Adding demand for goods and services generated by tourists to local demand may increase Cumberland’s attractiveness for some retailers and service providers.

Implications

19

Cumberland’s non-residential market has not recovered yet

Properties are available for lease and sale but current supply is exceeding demand (particularly for retail/service property) Much of this supply is concentrated within the Central

Business District and along Virginia Avenue in South Cumberland

If buyers/investors become more seriously interested in Cumberland, there is a supply of available properties that are well-located within the Central Business District and along major thoroughfares.

A better understanding of the Cumberland market and what type of retail and services it can support is needed.

Target Industry AnalysisTarget Industry Analysis

21

Is it a local specialization?

Is it adding jobs locally?

Is it gaining a competitive share relative to the

nation?

Does it capitalize on Cumberland’s strengths?

Is it consistent with the goals of the community?

Target Industry Methodology

Target Industry Methodology

22

Target Potential [2]

Performance Classification [1]

Question 3: Is the Industry gaining

competitive share?

Question 2: Is the industry adding jobs

locally?

Question 1: Is the industry a local specialization?

Universe of Local Industries

Yes

Yes

Yes

SP

CS

No

LP

HP R

No

Yes

CP

LP RT

No

PP

LP RT

No

Yes

Yes

SP

ES

No

LP

PL

No

Yes

CP

PL

No

PP

PL

[1] Performance Classification Codes: SP = Strong Performer; LP = Lagging Performer; CP = Constrained Performer; PP = Poor Performer

[2] Target Potential Codes: CS = Current Strength; HP RT = Higher Priority Retention Target; LP RT = Lower Priority Retention Target; ES = Emerging Strength; PL = Prospects Limited

Statewide Competitive Assets

23

Financial Assets & Income Income Poverty Rate (3rd) Bankruptcy Rate (9th)

Businesses & Jobs Low Wage Jobs (14th) Employers Offering Health Insurance (6th) Retirement Plan Participation (5th)

Housing High Cost Mortgage Loans (3rd)

Healthcare Uninsured Rate (12th)

Education Two-Year Degree (8th) Four-Year Degree (5th) 8th Grade Reading Proficiency (6th)

Rankings part of 2014Development Report Card for the States by the Corporation for Enterprise Development

Statewide Competitive Constraints

24

Financial Assets & Income Average Credit Card Debt (45th) Borrowers over 90 Days Overdue (42nd)

Businesses & Jobs Small business ownership rate (44th) Private Loans to Small Businesses (41st) Business Ownership by Race (46th) Business Ownership by Gender (43rd)

Housing Foreclosure Rate (43rd)

Healthcare Uninsured Rate by Race (45th) Uninsured Rate by Gender (40nd)

Education None

Rankings part of 2014 Development Report Card for the States by the Corporation for Enterprise Development

Site Selection Criteria

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Cumberland Specializations Labor costs (3rd) Training programs (23rd) Proximity of technical university (22nd) Housing costs (3rd) Ratings of Public Schools (4th) Recreational opportunities (6th)

Cumberland Strengths Highway accessibility (2nd) Proximity to Major Markets (15th) Railroad Service (25th) Healthcare facilities (2nd) Climate (7th)

Rankings part of 2013 Area Development Corporate Survey by Area Development Magazine

Site Selection Criteria

26

Cumberland Weaknesses Availability of skilled labor (1st) Highway accessibility (2nd) Occupancy or construction costs (4th) Corporate tax rate (7th) Tax exemptions (11th) Availability of land (13th)

Cumberland Opportunities Availability of advanced ICT services (5th) Availability of buildings (6th) State and local incentives (8th) Availability of Long-Term Financing (16th)

Rankings part of 2013 Area Development Corporate Survey by Area Development Magazine

Degree programs applicable to local industries/small business Accounting Advanced Manufacturing Business Administration Biotechnology Chemistry Culinary Arts Cyber Security/Secure Computing Economics Engineering Information Technology Mass Communications Multimedia Technology Nanotechnology

Non-credit continuing education courses Small Business Center (ACM)

Site Selection Asset: Higher Education

27

Historic points of interest Natural recreational resources Entertainment destinations

Site Selection Asset: Recreation, Culture & Tourism

28

29

Target Industry MethodologyIndustry Strength (Location Quotient)

30

Target Industry MethodologyIndustry Strength (Location Quotient)

31

Employment Trends

32

Employment Trends

Target Industry Clusters

33

Administrative and Support Services Data Processing, Hosting and Related Services Inbound and Outbound Telemarketing Direct Mail Advertising Translation and Transcription Services Process, Physical Distribution and Logistics Consulting

Services Financial Transaction Hosting and Processing

Internet and Virtual Services Software Publishing Motion Picture and Video Processing Telecommunication Support Services Internet Publishing Cyber Security Services

Target Industry Clusters

34

Healthcare and Social Assistance Healthcare

Specialty Hospitals/Hospital Services Outpatient Care Centers Offices of Physicians Offices of Dentists Offices of Other Health Practitioners

Social Assistance Home Health Care Services Child Day Care Services Community Care Facilities for the Elderly

Research and Support Facilities Medical and Diagnostic Laboratories Diagnostic Imaging Centers

Target Industry Clusters

35

Technical, Research, and Consulting Operations Professional Services

Management, Scientific, and Technical Consulting Services Architectural, Engineering, and Related Services Advertising and Related Services Legal Support and Research Services Accounting, Tax Preparation, Bookkeeping and Payroll Services

Technical Research and Modeling Computer Systems Design and Related Services Scientific Research and Development Services Agriculture and Biological Research/Consulting Services Other Professional, Scientific, and Technical Services

Target Industry Clusters

36

Entertainment and Recreation Complementary Sports/Exercise Venues And Events Conducting Scenic and Sightseeing Tours Providing Guide Services

Archeological Canoeing/Kayaking Cycling Hunting./Fishing

Full Service Restaurants Augment Destination Activities and Events Night Life/Activity Cluster Bed & Breakfasts Camping/Non-Permanent Lodging Venues

Small Professional/Service Firms by MSA(Under 20 employees)

37

NAICS Description Baltimore Philadelphia Pittsburgh Washington5112 Software Publishers 48 118 36 2095121 Motion Picture and Video Industries 90 207 75 3245179 Other Telecommunications 23 66 22 935182 Data Processing, Hosting, and Related Services 116 267 92 3855191 Other Information Services 54 188 136 2705239 Other Financial Investment Activities 404 1,333 365 9375412 Accounting, Tax Preparation, Bookkeeping, and Payroll Services 1,082 2,008 741 2,2775413 Architectural, Engineering, and Related Services 1,020 1,759 733 2,2965414 Specialized Design Services 326 549 150 7265415 Computer Systems Design and Related Services 1,805 2,982 757 8,3185416 Management, Scientific, and Technical Consulting Services 1,516 3,112 922 5,7975417 Scientific Research and Development Services 188 343 88 8175418 Advertising and Related Services 292 690 215 1,2525419 Other Professional, Scientific, and Technical Services 494 1,138 452 1,3355511 Management of Companies and Enterprises 314 1,521 351 1,0225614 Business Support Services 254 547 199 6415615 Travel Arrangement and Reservation Services 128 408 116 4847113 Promoters of Performing Arts, Sports, and Similar Events 48 94 42 1117115 Independent Artists, Writers, and Performers 105 222 63 2757139 Other Amusement and Recreation Industries 412 912 490 7578112 Electronic and Precision Equipment Repair and Maintenance 120 231 85 2058113 Commercial and Industrial Machinery and Equipment Repair 169 281 142 148

TOTALS 9,008 18,976 6,272 28,679