Business and community leaders came together on Wednesday morning, March 15, 2023, to learn more about the projections and forecasts for the Statesboro and Bulloch County Economy. The breakfast meeting was hosted by Synovus bank and featured a presentation by Cal Evans, Senior Director of Investor Relations and Market Intelligence for Synovus.
Evans full presentation can be viewed above. Click here to view Evans slide presentation.
In the nearly hour-long presentation, Evans walked through all of the issues impacting the national economy and offered his areas of concerns and highlighted opportunities.
Lots of economic drivers to be excited about in Statesboro and Bulloch
When it comes to Statesboro and Bulloch, Evans is very Bullish on Bulloch. Due to the rapid and extraordinary growth we are experiencing, buoyed by the Hyundai Mega Plant and all of the suppliers, we are uniquely insulated from the areas of national concern.
"The economic information that is out there has so much noise in it that it is hard to discern exactly what is going on. I think the GDP numbers have generally been overstated and the things that contribute to it aren't exactly the kinds of things that we love to spend a month on," said Cal Evans. "That said, that is the national economy. I do have a very positive outlook on the Southeast economy, we are poised for growth. I am extremely excited about the Statesboro economy which should absolutely outperform in the years to come. Statesboro and Bulloch have had great growth drivers before with a strong healthcare segment, the University and the proximity to the ports. All of the exciting growth is on top of these already excellent economic drivers."
Taking a look at the GDP equation for Statesboro. Nationally in the third and fourth quarter of 2022 we did not see a lot of fixed investment, but Statesboro is about to get a ton of investment. In fact, it is happening and has been happening over the past year beginning with the Aspen Aerogels announcement. In terms of how the GDP looks for Statesboro, fixed investment is a major component that will continue to get boosted up. Consumer spending will follow. Statesboro and Bulloch County will have higher wages, we are going to have more people, we are going to have better shops and it is going to be a great environment and we know it because we have seen it. Evans explained that you really need to look no further than LaGrange, Georgia to see what is about to happen in Statesboro and Bulloch County.
LaGrange Kia Impact
LaGrange had a Kia plant enter the market in 2008. Georgia Trend magazine wrote a story about the Kia Effect there. The article discusses the first days of Kia's arrival and it is dead on with everything Evans is hearing about the Statesboro market. Evans said this article is a forecast and a blueprint of what is coming to Statesboro and Bulloch County.
Things LaGrange did and experienced because of Kia growth:
- Hired a Korean liaison to help communicate needs and opportunities between the suppliers
- Created a new college focused on tech and trade and created a new career academy which is like a magnet school for tradesmen.
- Greatly expanded multifamily/single family housing inventory
- Diverse retail, more national tenants
- The Ray, an extension off of 85 which is a tech/community innovations exhibit
A Matter of Perspective
Evans responded in his presentation to the four most asked questions he gets as he travels the state. Evans cautioned that each person's and communities economic position is really a matter of perspective. Below are the common questions and Evan's response.
Are we in a recession?
The answer depends on your balance sheet. If you don't have a lot of money you are feeling this. We are definitely in a recession. If you have a lot of money your biggest concern may be that the beach house rental went up 20%. People are still spending at the top end, but there is a whole lot of pressure down at the bottom end. This is definitely something that will be interesting to watch. It will play out politically in the next election and it will be interesting to see what transpires from that.
How far will the Federal Reserve Board go?
I think they are going to hold rates higher for longer. I do not think this is something that winds down quickly. I do think that given some of the bank volatility that they might not raise rates as much. But in my opinion, the Fed needs to pause and let this ride for six months. Because they are basing this on data that lags. We really need to stop and let the dust settle and see where we are before they move to the next rate increase.
What would we expect to see with Valuations?
We will see cap rates going up in commercial real estate evaluations and rents are tempering some. I don't think we are going to see big value losses, but you may see a little based on the sector. Apartments should stay strong. Warehousing should stay strong. We will see a little decrease in the office sector. Keep in mind there is so much investment money out there waiting to go into these markets that it almost creates a safety net for the values of these properties. This is not 2008, where the banks are collapsing and property is defaulting and people are throwing in the keys left and right. What is going to be different now, compared to 2008 is that if you see a property foreclosed upon and it's going to be a distressed sale it probably didn't come from a bank. The regulators have been on banks like white on rice and it is a whole different ball game for banks now than it was in 2008. Where you will see these properties fall out are in commercial backed securities transactions and non bank transactions where they don't have the capital requirements or the regulatory issues that banks face. That will limit the number of properties that are distressed and you are going to see money come in and pay at a level that is nowhere near the distressed prices in some instances like we saw in 2008.
Which sector will see the most impact in the short term?
Office and apartments are closely behind because we know that rents are coming down fairly significantly and we know we have supply issues. But once again, mortgage rates are a big determinant of exactly how that fairs.
Synovus team pleased with the turnout
Nearly 200 business and community leaders came out to hear Evans and learn more about the local market. Synovus extended thanks to First Baptist Church for allowing them to host the event in the Perry Fellowship Hall. Stacy Underwood and Uncle Shug's Chicken Barn catered the event.