GALVESTON ECONOMIC REPORT | MID YEAR 2014 …...The city was destroyed by the 1900 Galveston...

GALVESTON ECONOMIC REPORT | MID YEAR 2014 | A SNAPSHOT OF THE GALVESTON ECONOMY

COLLIERS INTERNATIONAL | P. 2 1

Galveston is a coastal city comprised of Galveston Island and Pelican Island in the U.S. state of Texas. The community encompasses 208.3 square miles, and has a population of 51,111 people. It is the county seat and second-largest municipality of Galveston County, and is located within the Houston–Baytown–Sugar Land metropolitan statistical area (MSA). Named after Bernardo de Gálvez y Madrid, Count of Gálvez (born in Málaga, Spain), Galveston's first European settlements on the island were constructed around 1816 by French pirate Louis-Michel Aury to help the fledgling Republic of Mexico fight Spain. The Port of Galveston was established in 1825 by the Congress of Mexico following its successful independence from Spain. The city served as the main port for the Texas Navy during the Texas Revolution, and later served as the capital of the Republic of Texas.

EXECUTIVE SUMMARY

GALVESTON MSA

POPULATION HOUSEHOLDS

EST. 2018 55,320 23,444

2013 51,111 21,523

2010 47,743 19,957

GALVESTON LABOR FORCE

SERVICE 24.9%

PROFESSIONAL/RELATED 23.0%

SALES/OFFICE 21.3%

GALVESTON MSA UNEMPLOYMENT

2013 2012 2011 2010

4.7 % 7.8% 9.1% 8.2%

GALVESTON MEDIAN HOME VALUES

OWNER-OCCUPIED HOME VALUE $131,809

RENTER-OCCUPIED RENT $623

MILES FROM GALVESTON

AUSTIN 206

SAN ANTONIO 241

DALLAS 288

NEW ORLEANS 392

IMPORT/EXPORT TRADE (METRIC TONS)

HAS AIR FREIGHT

PORT TOTAL TONNAGE

2013 414.6M 329M

2012 419.2M 247M

Source: Galveston County Economic Alliance

During the 19th century, Galveston became a major United States commercial center with one of the largest ports in the United States. The city was destroyed by the 1900 Galveston Hurricane, whose effects included flooding from a storm surge. The natural disaster on the exposed barrier island is still ranked as the deadliest in United States history, with an estimated toll of 6,000-8,000 people. Much of Galveston's modern economy includes tourism, health care, shipping, and finance. The 84-acre University of Texas Medical Branch campus with an enrollment of more than 2,500 students is a major economic force of the city. Galveston is home to six historic districts containing one of the largest and historically significant collections of 19th-century buildings with over 60 structures listed in the National Register of Historic Places.

GALVESTON AERIAL

Galveston’s cruise port popularity ranks first


COLLIERS INTERNATIONAL | P. 3

GALVESTON SALES TAX DATA BY MONTH

Sales tax collections are a very good proxy for overall economic activity, excluding investment. They are also very accurate, because they do not rely on estimates or formulas; they represent actual sales. Note: Collections posted for a given month represent sales about 2 months prior to that date. The chart below shows the fluctuation of sales tax by month.

Source Texas Comptroller

GALVESTON LOCAL SALES TAX : JULY 2008 – JULY 2014

GALVESTON LOCAL SALES TAX: MONTH OVER MONTH RATE OF CHANGE 2008 - 2014

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14

-50%

-30%

-10%

10%

30%

50%

70%

90%

110%

Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14



GALVESTON SALES TAX DATA BY YEAR

The year-over-year rate of change in city sales tax spiked lower in October 2008 in the aftermath of Hurricane Ike, and then surged in October 2009, because October 2008 was such a low baseline. The chart below shows the decrease in the local sales tax from $18M in 2009 to $15M in 2010. The Galveston sales tax has steadily increased for the past 51 months which has helped boost all sectors of the Galveston economy.


GALVESTON LOCAL SALES TAX : 2008 – JULY 2014

GALVESTON LOCAL SALES TAX: YEAR OVER YEAR RATE OF CHANGE 2008 - 2014

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

2008 2009 2010 2011 2012 2013 Jul-14

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jul-14



UNIVERSITY OF TEXAS MEDICAL BRANCH

The University of Texas Medical Branch was Texas’ first medical school. Established in 1891 as the University of Texas Medical Department, UTMB has grown from one building, 23 students and 13 faculty members to more than 70 buildings, more than 2,500 students and more than 1,000 faculty. It has four schools, three institutes for advanced study, a comprehensive medical library, three on-site hospitals (including an affiliated Shriners Hospital for Children), a network of clinics that provide primary and specialized medical care and numerous research facilities. UTMB’s primary missions are health science education, medical research (it is home to the Galveston National Laboratory) and health care services. Its Emergency Room at John Sealy Hospital is certified as a Level 1 Trauma Center and serves as the lead trauma facility for a nine-county region in Southeast Texas. Hurricane Ike caused significant flood damage to nearly every building on campus, including the John Sealy Hospital. However, UTMB has about $1.4 billion to restore and expand its campus. In 2011 the foundation committed $170 million towards the construction of a new Jennie Sealy Hospital on the UTMB campus, an amount that represents the largest single gift ever to a Texas health institution. The Jennie Sealy Hospital is expected to be completed in 2015 and operational in 2016.


SCHOOL OF MEDICINE The School of Medicine at UTMB opened in 1891 and has provided medical school or residency training to one in six Texas physicians. With 20 departments, three institutes and a unique partnership with the University of Texas in Austin and Seton Healthcare in Austin, UTMB’s School of Medicine is a leader in medical school education, translational research and clinical care. The University of Texas Medical Branch (UTMB) is a major academic health center in the fields of health sciences education, clinical care and biomedical research.

GRADUATE SCHOOL OF BIOMEDICAL SCIENCES The Graduate School of Biomedical Sciences (GSBS) is one of four degree-granting schools at UTMB and plays a major role in research and scholarship at the university. Biomedical graduate programs were started in 1952, and a separate graduate school was established in 1969, becoming the Graduate School of Biomedical Sciences in 1972. There are 323 faculty members in the graduate school. UTMB maintains an excellent faculty-to-student ratio, with 341 graduate students enrolled and approximately 50 enrolling each year. The graduate school has 11 degree-granting programs.



MONTHLY CRUISE SHIP DATA

The number of cruise ship passengers peaked in December 2005 at nearly 70,000. They declined from there, and then collapsed in September 2008, due to Hurricane Ike. However, 2012 and 2013 has seen a 76% rise in cruise ship passengers since 2011. In the first quarter of 2014, cruise ship passengers and cruise ship call numbers steadily fell. Researchers believe this is due to the technical difficulties that held up two Carnival cruise ships and and all the Disney cruise lines being consolidated in Florida instead of Galveston. To help correct this decline, the Port of Galveston plans to add an additional Royal Caribbean sailing (scheduled for February 2014) and a new Carnival cruise (scheduled for February 2015). The Port of Galveston is also changing the cruise schedule from seasonal to year-round, doubling the amount of cruising out of Galveston a year.

Source Port of Galveston

GALVESTON CRUISE SHIP PASSENGERS: 2009 - 2013

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

2009 2010 2011 2012 2013

Embark Debark

GALVESTON CRUISE SHIP CALLS

Year Cargo Ships Cruise Ships Lays & Rigs Barges

(cargo) Barges (lay) Research Vessels Total

2009 365 142 98 11 90 238 944 2010 389 152 91 11 86 349 1,078 2011 361 152 108 7 62 84 774 2012 325 174 96 5 117 86 803 2013 317 179 96 6 229 85 912



GALVESTON CRUISE SHIPS

The Port of Galveston ranks first among cruise ports in the Gulf of Mexico and Texas, with seven cruise lines offering sailings from Galveston Island. In 2013, the Port of Galveston made over $24 million in cruise revenue with over 1.2 million passengers. As of early 2014, the Port of Galveston has begun due diligence on the construction of a third terminal to host additional cruise lines. Since cruise ship passengers usually stay in Galveston the night before departure and the night after arrival, the Galveston hotel industry has also seen a rise in revenue.

GALVESTON’S CARNIVAL CRUISE SHIPS

Length Passengers Crew Decks Gross Tonnage

Year Launched

Ports of Call

Carnival Magic 1,004 ft. 3,690 1,367 14 128,500 2011

Western Carribbean,

Cayman Islands

Carnival Triumph

893 ft. 2,758 1,100 13 101,509 1999 Western Carribbean

CARNIVAL TRIUMPH Triumph is the older and smaller sister ship of the Magic. The ship’s theme is “cities of the world”, with bars, restaurants and public areas with themes of cities like Rome, New Orleans and Monaco.

CARNIVAL MAGIC Magic, the 2nd largest Carnival ship, calls Galveston it’s home year round. Amenities include: bars, a casino, pools, a waterpark and dozens of dining options.

Source: galvestoncruisetips.com




GALVESTON’S ROYAL CARIBBEAN CRUISE SHIPS


Year Launched Ports of Call

Liberty of the Seas 1,112 ft. 4,600 1,300 18 154,407 2007 Carribbean,

Mediterranean

Navigator of the Seas 1,020 ft. 3,114 1,213 15 1039,570 2002 Carribbean,

Mediterranean

NAVIGATOR OF THE SEAS Navigator of the Seas, a ship from the Voyager Class collection, includes amenities like, the Windjammer Café, Johnny Rockets and Jade Sushi. Navigator is scheduled to be updated in 2014.

LIBERTY OF THE SEAS Liberty of the Seas is a ship from the Freedom class collection. The biggest attraction of this ship is the DreamWorks Experience, which includes character meet and greets, parades, table-side visits, an outdoor movie screen and a 3D movie theater.





GALVESTON’S DISNEY CRUISE SHIPS


Year Launched Ports of Call

Disney Magic 964 ft. 2,400 945 11 84,000 1998 Caribbean, Bahamian

Disney Wonder 964 ft. 2,400 945 11 83,000 1999 Carribbean, Alaska

DISNEY WONDER Disney Wonder is very similar to her sister ship, Disney Magic. On Wonder, you will find plenty of shows to keep you entertained (including Toy Story, The Musical) several nightclubs, lounges and three pools.

DISNEY MAGIC Disney Magic is instantly recognized thanks to its classy look that reminds you of cruise liners from decades past. Entertainment on the ship includes award-winning live Broadway-style shows with many Disney characters, two movie theaters, several night clubs, pools, and many Disney-themed parties and celebrations.




GALVESTON MONTHLY HOTEL DATA In 2009, Hurricane Ike and the national recession hit the Galveston hotel industry hard due to structural damage to their tourism attractions. Since then, the market has rebounded with the entrance of many new high-quality hotels and renovations to older hotels. Tourism has also picked up again with many new attractions lining the Seawall. Hotel occupancy tax revenues returned to their pre-recession peak in 2012 and rose well above it in 2013. This surge in demand was primarily caused by the tourism, healthcare, energy and banking industries.


GALVESTON HOTEL REVENUE: MAY 2013 – MAY 2014

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

GALVESTON OCCUPANCY TAX RECIEPTS

Year Available Rooms

Percent Change

Total Reciepts (Millions)

Percent Change RevPAR Percent

Change

2004 5,016 - 79,439 - 43.39 -

2005 4,949 -1.3% 94,771 19.3% 52.46 20.9%

2006 5,083 2.7% 106,050 11.9% 57.16 9.0%

2007 5,379 5.8% 119,288 12.5% 60.76 6.3% 2008 5,397 0.3% 139,069 16.6% 70.59 16.2% 2009 5,300 -1.8% 105,493 -24.1% 54.53 -22.8% 2010 5,465 3.1% 104,472 -1.0% 52.38 -4.0% 2011 5,483 3.0% 121,543 16.3% 60.74 16.0% 2012 5,635 2.8% 139,965 15.2% 68.05 12.0% 2013 6,134 5.9% 148,129 5.8% 67.98 0.1% 2014 5,290 -13.8% 12,302 -7.8% 39.42 6.9%



MONTHLY RESIDENTIAL REAL ESTATE DATA

Since the major dip in total dollar sales in 2009, there has been a steady increase. In 2013, the total sales value reached $246,500,000, a 52% increase from 2009. As of June 2014, Galveston’s residential total dollar sales value is at a steady $155,099,515.

Source Texas A&M Real Estate Center

GALVESTON RESIDENTIAL TOTAL DOLLAR SALES 2008 – JUNE 2014

GALVESTON AVERAGE HOME PRICE 2008 – JUNE 2014

0

50,000

100,000

150,000

200,000

250,000

2008 2009 2010 2011 2012 2013 2014

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

2008 2009 2010 2011 2012 2013 2014



The majority of commercial real estate in Galveston is retail, hotel or multi-family which relies heavily on tourism. Industrial product is either in the form of distribution or warehouse and is mostly found along the port. Office product is mostly occupied by small business services or government entities. The Galveston County retail market consists of 262 buildings containing 3.4M SF of gross building area.

The Galveston County office market consists of 67 Class B and C buildings containing 1.7M SF of gross building area.

GALVESTON RETAIL MARKET ABSORPTION, NEW SUPPLY & VACANCY RATES

GALVESTON OFFICE MARKET ABSORPTION, NEW SUPPLY & VACANCY RATES

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

(40,000)

(30,000)

(20,000)

(10,000)

0

10,000

20,000

30,000

40,000

Q2-08 Q2-09 Q2-10 Q2-11 Q2-12 Q2-13 Q2-14

Net Absorption New Supply Vacancy

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

(20,000)

(15,000)

(10,000)

(5,000)

0

5,000

10,000

15,000

20,000

25,000

30,000

Q2-08 Q2-09 Q2-10 Q2-11 Q2-12 Q2-13 Q2-14


RETAIL & OFFICE STATISTICS



The Galveston County industrial market consists of 62 buildings containing 2.8M SF of gross building area.

The Galveston County apartment market consists of 602,919 apartment units. The average monthly rental rate is $933, or $1.05 per SF.

Source: Apartment Data Services, Inc.

GALVESTON INDUSTRIAL MARKET ABSORPTION, NEW SUPPLY & VACANCY RATES

GALVESTON APARTMENT MARKET ABSORPTION, NEW SUPPLY & VACANCY RATES

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

(275,000)

(225,000)

(175,000)

(125,000)

(75,000)

(25,000)

25,000

75,000

125,000

Q2-08 Q2-09 Q2-10 Q2-11 Q2-12 Q2-13 Q2-14


0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

(1,000)

(800)

(600)

(400)

(200)

0

200

400

600

800

1,000

Q2-10 Q2-11 Q2-12 Q2-13 Q2-14


INDUSTRIAL & APARTMENT STATISTICS



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GALVESTON ECONOMIC REPORT | MID YEAR 2014 …...The city was destroyed by the 1900 Galveston...

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