FINDING SOURCES OF GROWTH IN A “NO GROWTH” MARKET
By: Douglas E. Harnish, MBA
MARKET METRIC$ LLC
The Dayton Metropolitan Area has been described as a “no growth” metro that languishes in spite of a strengthening general economy and growth in Southwest Ohio. It is true that the Dayton Metro has suffered its share of job losses and the loss of major corporations that have historically driven the economy. The defined MSA has been reduced to only three counties; Greene, Miami, and Montgomery. In the 2010 Census, the Dayton Metro lost over 6,600 persons while achieving a modest increase of slightly more than 4,600 households. More specifically, Montgomery County lost almost 24,00 persons and slightly less than 5,300 households.
Declines in Montgomery County largely overshadowed growth in the remaining counties in the MSA. While the aggregate statistics support the “no growth” observation, they mask areas of growth and opportunity within the more general market area. The “South Metro Area” is at the heart of a cluster of communities poised to experience substantial growth in the immediate future. While the municipalities in the South Metro Area have some land for future development, the vast majority of developable land is in five townships in southeastern Montgomery and northern Warren Counties. Current estimates coupled with near-term projections indicate that 13,767 persons and 5,533 households will be added in the five townships; Miami and Washington in Montgomery County plus Clear Creek, Franklin, and Turtlecreek in Warren County, between the last Census in 2010 and the end of the decade in 2019. Approximately 75% of the population growth (10,373 persons) and 77% of the household growth (4,235 households) is projected to take place from 2015 through 2019. These projections represent a substantial addition to the consumer base in the South Metro Area. Thus, the Dayton Mall and other merchants, restaurants, entertainment venues, professional practices, and service providers in close proximity should experience gains if for no other reason than convenience. Looking at the larger market area, Montgomery County is projected to experience modest growth in the decade from 2010 through 2019; however, Butler and Warren Counties are projected to experience rapid growth throughout the period representing over 45% of the total growth projected for the entire Cincinnati Metropolitan Area in the decade.
Focusing for a moment on only Montgomery County, 3,362 new housing units are projected to be built in the County between 2015 and 2019. Of these new units, 2,411 units are projected to be built in Miami and Washington Townships; 71.8% of the total housing unit development projected for the entire County in the next five years. Housing vacancy rates are projected to be very low in these two townships leading to a conclusion that almost all, if not all, of these projected new housing units will be occupied upon completion.
Channeling the projected growth to businesses and professional practices in the South Metro Area will be the challenge. New competitive, commercial venues are emerging on the landscape along the I-75 corridor between Dayton and Cincinnati along with new locations along I-675 in Greene County. Unless the existing businesses in the South Metro Area are attuned to the competitive challenges to the growth opportunities that could emerge, the overall impact on South Metro Area businesses could be dilutive; in essence, a declining market share. This observation is particularly important if businesses are brick and mortar based in a time of growing internet shopping. Businesses will have to reach out further geographically and become “e-tail” savvy in order to be identified by the growing consumer base; especially that growing consumer base in Butler and Warren Counties. The growing business base in West Chester in particular may represent reasonable alternatives for households in eastern Butler and western Warren Counties between southern Montgomery County and northern Hamilton County. The challenge for South Metro Area businesses will be in formulating value propositions that make it worth travelling north on I-75 to southern Montgomery County versus a journey to West Chester and vicinity; in essence, what makes you better than your competition.
While the statistics above suggest that retail, dining, entertainment, professional practices, and service providers should all experience growth, a more detailed look at the core of this growth suggests that all of these enterprises will need to focus on a specific segment of households to attract consumer dollars in the future. The segment in focus is households headed by “senior citizens”. As cited above, 5,533 households are projected to be added in the five townships between 2010 and 2019. A total of 5,568 households headed by persons between 55 and 74 years of age are projected to be added during the decade. This number exceeds total projected household growth for the area indicating that the total number of households headed by persons under 55 years of age will decline slightly in the same time period. Examining the growth dynamic more closely, the largest segment of household growth is projected for households headed by persons between 65 and 74 years of age followed closely by persons between 55 and 64 years of age.
All businesses will need to spend more time addressing the needs and wants of households headed by middle-aged and senior adults. A significant effort must be directed at senior households given the magnitude of growth projected for households in the “senior” age brackets. There is no question that the goods and services desired change with age and the responsiveness of merchants to the changing demographics will ultimately determine how much of this expanding market they will capture. Younger consumers should not be ignored, but the shifting age demographics indicate a need to focus on a broader range of age groups in the population and households in the future with some de-emphasis on the youthful end of the age range.
The household income dynamics of the South Metro Area are also well hidden by the aggregate statistics for Montgomery County and The Dayton Metropolitan Area. The household income statistics for Miami and Washington Townships are both very strong as compared to the County or the Dayton Metro in the aggregate. More generally, the household income statistics for all five of the townships identified earlier are very strong relative to their respective Metro markets. As such, household income should not be an impediment to business development and/or growth in the South Metro Area in the near term.
The overarching conclusion from the statistics cited above is that there will be ample opportunities for business development and growth in the South Metro Area. All the businesses have to do is look on their doorsteps for the sources of this growth even if it is described as a “no growth” market.