Georgia State’s Dhawan Waiting for Businesses to Invest Before Buying In to Optimism
ATLANTA – Strong job growth, rising home prices and continued stock market appreciation point to economic health, but global tensions and lack of business spending are cause for concern, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
“You might assume that we are back in the late 1990s when we looked to the future with great anticipation, but I see quite a few differences between now and then,” Dhawan writes in his Forecast of The Nation, released today.
Among the differences: Extremely low interest rates and a disinflationary environment. Executives and policymakers want to know when rates will rise, as evidenced by the questioning of Federal Reserve chair Janet Yellen when she testified before the U.S. Congress Joint Economic Committee earlier in May.
A sharp decline in export growth is also contributing to the forecaster’s tempered expectations. “Exports represent foreign demand for our goods, and as such, they are a reflection of our trading partners’ economic health, which is iffy to say the least.” Anxiety over Russia’s tussle with Ukraine and Germany’s dependence on Russian energy sources have unfortunately shorted growth prospects for a European economic rebound this year. Furthermore, China’s continued stagnation is impacting its suppliers in the emerging markets. All this will ultimately impact financial markets back at home.
That said, Dhawan asserts the news is not all bad. “Vehicle sales cracked the 16-million mark, housing starts are still decent and home prices grew by double digits in 2013.” New home sales are rising, too, but sales of discretionary items remain flat. “Buyers are moving into new homes with old furniture.”
Dhawan’s concerns will be assuaged when “we witness consistent growth in all GDP categories, including exports, and that can happen only when our trading partners are back on their feet and our businesses are investing, which leads to sustained hiring.” As for the Fed, the forecaster says the nation’s central bank won’t move on interest rates until it has concrete evidence that business investment growth is here to stay.
Business investment will slowly increase by year’s end, says Dhawan, leading to enhanced growth prospects in 2015. And beyond that? “2016 will mark a great year by the current recovery standard.”
Highlights from the Economic Forecasting Center’s National Report
- The weather-affected growth of 0.1% in the first quarter of 2014 will recover to 3.7% in the second, but the year will average 2.2%. Real GDP expands at 2.5% in 2015 and 2.9% in 2016.
- Investment will grow by 3.7% in 2014, 5.1% in 2015 and 6.5% in 2016. Expect an average of 196,000 new jobs per month in 2014, 186,000 per month in 2015 and 203,000 per month in 2016.
- Housing starts will average 0.953 million units in 2014, rise sharply to 1.223 million units in 2015, and increase further to 1.323 million units in 2016. Auto sales will average 15.5 million units in 2014, and increase slightly to 15.6 million units in 2015 and 15.7 million units in 2016.
- The 10-year bond rate will rise to 3.6% by year-end of 2014 and not cross 4.0% until mid-2016.
Peach State Bets Gingerly on Growth
After a slow start to 2014 caused by January’s “snowpocalypse,” Georgia will add 20,000 jobs per quarter for the rest of the year, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
“When you look at the positives and the negatives you get numbers that seem slightly off-kilter for state job growth,” Dhawan writes in his Forecast of Georgia and Atlanta, released today. “In the first three months Georgia added only 6,000-odd jobs, due to the weather effect. All told, my forecast calls for 65,100 new jobs in the state by year end.”
The March benchmarking process revised 2013 job growth downward by a miniscule 0.2%, to 83,200, including a 2% reduction in the corporate sector triggered in part by a slowdown in hiring due to global factors such as the Russia-Ukraine standoff and a stagnant Chinese economy. The transportation sector encountered an even larger downward revision of 2.9%. Government jobs were revised slightly upwards.
Consistent with national trends, retail and hospitality generated 40% of new jobs in Georgia last year. But if oil prices remain high and global issues continue to impact the catalyst sectors (manufacturing, corporate and healthcare) the forecaster is concerned that these two sectors could suffer. “No announcements of new hotel building or malls are on the horizon, just refurbishing at the most. Momentum will slow this year for these sectors.”
Dhawan predicts “significant growth” in construction due to multiple announcements of apartment building intown Atlanta and the new Falcons stadium which began with a groundbreaking ceremony last week. “Approval of the Savannah dredging project and expected lower energy prices makes me bullish on manufacturing-related employment in the coming years.”
Also on the upswing are metro Atlanta home prices which rose by double digits during 2012-2013, with permits increasing by 70%. The forecaster expects the home price growth to moderate as potential purchasers take a wait-and-see approach around mortgage rates.
Multi-family housing permits in metro Atlanta also increased during 2012-2013; two-thirds of the permits originating in Fulton County. Dhawan comments that, “This is no surprise, given millenials’ preference to live in town near their jobs,” a trend he anticipates will easily continue.
Highlights from the Economic Forecasting Center’s Report for Georgia and Atlanta
- In calendar year 2014 (January-December), growth will slow with the state adding 65,100 jobs, (14,800 premium jobs). In 2015, growth picks up as Georgia adds 89,200 jobs (18,400 premium jobs). In 2016, growth will be even better with 100,100 jobs added (20,700 premium jobs).
- State unemployment averaged 8.2% in 2013. It will drop further to 6.9% in 2014, 6.3% in 2015, fall below 6% to 5.7% in 2016. Nominal personal income rose 2.7% in 2013 and will increase 3.3% in 2014. Income will rise by a strong 5.3% rate in 2015 and an even better 5.6% in 2016.
- Atlanta added 59,800 jobs in 2013. Expect this to moderate in 2014 as Atlanta will add 46,800 jobs, including 10,800 premium jobs. Employment will grow strongly in calendar year 2015, gaining 61,300 jobs (14,300 premium), and by 67,800 jobs (15,800 premium) in 2016.
- Atlanta’s housing permits numbered 24,065 units in 2013, due to an 85% increase in multifamily permits. In 2014, permitting activity levels will be maintained at about 23,103, a decrease of 4%. Permit activity will rise to 23,974 in 2015 and then jump sharply to 27,609 in 2016.
Vapor: The Next Environmental Cloud Rolls In
By Chris Fonzi
Logic Environmental, Inc.
3400 McClure Bridge Road, Suite F602
Duluth, Georgia 30096
ph: 770.817.0212 fax: 770.817.0214
For those of you who feel like global warming, deforestation and the decline in the world’s billfish population are just a little too abstract to be personally compelling, the American Society for Scaring the Hell Out of Everyone announces a completely novel environmental problem – and this one could land smack in the middle of your next real estate deal.
For years now, the Phase I/Phase II process of environmental site assessment has been focused primarily on identifying possible sources of soil and groundwater contamination – underground tanks, spills, dump sites, etc. This was the mandate established by the American Society for Testing Materials (ASTM), a private organization that sets the standards for what goes into a Phase I investigation. Although ASTM standards aren’t law, they are close to being the only game in town and virtually all reputable consultants follow them. In January 2014, ASTM revised the standards for what constitutes a Phase I, the first such revision in eight years. The most significant change was the addition of a requirement that all Phase I reports evaluate sites for the possible presence of vapor as a recognized environmental threat. And vapor, as it turns out, is everywhere.
In this context, “vapor” refers to the migration of gasses from volatile contaminants – like gasoline or dry cleaning solvents – in soil. Let’s say you’re doing a deal on a corner-lot restaurant, built 10 years ago on the site of a former gas station. The Phase I assessment shows that gasoline contamination was reported from the site just before its redevelopment. At that time, the testing showed that the contamination was not very severe and the state environmental department issued a no-further-action-required letter for the release. The station’s underground storage tanks were removed, but no other cleanup was performed and a moderate amount of residual contamination was left in place. (This is standard practice, by the way. Only very rarely do environmental authorities require a site be restored to pristine condition and often allow the owner off the hook without performing any real cleanup at all.)
Historically – and by that we mean, until four months ago – a Phase I on this property would most likely have concluded that the no-further-action letter was a silver bullet, and that the contamination warranted no further investigation. But now, the report may also bear the ominous conclusion that your property has a vapor condition. It might say no more than that, and leave the conclusion unexplained, like an odorous gray cloud above your deal. Or it might recommend some sort of testing. Or it might even recommend some type of modification to the property to mitigate the impact of these vapors.
“Vapor intrusion” is when vapor emerges from the soil into basements or structures and into our personal space.”
“Vapor encroachment”means presence of vapor in soil anywhere on a property – even if the property supports no structures.”
Before we talk about how you should handle this, we need to burden you with two terms of envirospeak jargon: vapor intrusion and vapor encroachment. “Vapor intrusion” is when vapor emerges from the soil into basements or structures and into our personal space. Human exposure to airborne chemicals can be a real issue. Any doctor, toxicologist or Richard Pryor can tell you that one of the fastest ways to get any chemical into your blood is to breath it in. Accordingly, most government studies and environmental guidelines involving vapor have focused on human exposure through vapor intrusion. “Vapor encroachment,” on the other hand, was basically invented by the lawyers of the standards-makers because creating standards for vapor intrusion raised too many legal issues. It means presence of vapor in soil anywhere on a property – even if the property supports no structures. Vapor encroachment is generally not a significant health threat in its own right, but is important mostly as a precursor to vapor intrusion. Vapor encroachment is unlikely to ever be directly regulated.
Distinguishing these two conditions – intrusion vs. encroachment – is important to understanding a central problem with the new Phase I standards. That is, that pointing out a vapor encroachment issue can accomplish very little apart from making everyone involved in a deal uncomfortable. There are no government standards, no reporting obligations and no clear response which arises from the identification of a vapor encroachment condition. Some benchmarks have been established for vapor intrusion, but they are still evolving on a state-by-state basis and Georgia has yet to enact any regulations. While buildings can be tested for vapor intrusion, testing for vapor encroachment (that is, testing away from a structure) rarely serves any clear goal.
The best advice for managing vapor issues – as it is for most environmental issues – is to have a clear goal in mind before either party begins investing time and money into a solution.
Although some draft federal guidelines exist – including screening levels for a range of common contaminants – the government has, for the most part, not really chimed in on the question of how much vapor is too much. For this reason, getting a no-further-action letter or some other government blessing that a vapor condition is “acceptable” may not be an option. The EPA is scheduled to release their final guidance document about vapor very soon (we would be more specific, but the government has goals, not deadlines) and most states, including Georgia, have created vapor intrusion task forces to address this issue.
Testing a building for potential vapor intrusion involves collecting an air samples from beneath the slab of the structure. This can involve the uniquely disruptive step of coring a hole through the floor of a building, but can also sometimes be accomplished by forcing a direct-push probe (imagine a giant steel syringe attached to a pickup truck) at an angle beneath the slab. Expect the cost of vapor intrusion testing to be comparable to other Phase II investigations, typically $2,500 or more.
While testing the air IN the building would seem like a more straightforward approach, it carries several potential problems.
A shocking number of common household or business items can contribute vapors to an environment, including dry-cleaned clothing, new carpet, soaps and lotions, nail polish remover, cleaning supplies, etc. Since most indoor sampling techniques would evaluate the space over a period of time, even a brief exposure to some of these chemicals could cause a false positive. For this reason, a preferable method involves collecting samples from below or near the building slab, then using a computer model or a screening level calculator to predict the indoor air concentration. This also provides a level of liability protection to the property owner, as an estimated result would not carry the same liability as an actual positive sample result from direct indoor air testing.
Fixing a vapor intrusion condition means directing the soil vapors away from the structure. During building construction, this can be as simple as installing a vapor barrier under the foundation. For existing structures, it might involve the installation of a subsurface venting system, or alterations to an existing HVAC system. Once again, however, the absence of government oversight in this area will make it important for buyers and sellers to reach a clear and meeting of the minds as to the goals of any mitigation project.
For the moment, vapor issues are in a nascent and unsettled stage in their development, lacking the predictability which makes other environmental issues easier to quantify and less likely to be deal-breakers. As government regulation and industry practice evolve, vapor will inevitably become easier to manage in a transactional context, even as the frequency of vapor-related issues increases.
Chris is founder and principal of Logic, GABB Affiliate member and a GABB Platinum Sponsor. He is a graduate of the University of Florida and the UF School of Law. He has performed environmental assessments and provided consulting services in more than 20 states during the past 15 years.
Read MoreGABB Today May 2014
We hope you enjoy your Memorial Day weekend, and we hope you plan to join us NEXT TUESDAY for our regular GABB meeting for an informative talk about the upcoming election season from political analyst Bill Crane.
Brian Harper Senior Vice President of SBA Lending with Atlantic Capital Bank will sponsor the May 27 meeting, which starts at 10:30 a.m. at the South Terraces Conference Center after at 9:45 a.m. networking session and a free light breakfast. The South Terraces Conference Center is at 115 Perimeter Center Place, Atlanta. For information about sponsoring future GABB meetings, contact GABB Board Member Mike Kelly.
Tuesday, May 27: Bill Crane, who helped market the city of Atlanta during the Olympic years, will talk about what the elections will mean for Georgia businesses. Bill Crane of CSI Crane, LLC is nearing 25 years as a senior communications strategist. He began his career in broadcasting, and later served in senior communications staff positions under Georgia’s Gold Dome as well as on Capitol Hill, working for two U.S. Senators and one Governor, in both major political parties. Crane also has significant economic development experience, serving as Vice-President of Marketing and Communications for the Metro Atlanta Chamber of Commerce during Atlanta’s Olympic years.
Since the 2000 Presidential Election, Crane has become one of the southeast’s most visible political analysts and commentators, first with 11Alive News, Atlanta’s NBC affiliate, and now Channel 2’s WSB-TV Action News. Crane added radio in 2006, since providing commentary for WSB-AM News/Talk 750 and now 95.5 FM. In the summer of 2009, Crane opened his own shop, CSI Crane, providing a full-range of marketing, public affairs and communications services to individuals and corporations.
UPCOMING GABB EVENTS:
JUNE 24: Demystifying Advertising with Rutland Walker
Join Cox Media Group Project Manager Rutland Walker and GABB as we demystify advertising in 2014, and give you a few simple takeaways that will increase the effectiveness of your advertising no matter what you do. Walker is also an Adjunct Professor at The Academy of Marketing in Atlanta. The meeting sponsor will be David Aynes of Atlanta Leasing and Investment, 1230 Peachtree Street, Atlanta, GA 30309. 404- 348-4448×2
JULY 29: Achieve your Business Goals with Ruth King
Ruth King, who describes herself as a serial entrepreneur, will speak to the GABB. Through Business Ventures Corporation, she coaches, trains, and helps contractors and others achieve the business goals they want to achieve. Meeting sponsorship available; contact GABB Board Member Mike Kelly.
AUGUST 26: Affiliates Panel
GABB Affiliates will hold a panel discussion about banking, legal and/or others matters of interest to professional business brokers. The panel discussion will be led by Chris Fonzi of Logic Environmental, chair of the GABB’s newly formed Affiliates Committee. Meeting sponsorship available; contact GABB Board Member Mike Kelly.
SEPT. 30 GABB FALL CONFERENCE
The GABB Fall Conference will be held on Sept. 30 with two popular speakers and IBBA credit. Course #117 – Understanding Tax Returns (4 credit hours) Course #424 – Pro Forma and Cash Flow Statement: Tool For Closing More Deals (4 credit hours) Both courses have been approved for IBBA credit for the CBI and will be eligible for Real Estate Continuing Education Credit.
Did you Complete the GABB Survey?
Last week, the GABB emailed all current and former GABB members and potential members with a survey about your knowledge of the organization and your experiences with the group. If you have NOT filled out the survey, please do so now, before Friday, so that we can compile the results. All responses are confidential. This email was sent to current, former and potential members so please participate even if you are not a current member.
The entire process should take less than 10 minutes.
Please be candid in your answers; your responses will remain confidential and will be combined with other participant’s feedback for reporting purposes.
You may click the link below to begin (or copy & paste the link into your browser).
Thank you for your participation.
Check your GABB Profile:
Please take a moment to log into the GABB website and check your profile. If something is wrong or missing, please contact GABB Executive Director Diane Loupe by email or by phoning 404-374-3990. If you want your profile picture displayed, please send it.
GABB members represent owners of Georgia businesses and help them estimate the value of their businesses, create marketing plans and strategies for the sale of their businesses, and identify and qualify potential business buyers while keeping the sale confidential from employees and customers. Many of today’s business buyers are individuals who have decided not to re-enter corporate America , but are ready to control their own destiny by purchasing and operating a Georgia business. Many business buyers are also current business owners who saw 2013 as an opportunity to grow their revenues through purchases of competitors or strategic partners.
Read MoreCommunications Expert to Recap Election at May 27 GABB Meeting
ATLANTA, GA. –Bill Crane, who helped market the city of Atlanta during the Olympic years, will talk about election results to the Georgia Association of Business Brokers on Tuesday, May 27, at 10:30 a.m. at the South Terraces Conference Center. The GABB is the state’s largest professional organization dedicated to buying and selling businesses and franchises.
Bill Crane of CSI Crane, LLC is nearing 25 years as a senior communications strategist. He began his career in broadcasting, and later served in senior communications staff positions under Georgia’s Gold Dome as well as on Capitol Hill, working for two U.S. Senators and one Governor, in both major political parties.
Crane also has significant economic development experience, serving as Vice-President of Marketing and Communications for the Metro Atlanta Chamber of Commerce during Atlanta’s Olympic years.
During the past decade, Crane was a Senior Vice President with the GCI Group, a global public relations firm, where he helmed client engagements for AFLAC, Cousins Properties, Deloitte Consulting, InterContinental Hotels Group and Johnson & Johnson among others.
Since the 2000 Presidential Election, Crane has become one of the southeast’s most visible political analysts and commentators, first with 11Alive News, Atlanta’s NBC affiliate, and now Channel 2’s WSB-TV Action News. Crane added radio in 2006, since providing commentary for WSB-AM News/Talk 750 and now 95.5 FM. In the summer of 2009, Crane opened his own shop, CSI Crane, providing a full-range of marketing, public affairs and communications services to individuals and corporations.
Crane is a graduate of the Grady College of Journalism at the University of Georgia. He remains an avid Bulldog fan, and the proud father of two daughters. Crane lives in Scottdale, Georgia.
GABB members represent owners of Georgia businesses in extremely important transactions: the sale of their businesses. GABB members help business owners determine the asking prices of their businesses, create marketing plans and strategies for the sale of their businesses, and identify and qualify buyers of their business while keeping the sale confidential from employees and customers. Many of today’s business buyers are individuals who have decided not to re-enter corporate America, but are ready to control their own destiny by purchasing and operating a Georgia business. Many business buyers are also current business owners who saw 2013 as an opportunity to grow their revenues through purchases of competitors or strategic partners.
The GABB’s monthly meeting at 10:30 a.m. at the South Terraces Conference Center is preceded at 9:45 a.m. by a free light breakfast and networking session. The South Terraces Conference Center is at 115 Perimeter Center Place, Atlanta. For more information about the GABB, contact GABB President C. David Chambless at dchambless@abraxas.biz or 404-627-4454 or GABB Executive Director Diane Loupe at 404-374-3990 or georgiabusinessbrokers@gmail.com.
Read MoreGREC increases continuing education requirements
Georgia Real Estate Commission increases continuing education requirements
Today’s update comes from former GABB president Kathryne Pusch, who is also a member of the Georgia Real Estate Commission’s Education Advisory Committee, a licensed Georgia real estate instructor, and the author of The Complete Preparation Guide to the Georgia Real Estate Sales Exam.
The Georgia Real Estate Commission passed changes to two of its Rules at its April 2, 2014 meeting.
Key Points
• Beginning July 1, 2015 each licensee must have completed 36 hours of Continuing Education to renew a license.
• Beginning July 1, 2016, each licensee must have completed 3 hours on the topic of license law as part of the 36 hours of CE.
One of the many benefits of the GABB is discounts on quality professional training aimed at the needs of professionals engaged in buying and selling businesses and franchises.
Rule 520-1.05 Maintaining a License
Increase in Required Continuing Education Hours
Since continuing education (CE) was first required of non-grandfathered real estate licensees in 1980, the Georgia Real Estate Commission (GREC) has not increased the CE hours. Based on the number of repeated types of violations, surveys of licensees, input from industry professionals, and the ever-changing industry, the Georgia Real Estate Commission determined that an increase from 24 to 36 hours of CE per renewal period would further “protect the public” which is the function of the GREC. The Commission cites the following reasons for the increase:
1. The national average of CE hours is 9.3 hours per year. All surrounding states except for South Carolina have more CE hours per year than Georgia. This increase would put Georgia nearer the national average and above all surrounding states.
2 . The purpose of the GREC is to “protect the public” from misconduct and violations by real estate licensees of real estate law and rules. The GREC firmly believes that an increase in CE taken by real estate licensees will help diminish the number of violations by licensees of the license law.
3. The GREC considers real estate licensees as professionals. As professionals, real estate licensees should take CE hours commensurate with other professions. For example, attorneys are required to take 12 hours of CE each year, insurance agents 15 hours of CE each year and appraisers 14 hours of CE each year. The GREC wants to insure the integrity and “raise the bar” for licensee professionalism.
The section of the rule that changed is stated below, and you can go to the GREC website and read the Rule.
(1) Required Education.
(d) In order to renew an active license, a licensee shall furnish to the Commission evidence of satisfactorily completing thirty-six (36) instructional hours of continuing education courses during the renewal period. The effective date of this requirement shall be July 1, 2015. Any licensee who renews an active license on or after this date must have completed thirty-six (36) hours of continuing education courses in order to renew.
(e) A licensee shall satisfactorily complete at least three (3) hours of continuing education on the topic of license law during each license renewal period. The effective date of this requirement shall be July 1, 2016. Any licensee who renews an active license on or after this date must have completed at least three (3) hours of continuing education on the topic of license law in order to renew.
Note that the new Rule has 2 parts, 1) number of hours and 2) the requirement of a license law course, and they are staggered in the years they become effective. If a licensee renews between July 1, 2015 and June 30, 2016, he/she must take 36 hours of CE to renew. If a licensee renews on or after July 1, 2016 , the 36 hours must include a course that includes 3-hours on the topic of license law.
Any course developed to qualify as a continuing education course on the topic of license law will contain material that covers such topics as trust account requirements, brokerage relationships, unfair trade practices, advertising, licensees acting as principals, and other topics as deemed appropriate by the Georgia Real Estate Commission. Course providers will be required to identify the course as meeting the requirements for the 3-hour mandatory license law course approval.
Note Regarding Grandfathered Licensees: Because it takes a statutory change by the Georgia General Assembly to require continuing education for “Grandfathered Licensees” (those licensed prior to 1980), these “Grandfathered Licensees” will continue to be exempt from all continuing education requirements. However, Grandfathered licensees are encouraged to attend CE courses and in particular the courses that cover updates and a review of License Laws, Rules, and Regulations. Every licensee is responsible for being knowledgeable regarding the License Laws, Rules, and Regulations and being uninformed is not a defense for a violation of the License Laws, Rules, and Regulations.