American
Appraisers
Corporation
Appraisers
Corporation
(502) 267-6320 Office
(502) 267-6344 Fax
10801 Electron Drive, Suite 308
Louisville, KY. 40299
(502) 267-6344 Fax
10801 Electron Drive, Suite 308
Louisville, KY. 40299
REGIONAL ANALYSIS OF LOUISVILLE KENTUCKY
The subject is influenced in a general manner by the economic, political, physical and social
characteristics of the Louisville Metropolitan Statistical Area (MSA). An MSA is a geographic area with a
significant population nucleus, along with any adjacent communities that have a high degree of
economic and social integration with that nucleus. Louisville is part of a metropolitan statistical area that
includes Jefferson County, Bullitt County and Oldham County in Kentucky, and three Indiana Counties
including Clark, Harrison and Floyd.
The value of real property is influenced by the interaction of four basic forces. These forces include
social trends, economic circumstances, environmental conditions, and governmental controls and
regulations. The interaction of these four forces influences the value of every parcel of real estate in
the market.
Social Trends
Social forces are trends that are exerted primarily through population characteristics. Real property
values are affected not only by population changes and characteristics, but also by various forms of
human activity.
Population and Area: Population growth trends influence employment growth, income levels, and
many other key demand parameters analyzed in determining commercial real estate productivity.
The city of Louisville (official name: Metro Louisville) is the largest city in the state of Kentucky, and the
16th largest in the country. Metro Louisville attained such status after a merger took effect on January
1, 2003 between the county and city governments. Louisville is part of a metropolitan statistical area
that includes Jefferson County, Bullitt County, and Oldham County in Kentucky, and three Indiana
counties, including Clark, Harrison, and Floyd. The census has provided recent population data, and
the projections are considered reliable. The population for the MSA is projected at 1,033,459 and is
growing at a rate of .38% per year. The population for Metro Louisville is projected at 694,733, or 67%
of the MSA population, and is growing at a rate of 2.15% per year. This trend was maintained through
the 1990s after a previous decade of stagnant population growth.
Higher Education: Institutions of higher learning typically are not as vulnerable to economic
downswings, and they help to provide an area with a more solid employment base. Noted universities
and colleges in Metro Louisville are the University of Louisville, Jefferson Community College, the
Sullivan University network, Bellarmine University, Louisville Technical Institute, Louisville Presbyterian
Theological Seminary, Spalding University, Indiana University Southeast, and Indiana Vocational
Technical School.
Recreational and Regional Attractions: Recreational and regional attractions enhance an area’s
quality of life. These activities may also have a significant economic impact on an area by increasing
the demand for services and retail trade created by visitors.
Cultural sites in Metro Louisville include the Louisville Science Center, My Old Kentucky Home State
Park (in nearby Bardstown), Six Flags Kentucky Kingdom Theme Park, The Louisville Slugger Museum,
Slugger Park (home of the Louisville Riverbats minor league baseball team), the Falls of the Ohio
Museum, the Kentucky Center for the Arts, the Louisville Zoo, Freedom Hall, and Churchill Downs,
home of the famed Kentucky Derby. Churchill Downs is home to the Kentucky Derby Museum as well.
Recreational sites are abundant. They include the Ohio River and its related outlets, as well as a well-
established metropolitan park system that includes several large parks and many smaller ones.
Economic Forces
Economic forces are the fundamental relationships between current and anticipated supply and
demand and the economic activities in which the population participates in order to satisfy its wants,
needs, and demands through its purchase power.
The national recession that began in the fall of 1999 contributed to a nationwide weakness in the
manufacturing sector. The entire state of Kentucky, including the Louisville metropolitan area, was
affected as well. This slowdown created a predictable reduction in demand for industrial space. The
absorption in the year 2000 was paltry at best, followed by negative absorption in 2001. The events of
September 11, 2001 were a major cause of this weakness as market participants stood back and
waited to see what would happen next. In order to stimulate the economy, interest rates were cut to a
forty-year low. The low interest rates encouraged investors to build, and build they did. 2001 was a
record year, with 1,300,000 s/f constructed in new industrial space. This jump in supply, with negative
absorption, created an abundance of vacant industrial space. This trend began to turn in the fourth
quarter of 2002. Due to the large vacancies of 2001, new construction was sharply reduced in 2002;
absorption increased steadily throughout the year. 60% of the absorption was by owner occupants.
Income: The economic vitality of an area is an important consideration in forecasting the demand
and potential income for commercial real estate. Income levels provide an indication of an area’s
economic vitality since they reflect an area’s economic growth and its residents’ standards of living.
Industries and Employment:
The distribution of employment and the overall unemployment rate help determine the economic
character of an area. The Louisville area has several large private organizations that make up a large
portion of the workforce. The top five employers are listed below, along with the number of employees:
1 UPS 21,272
2 Ford Motor Company 10,300
3 GE Appliance Park 6,000
4 Kroger 4,837
5 Humana 4,626
UPS is the Louisville area’s largest employer, with over 21,000 employees. The second largest is Ford
Motor Company, with over 10,000 employees. During 2000, UPS spent almost $1 billion dollars
expanding their facility into a 2.7 million square foot operation that can sort up to 500,000 packages
per hour. The Louisville International Airport, which is also the locale for UPS, doubled their capacity in
1998, with an $800 million dollar expansion that added two new parallel runways.
Since this expansion, there has been an explosion of new distribution centers built to take advantage of
the UPS hub, which handles the 12th largest tonnage in the world. With the combination of the new
UPS hub, Louisville’s central location, and its existing interstate system (see Highway Transportation
section below), Louisville is a perfect location for distribution.
Environmental Forces
Environmental forces are both natural and manmade forces that influence real property values. Some
environmental forces include climactic conditions, natural barriers to future development, primary
transportation systems, and the nature and desirability of the immediate areas surrounding a property.
Highway Transportation: Highway accessibility is a primary consideration in planning an area’s
future growth and development. The Louisville metropolitan area is accessed via three different
interstate highways. I-64 is a major east-west corridor, capable of delivering goods to the East or West
Coasts. St. Louis lies to the west on I-64; West Virginia is accessible to the east. I-65 is a major north-
south corridor, connecting Louisville with Indianapolis, IN and Chicago to the north, and Nashville, TN
and Montgomery, AL to the south. I-71 is a regional interstate highway that connects Louisville with
Cincinnati, OH, as well as I-75, which services not only major points in Ohio but all major points between
Detroit, MI and Florida. Regionally, Indianapolis, Cincinnati, and Nashville are all within a three-hour
drive.
Louisville’s central location in the eastern United States, gives it the claim that over 50% of the United
States Population can be reached within a one day drive. This makes Louisville and ideal location for
distribution.
Public Transportation: The Louisville metropolitan area is serviced by the Transit Authority of
River City, a bus system linking major metropolitan points to both the central business district and other
suburban areas.
Air Transportation: The Louisville International Airport serves Louisville and the surrounding
areas. Many destinations are directly accessible from Louisville; others are accessible via connecting
flights in Cincinnati (thirty minutes by air); Chicago and Atlanta (one hour by air); or Dallas (two hours
by air). In addition, the Louisville metropolitan area is serviced by two regional airports, Bowman Field
in Louisville and the Clark County Airport in Clark County, Indiana, just north of Louisville. These two
smaller airports facilitate ingress and egress for smaller, private jets and turbo-props.
Other Industrial Transportation: In addition to an abundant interstate system and several options
for air transport, the Louisville area is serviced by an extensive network of railroads.
Last but not least, the Ohio River provides an avenue for water transportation, which includes a
considerable amount of barge traffic. The Ohio River connects with the Mississippi River in St. Louis to
the west and the Allegheny River in Pittsburgh, PA to the east.
Climate: The Louisville area enjoys a distinct four-season year. The topography is generally
green, lush, and moderately hilly. Humidity is usually fairly high, even in cold temperatures. Winter
temperatures normally range from mid-teens to mid-40s. Summer temperatures range from 70s to low
90s. Annual precipitation is moderate to heavy in volume and heaviest during late winter and spring
Governmental Forces in Louisville Kentucky
Governmental, political and legal actions at all levels have an impact on property values. The legal
climate of a particular time or in a particular place may overshadow the natural market forces of supply
and demand. Without question, the most significant factor to occur in the Louisville area is the merger
between the city and county governments that took effect on January 1, 2003. Please see the
Population and Area Section for more information on the merger.
Utilities: The availability of utilities is extremely important to the future development of any
community. Electricity and natural gas are available to residents and businesses in Louisville through
Louisville Gas and Electric Co. (LG&E) .Water is obtained from the City of Louisville, the source being
the Ohio River and is pumped though reservoirs.
Outlook
Our review of the above data indicates that the Louisville metropolitan area has a relatively stable
economy, evidenced by increasing income levels, the steady creation of new jobs, and relatively low
unemployment rates. Metro Louisville also features numerous regional attractions and an excellent
transportation system that includes land, air, rail, and water. In conclusion, the economic outlook for the
Metro Louisville MSA is favorable for the overall success of the subject.
The subject is influenced in a general manner by the economic, political, physical and social
characteristics of the Louisville Metropolitan Statistical Area (MSA). An MSA is a geographic area with a
significant population nucleus, along with any adjacent communities that have a high degree of
economic and social integration with that nucleus. Louisville is part of a metropolitan statistical area that
includes Jefferson County, Bullitt County and Oldham County in Kentucky, and three Indiana Counties
including Clark, Harrison and Floyd.
The value of real property is influenced by the interaction of four basic forces. These forces include
social trends, economic circumstances, environmental conditions, and governmental controls and
regulations. The interaction of these four forces influences the value of every parcel of real estate in
the market.
Social Trends
Social forces are trends that are exerted primarily through population characteristics. Real property
values are affected not only by population changes and characteristics, but also by various forms of
human activity.
Population and Area: Population growth trends influence employment growth, income levels, and
many other key demand parameters analyzed in determining commercial real estate productivity.
The city of Louisville (official name: Metro Louisville) is the largest city in the state of Kentucky, and the
16th largest in the country. Metro Louisville attained such status after a merger took effect on January
1, 2003 between the county and city governments. Louisville is part of a metropolitan statistical area
that includes Jefferson County, Bullitt County, and Oldham County in Kentucky, and three Indiana
counties, including Clark, Harrison, and Floyd. The census has provided recent population data, and
the projections are considered reliable. The population for the MSA is projected at 1,033,459 and is
growing at a rate of .38% per year. The population for Metro Louisville is projected at 694,733, or 67%
of the MSA population, and is growing at a rate of 2.15% per year. This trend was maintained through
the 1990s after a previous decade of stagnant population growth.
Higher Education: Institutions of higher learning typically are not as vulnerable to economic
downswings, and they help to provide an area with a more solid employment base. Noted universities
and colleges in Metro Louisville are the University of Louisville, Jefferson Community College, the
Sullivan University network, Bellarmine University, Louisville Technical Institute, Louisville Presbyterian
Theological Seminary, Spalding University, Indiana University Southeast, and Indiana Vocational
Technical School.
Recreational and Regional Attractions: Recreational and regional attractions enhance an area’s
quality of life. These activities may also have a significant economic impact on an area by increasing
the demand for services and retail trade created by visitors.
Cultural sites in Metro Louisville include the Louisville Science Center, My Old Kentucky Home State
Park (in nearby Bardstown), Six Flags Kentucky Kingdom Theme Park, The Louisville Slugger Museum,
Slugger Park (home of the Louisville Riverbats minor league baseball team), the Falls of the Ohio
Museum, the Kentucky Center for the Arts, the Louisville Zoo, Freedom Hall, and Churchill Downs,
home of the famed Kentucky Derby. Churchill Downs is home to the Kentucky Derby Museum as well.
Recreational sites are abundant. They include the Ohio River and its related outlets, as well as a well-
established metropolitan park system that includes several large parks and many smaller ones.
Economic Forces
Economic forces are the fundamental relationships between current and anticipated supply and
demand and the economic activities in which the population participates in order to satisfy its wants,
needs, and demands through its purchase power.
The national recession that began in the fall of 1999 contributed to a nationwide weakness in the
manufacturing sector. The entire state of Kentucky, including the Louisville metropolitan area, was
affected as well. This slowdown created a predictable reduction in demand for industrial space. The
absorption in the year 2000 was paltry at best, followed by negative absorption in 2001. The events of
September 11, 2001 were a major cause of this weakness as market participants stood back and
waited to see what would happen next. In order to stimulate the economy, interest rates were cut to a
forty-year low. The low interest rates encouraged investors to build, and build they did. 2001 was a
record year, with 1,300,000 s/f constructed in new industrial space. This jump in supply, with negative
absorption, created an abundance of vacant industrial space. This trend began to turn in the fourth
quarter of 2002. Due to the large vacancies of 2001, new construction was sharply reduced in 2002;
absorption increased steadily throughout the year. 60% of the absorption was by owner occupants.
Income: The economic vitality of an area is an important consideration in forecasting the demand
and potential income for commercial real estate. Income levels provide an indication of an area’s
economic vitality since they reflect an area’s economic growth and its residents’ standards of living.
Industries and Employment:
The distribution of employment and the overall unemployment rate help determine the economic
character of an area. The Louisville area has several large private organizations that make up a large
portion of the workforce. The top five employers are listed below, along with the number of employees:
1 UPS 21,272
2 Ford Motor Company 10,300
3 GE Appliance Park 6,000
4 Kroger 4,837
5 Humana 4,626
UPS is the Louisville area’s largest employer, with over 21,000 employees. The second largest is Ford
Motor Company, with over 10,000 employees. During 2000, UPS spent almost $1 billion dollars
expanding their facility into a 2.7 million square foot operation that can sort up to 500,000 packages
per hour. The Louisville International Airport, which is also the locale for UPS, doubled their capacity in
1998, with an $800 million dollar expansion that added two new parallel runways.
Since this expansion, there has been an explosion of new distribution centers built to take advantage of
the UPS hub, which handles the 12th largest tonnage in the world. With the combination of the new
UPS hub, Louisville’s central location, and its existing interstate system (see Highway Transportation
section below), Louisville is a perfect location for distribution.
Environmental Forces
Environmental forces are both natural and manmade forces that influence real property values. Some
environmental forces include climactic conditions, natural barriers to future development, primary
transportation systems, and the nature and desirability of the immediate areas surrounding a property.
Highway Transportation: Highway accessibility is a primary consideration in planning an area’s
future growth and development. The Louisville metropolitan area is accessed via three different
interstate highways. I-64 is a major east-west corridor, capable of delivering goods to the East or West
Coasts. St. Louis lies to the west on I-64; West Virginia is accessible to the east. I-65 is a major north-
south corridor, connecting Louisville with Indianapolis, IN and Chicago to the north, and Nashville, TN
and Montgomery, AL to the south. I-71 is a regional interstate highway that connects Louisville with
Cincinnati, OH, as well as I-75, which services not only major points in Ohio but all major points between
Detroit, MI and Florida. Regionally, Indianapolis, Cincinnati, and Nashville are all within a three-hour
drive.
Louisville’s central location in the eastern United States, gives it the claim that over 50% of the United
States Population can be reached within a one day drive. This makes Louisville and ideal location for
distribution.
Public Transportation: The Louisville metropolitan area is serviced by the Transit Authority of
River City, a bus system linking major metropolitan points to both the central business district and other
suburban areas.
Air Transportation: The Louisville International Airport serves Louisville and the surrounding
areas. Many destinations are directly accessible from Louisville; others are accessible via connecting
flights in Cincinnati (thirty minutes by air); Chicago and Atlanta (one hour by air); or Dallas (two hours
by air). In addition, the Louisville metropolitan area is serviced by two regional airports, Bowman Field
in Louisville and the Clark County Airport in Clark County, Indiana, just north of Louisville. These two
smaller airports facilitate ingress and egress for smaller, private jets and turbo-props.
Other Industrial Transportation: In addition to an abundant interstate system and several options
for air transport, the Louisville area is serviced by an extensive network of railroads.
Last but not least, the Ohio River provides an avenue for water transportation, which includes a
considerable amount of barge traffic. The Ohio River connects with the Mississippi River in St. Louis to
the west and the Allegheny River in Pittsburgh, PA to the east.
Climate: The Louisville area enjoys a distinct four-season year. The topography is generally
green, lush, and moderately hilly. Humidity is usually fairly high, even in cold temperatures. Winter
temperatures normally range from mid-teens to mid-40s. Summer temperatures range from 70s to low
90s. Annual precipitation is moderate to heavy in volume and heaviest during late winter and spring
Governmental Forces in Louisville Kentucky
Governmental, political and legal actions at all levels have an impact on property values. The legal
climate of a particular time or in a particular place may overshadow the natural market forces of supply
and demand. Without question, the most significant factor to occur in the Louisville area is the merger
between the city and county governments that took effect on January 1, 2003. Please see the
Population and Area Section for more information on the merger.
Utilities: The availability of utilities is extremely important to the future development of any
community. Electricity and natural gas are available to residents and businesses in Louisville through
Louisville Gas and Electric Co. (LG&E) .Water is obtained from the City of Louisville, the source being
the Ohio River and is pumped though reservoirs.
Outlook
Our review of the above data indicates that the Louisville metropolitan area has a relatively stable
economy, evidenced by increasing income levels, the steady creation of new jobs, and relatively low
unemployment rates. Metro Louisville also features numerous regional attractions and an excellent
transportation system that includes land, air, rail, and water. In conclusion, the economic outlook for the
Metro Louisville MSA is favorable for the overall success of the subject.
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Nationwide real estate appraisal service
_American
__Appraisers
___Corporation
__Appraisers
___Corporation
(502) 267-6320 Office
(502) 267-6344 Fax
10507 Watterson Tr., 2nd Flr
Louisville, KY. 40299
(502) 267-6344 Fax
10507 Watterson Tr., 2nd Flr
Louisville, KY. 40299