Appraisal Regional Analysis of
The subject is influenced in a general manner by the economic, political, physical and social characteristics of the Lexington-Fayette
Metropolitan Statistical Area (MSA). A 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. The Lexington-Fayette Metropolitan Statistical Area covers six
counties in the state of Kentucky. These counties include Fayette, Scott, Woodford, Bourbon, Clark, and Jessamine.
Lexington is located in the central portion of the State of Kentucky. Lexington is located 70 miles east of Louisville, 20 miles southeast of
Frankfort; the state Capital of Kentucky, 70 miles south of Cincinnati, Ohio, 150 miles west of Charleston, West Virginia, and 150 miles north of
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 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 Growth
Population growth trends influence employment growth, income levels, and many other key demand parameters analyzed in determining
commercial real estate productivity. The table below shows the population in the Lexington MSA in comparison with the State of Kentucky and
the United States. Historical data, as well as projections, are shown. The MSA population is steadily increasing faster than both the state of
Kentucky and the United States. These trends are expected to continue as indicated by the 2017 population projections.
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. The area is anchored around the University of Kentucky, and there are 10 colleges or universities within 40 miles of
Lexington. In this area over 65,000 students are enrolled graduating 12,000 annually.
Recreational and Regional Attractions
Recreational facilities and regional attractions enhance an area’s quality of life and generate additional employment. The Lexington MSA offers
numerous historical, cultural, and recreational options for both residents and visitors.
Lexington is home to many thriving arts organizations including a professional orchestra, two ballet companies, professional theatre, and
several museums including a basketball museum, several choral organizations and a highly respected opera program at the University of
Kentucky. In addition, there are several events and fairs that draw people from throughout the Bluegrass.
Mayfest is a free outdoor festival that takes place annually over Mother's Day weekend. Held in Gratz Park between the Carnegie Center and
Transylvania University, the festival typically features up to 100 art and craft booths, live entertainment throughout the weekend, food,
children's activities, adult activities and literary events, free carriage rides, a traditional Morris and Maypole dance and various demonstrations.
Taking part the first full weekend of June is the Festival of the Bluegrass, Kentucky's oldest bluegrass music festival. It includes three stages for
music and a "music camp" that teaches the bluegrass music to school children. Also in June is the popular Broadway review presented by UK
Opera Theatre, "It's A Grand Night for Singing!"
Lexington has over 100 parks ranging in size from the .20-acre Smith Street Park to the 659-acre Masterson Station Park. There are also six
public golf courses at Avon, Kearney Links, Lakeside, Meadowbrook, Tates Creek and Picadome.
Lexington is home to two historic horse racing tracks. Keeneland; which has sported live races in April and October since 1936, and The Red
Mile Harness Track, the oldest horse racing track in the city, and second oldest in the nation. The Kentucky Horse Park, located along scenic
Iron Works Pike, is a relatively late-comer to Lexington, opening in 1978. It is a working horse farm and an educational theme park.
The University of Kentucky fields 22 varsity sports teams, most of which compete in the Southeastern Conference. Lexington's only other
collegiate team; the Transylvania University Pioneers compete in NCAA Division III athletics. Lexington is also home to the Lexington Legends,
a Class A minor league affiliate of the Houston Astros.
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 Bluegrass is the financial, educational, retail, health care, service, and cultural center of Central Kentucky. Lexington-Fayette County is
the merged urban county government centered among an eight county alliance, which represents the Bluegrass Region.
The chart below compares the employment composition of the Lexington area with that of the state of Kentucky. Total employment is broken
down into the following sectors.
Overall, the sector employment is balanced and the percentage sector employment of the Lexington MSA is similar to that of the state.
Lexington MSA’s major employers are listed below. The major employers are consistent with the sector employment for the area.
The following chart shows the historical unemployment rates for the MSA, state, and US from 2000 to May 2012. As shown, the unemployment
rate for the MSA historically has been lower than the rates of the state and nation. The MSA’s unemployment, as well as the State and national
unemployment levels increased significantly from 2008 through 2011 but appear to be on a declining trend.
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.
The climate of the area is comparable to other communities in the Midwest region. Generally, these areas are known for their seasonal climate,
with warm weather in the summer and cold weather in the winter.
Two interstate highways run through Lexington and its suburbs. I-75 is a north-south limited access highway that passes through the eastern
portion of Lexington and connects the city with Cincinnati to the north and Knoxville to the South. I-64 is an east-west limited access highway
that passes through the northern Lexington area and connects the city with Louisville to the west and Huntington, West Virginia to the east.
The Transit Authority of the Lexington-Fayette Urban County Government or LexTran, is a public bus transportation system servicing
Lexington. It operates seven days a week on eight bus routes from 5:30 a.m. to 12:30 a.m. In addition to mainline and paratransit, LexTran
contracts with the University of Kentucky and operates four routes around the campus. It also runs two routes to the Bluegrass Community and
Technical College campuses. LexTran does not provide service outside the Lexington city proper due to limited funding sources.
The Bluegrass Airport (Code LEX) is a public airport that is located in Fayette County. There are approximately 65 direct and nonstop flights
daily from the two runways of Blue Grass Airport. Seven major airlines operate connection service at Blue Grass, including Allegiant Air,
American Eagle Airlines, Delta Air Lines, Continental Express, Northwest Airlink, United Express, and US Airways Express. The airport is
located about 5 miles west of the Lexington CBD.
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.
Our review of the above data indicates that the Lexington MSA has historically enjoyed a relatively stable economy, evidenced by a historical
pattern of increasing income levels, a steady creation of new jobs, and relatively low unemployment rates. However, Lexington, similar to rest of
the nation has recently experienced set-backs due the national and global recession. The area has experienced increasing foreclosures,
increasing unemployment, and has had other recessionary effects.
In comparison to the greater Midwest Region, the Lexington economy is faring better than comparable markets. Lexington saw smaller growth
and a less intense boom prior to the recession that started to take its effects in mid-2008 through now. And because the area was not over-
built to the degree as many other parts of the Midwest and Nation, the decline has not been as drastic as seen elsewhere.
In conclusion, the economic outlook for the Lexington MSA is favorable for the long term overall success of the subject. In the short term, the
market is anticipated to be flat. That unemployment levels are improving should serve to help spur more activity for the real estate market and
lead to future appreciation; however, the real estate market typically lags behind other more liquid financial markets.
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