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 Knoxville, Tennessee.
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
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
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
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
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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