Subject Property has Potential for Future Development of Various Land Uses

In order to assess the subject property’s real estate development potential, Market Transects reviewed numerous data sources related to the demand for real estate products at the subject site and information regarding the site itself. The data included economic and demographic statistics that will impact the current and future demand from potential buyers, developers and end users of real estate.

In summary, our research confirms that favorable conditions exist to allow for successful future development at the site. Highlights of the positive indicators include extremely healthy population and household growth rates, an employment picture that exceeds state and metropolitan area averages, quality schools and an excellent location on a regional thoroughfare. These attributes will allow for development that could include various land uses including residential, commercial, institutional and/or industrial.

Demographic Trends Positive for Lamar and Forrest Counties

Lamar and Forrest Counties are some of the fastest growing areas in the state of Mississippi. Certainly the Hattiesburg area saw a dramatic population spike following the exodus from the Gulf Coast due to Hurricane Katrina’s strike in 2005. Since that time migration patterns have returned to normal. Current and future trends illustrate that the subject property’s market area will continue to grow at rates greater than their neighboring counties and greater than most other areas in the state. From 2000-2009 the population grew in Mississippi by 3.3% (see Figures 1 & 2). However, Lamar and Forrest Counties garnered much greater than their fair share of growth during this period. In fact, the two counties were both in the state’s top ten in growth on both a percentage basis and in total population count. Estimates from Hattiesburg’s Area Development Partnership (ADP) and the US Census Bureau reveal that Lamar’s population has grown by over 26% since 2000 (10,051 people), outpaced by only one other Mississippi county (Desoto) on a percentage basis. During the same time period Forrest grew by nearly 10% (6,821 people). Looking ahead, projections show that growth will slow somewhat but the two counties will still be near the top of Mississippi’s forward trajectory. Estimates from the state’s Office of Policy Research and Planning show Mississippi growing at a 5.2% clip. Again, the subject site’s home

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counties are projected to garner greater than their fair share of growth between now and 2015. According to the projections, Lamar should grow by 14% (56,433 people) and Forrest by nearly 7% (84,469 people). The Hattiesburg Metropolitan Statistical Area (MSA) includes these two counties plus Perry. By comparison, Perry is projected to grow by under 2% (12,419). As a whole the MSA will grow by over 150,000 people and 92% of them will reside in the subject property’s market area. Therefore, the subject site appears to be situated with the path of growth in a dynamically emergent metro area.

Hattiesburg Stable Economic Growth Facilitates Subject Site Opportunities

Population growth is but one indicator of the potential for successful real estate development at the subject site. However, it is a key indicator. The market area’s growth will be fueled by new employment opportunities in a steady and balanced local economy. Various economic analysts agree that the Hattiesburg MSA is poised to emerge from the current recession in good shape. For example, Moody’s Economy.com points to the region’s stable government employment sector bolstered by The University of Southern Mississippi and its 1,800 employees and the leisure/hospitality and retail trade that is supported by its 14,600 students. Moreover, the region’s top employers, Forrest General Hospital (2,900 employees) and the Hattiesburg Clinic (1,900 employees) further anchor the economy.

During the current economic downturn the Lamar and Forrest economies have been able to successfully navigate the difficult times. While Mississippi’s and the nation’s unemployment rates have come near or exceeded 10%, Lamar and Forrest performed in the top ten of Mississippi economies, with unemployment rates under 8%. In fact, Lamar’s November 2009 rate of 6.5% is by far the best in southern Mississippi. Forrest’s rate of 7.7% is bettered by only Lamar and four other Mississippi counties (see Figures 3 & 4).

Moody’s declares that a “well educated labor force ensures that Hattiesburg will remain a hub for education/healthcare in the long-run. Solid demographics, albeit weaker than post-Katrina, will support job gains on par with those in the nation.” Of course in the short-term the lagging national economy will put a damper on any explosive growth anywhere in the United States. However, well-situated locations, such as the subject site, will be poised to absorb the growth that will assuredly come once the economic picture improves.

Locational Characteristics Could Lead to Subject Site Becoming Preferred Alternative for Hattiesburg Growth

Hattiesburg’s highest growth corridor has traditionally been west of downtown on Highway 98. Over the past decades this area, in and near the Oak Grove school district, experienced dynamic changes and an influx of higher-end residential and retail development. This area will no doubt continue to serve as the region’s favored growth quarter; however it has also become a victim of its own success. Interviews with local experts bring to light trepidation about the sustained future growth of the Highway 98 corridor due mostly to traffic concerns. Many in the area seem certain that population growth will seek other areas within the Hattiesburg region. The Highway 98 corridor has been attractive historically because of ease of access to employment and quality schools. With traffic choked roadways, mobility is now a concern for that area.

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The subject site is located in a logical position to become a preferred alternative for future growth looking for less congestion. Moreover, the schools in the Sumrall area of the Lamar District are top notch, receiving the highest rankings on the state’s annual report card. Approximately 40% of the subject property is zoned for these quality schools. The other half of the property is zoned for North Forrest schools, which receive much lower rankings. It appears then that future residential development opportunities could exist, most likely on the Lamar portion of the site. As growth continues, however, other opportunities should present themselves for both the Lamar and the Forrest sections of the property.

Subject Site Opportunities Will Present Themselves in the Future

Given the improvements in the national economy, the characteristics of the local economy and the nature of the population growth in the Hattiesburg area, the subject site is poised for development in future. This development could occur with various property types. The most likely nearer-term opportunities should occur in the residential and industrial sectors. The residential growth is most likely in the Lamar portion of the site. It should be noted, however, that an oversupply of single-family homes that resulted from aggressive construction after 2005 is still a concern. The industrial opportunities are based largely on the ease of access to Interstate 59.

As the area begins to capture an even larger share of Hattiesburg growth, retail and institutional opportunities will become more likely. Current low traffic counts on Highway 42 limit the retail potential, but as more rooftops emerge in the area more retail will be needed to service them (see Figure 5). With over two miles of frontage on Highway 42, the site is a logical location for this. Similarly, institutional uses that service households, such as schools and hospitals, may also find the site attractive.

Our research, analysis and conclusions are current as of December 2009. National, state and local trends are subject to change, should be monitored and could have an effect on the development potential outlined herein.

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APPENDIX – SUPPORTING DOCUMENTATION

Figure 1 – Population / Percent Change

		Population			Percent Change
	2000		2009	2015	2000-09	2009-15
Mississippi	2,844,658		2,938,618	3,090,895	3.3%	5.2%
Forrest	72,604		79,185	84,469	9.1%	6.7%
Lamar	39,070		49,538	56,433	26.8%	13.9%
Perry	12,138		12,202	12,419	0.5%	1.8%
MSA	123,812		140,925	153,321	13.8%	8.8%

Sources: Area Development Partnership (ADP), US Census Bureau & Mississippi Office of Policy Research and Planning

Figure 2 – Population / Percent Change By County Maps

Source: Area Development Partnership (ADP)

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Figure 3 – Employment / Labor Force By County Maps

Source: Area Development Partnership (ADP)

Figure 4 – Employment Comparison & Forecast

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Figure 5 – Lamar County Traffic Counts (2007)

Source: Area Development Partnership (ADP)

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