Demographics and the “New Hampshire Advantage”
We’re all fairly familiar with the concept of demographics and how important they are to businesses in determining where to locate. Most frequently we hear about retailers looking at population density, age, median income and educational levels, but other types of businesses also review demographic data before making decisions to locate in a particular place.There are many sources of this data, but most of it comes from the U.S. Census Bureau, which reports current data, and also makes projections based on that data. State and local government agencies use the data to highlight how their jurisdiction compares to others, and there are several commercial firms that mine the data and repackage it for the use of their subscribers.As a Certified Commercial Investment Member (CCIM), I have access to excellent demographic software from ESRI.Demographic analysisTypically, demographic analysis starts with a target area, whether it’s a street address, an intersection, a zip code, a town, or any other imaginable geographical spot. Then a study area is created, either by establishing distance radii from a center point, or establishing drive times from the center point.The objective is to get a picture of the demographics of the area that surrounds the target point.In most cases, the retailer, business or investor doing the analysis has criteria that need to be met. For example, a national restaurant chain might be looking for a population of 50,000 people in a five-mile radius of the target point, with a median household income of at least $40,000.Using demographic software, they can very quickly determine whether those criteria can be met. (In some cases, it’s possible to reverse the study, by finding areas that have the criteria, rather than working from target points to see whether they meet it.)Demographic software has become much more sophisticated and targeted, and reports can now be obtained on topics such as “Market Potential Index,” “Leakage by Industry” and “Tapestry Lifestyle Analysis,” all of which help businesses to understand the makeup of people in a given area.The only limit to the use of the data is the thought that goes into the analytical approach.Economic developmentI recently read “What is New Hampshire?” a September 2011 white paper produced by the New Hampshire Center for Public Policy Studies. This paper makes it clear that there is no simple answer to that question when it comes to the state’s demographics, and that there has been, and will continue to be, significant change.The report provides important information not only for retailers and businesses, but also for state and local governments, as well as the various economic development committees that have sprung up in virtually every town. There is a “New Hampshire Advantage,” but it seems that every town also feels it has certain advantages that should draw businesses to it.Reduced to its simplest terms, economic development is all about job creation. We know that people are drawn to an area because of quality-of-life issues, and that businesses are drawn to areas because of the people who are there. By definition, this is a chicken-and-egg proposition, and a difficult and challenging matter for those who make public policy.Currently, the major industries in the state are smart manufacturing/high technology (often referred to as SMHT), health care, retail and financial services. Is the workforce large enough and educated appropriately for growth in these industries? Can we attract additional businesses and diversify the property tax base? If more jobs are created in the SMHT field, will there be a spillover effect creating jobs in businesses that support that industry?According to the white paper, many people in New Hampshire are aging, were born someplace other than New Hampshire, and are better educated and make more money than the national norm. (As noted in the paper, there are wide disparities from one region to another, and even within regions, so one must be careful when making generalizations about the overall population.)But things are changing fairly dramatically. Although New Hampshire continues to grow faster than other New England states, in-migration and overall population growth is slowing, and by 2020 we will have a very large segment of people over 65, especially in the northern half of the state.The “New Hampshire Advantage” takes into account several other factors beyond typical demographic indicators. These include crime, health care, tax structure, the education system, energy sources, the environment and water quality. People looking to move here, as well as businesses, will look at these issues before making their decision.Policymakers have limited control over whether economic development occurs, but according to the report they can affect it in the areas of health care, education, infrastructure and tax policy.The Great Recession has made it much more difficult for policymakers, businesses and consumers, but it is very important as we move forward that we make public policy decisions based on the long-term view, and that our changing demographics are taken into account.Dan Scanlon, JD, CCIM, is an adviser with Grubb & Ellis|Northern New England, Manchester. He can be reached at 603-206-9605 or email@example.com.