THE BOSTON ECONOMY 2007 STEADY GROWTH 611 The Boston Economy 2007 Steady Growth THOMAS M. MENINO, MAYOR CITY OF BOSTON Boston Redevelopment Authority Paul McCann, Interim Director Clarence J. Jones, Chairman Consuelo Gonzales Thornell, Treasurer Paul D. Foster, Co-Vice Chairman James M. Coyle, Member Christopher J. Supple, Member Harry R. Collings, Executive Director / Secretary Report prepared by: Dominic Modicamore Gregory W. Perkins Jim Vrabel Research Division Alvaro Lima, Director Report #611 May, 2007 2 Table of Contents A Note About This Report………………………………………………….. 3 Executive Summary…………………………………………………………. 4 Introduction…………………………………………………………………. 8 Overview of Recent Economic Conditions……………………………......... 8 Statistical Data…………………………………………………………......... 8 Population………………………………………………………………….... 9 Employment Structure, Employment Trends and Occupational Changes…... 10 Unemployment………………………………………………………………. 14 Largest Employers…………………………………………………………… 15 Labor Force and Education …………………………………………………. 16 Income, Wages, and Cost of Living…………………………………………. 16 Medical and Higher Educational Institutions………………………………... 18 Tourism and Culture…………………………………………………………. 20 Hotel Market…………………………………………………………………. 21 Transportation………………………………………………………………... 23 Seaport and Airport…………………………………………………………... 24 Construction Activity………………………………………………………… 26 Large Public Sector Projects…………………………………………………. 26 Empowerment Zone Designation…………………………………………….. 27 Office Market and New Development……………………………………….. 28 Retail Market…………………………………………………………………. 31 Industrial Market and Recent Developments………………………………… 32 Housing Stock, Housing Values, and Development…………………………. 32 The Linkage Program………………………………………………………… 38 A NOTE ABOUT THIS REPORT The following report was prepared by the Boston Redevelopment Authority (the BRA) Research Division in the Spring of 2007. The report describes the principal components of the economy of the City of Boston (the City) and presents major economic, demographic and market indicators, and historical, statistical and other information. The information contained herein has been furnished by the City and certain information has been obtained from other sources which are believed to be reliable, but is not guaranteed as to accuracy or completeness. The statistical data contained in this report do not necessarily reflect current activity because of delays resulting from the time required to collect, tabulate and publish such data. While the City believes that it has used the most recent data readily available to it in this report, the data contained herein may not reflect current conditions or trends because of such delays. Moreover, statistical data are approximations and generalizations subject to various sources of error inherent in the statistical process, and may be revised on the basis of additional data. The statistical data contained herein describes past activity and are not presented in order to suggest the continuation of any trend, or to predict future economic activity either in particular categories or in general. 3 Executive Summary Introduction Population Boston is the twentieth largest city in the United States and the economic hub of The Commonwealth According to the Bureau of the Census, Boston’s of Massachusetts and the New England region. It is a population was 589,141 in 2000, a 2.6% increase over center for professional, business, financial, 1990, following the 2.0% increase since 1980. The governmental, higher educational and medical number of households in the city similarly increased, services, and a center for transportation, rising from 218,457 in 1980, to 228,464 in 1990, and communications, export, cultural and entertainment to 239,528 in 2000, while household size fell from 2.4 activities, as well as local, state and federal to 2.3 persons per household from 1980 to 2000. government. High technology, research and development, financial services, manufacturing, and Boston’s racial composition was: White, Non-Hispanic wholesale distribution also contribute to the economy 49.5%; Black, Non-Hispanic 23.8%; Hispanic 14.4%; of the Boston and its suburbs. Asian/Pacific Islander 7.5%; Multi-racial 3.1%; other single race 1.4%; and Native American 0.3%. Boston In 2000 the city had a population of 589,141, while continues to be a city of young adults due to the large generating 680,174 jobs – a ratio of jobs to population number of students and young adults living and that indicates that the city provides employment and working in the city. income for an area well beyond its borders. Boston’s economy comprises approximately 18% of the Boston is the center of the Boston-Cambridge-Quincy Massachusetts economy and 10% of that of the six MA-NH Metropolitan Statistical Area, which includes New England states. Essex, Middlesex, Norfolk, Plymouth, and Suffolk counties in Massachusetts, and Rockingham and Overview of Recent Economic Conditions Strafford counties in New Hampshire, and had 4.4 million people and 3.0 million jobs in 2004. Total Following an economic slowdown in the national and personal income from 2000 through 2005 grew at an state economies that began in 2001, the Boston annual average rate of 3.1%, slightly below the economy – and that of the nation, region and state – national mark of 4.0%. began to turn around in late 2003. Since that time, the Boston economy has experienced a period of Employment steady growth. The latest data shows an improved labor market, falling unemployment, and greatly The economy of Metropolitan Boston rests primarily improved office and hotel markets. on high technology, finance, professional and business services, defense, and educational and The unemployment rate, which had risen to 6.5% in medical institutions. Boston in 2003, dropped to 5.3% in 2006. Like major office markets across the country, Boston’s office There were 654,361 jobs in Boston (Suffolk County) in market weakened during the economic downturn, but 2006, an increased of 18,738 (2.9%) from two years has continued to strengthen since 2005. Boston’s before. The finance, services, education and health hotel occupancy fell to 69.6% in 2001, but has sectors showed the largest employment gains. As of increased steadily, rising to 76,4% in 2006. 2000, 69% of Boston residents were White-Collar Residential home sales had been strong through workers and 31% were Blue-Collar and Service 2005, although housing data since then have shown workers, compared to 1960 when 44% were White- slower sales volume and a slight fall in median sales Collar workers and 46% were Blue-Collar and Service prices. workers. 4 In 2006 the annual average unemployment rate for As of academic year 2004-2005, Boston was home to Boston was 5.3%, slightly higher than the 4.6% 32 universities, colleges, professional and graduate national rate, and the rates for Metropolitan Boston schools and community colleges that had a combined (4.6%), Massachusetts (4.9%) and New England enrollment in fall 2004 of 139,784. Based on total (4.6%), respectively. All of these rates were still graduate and undergraduate enrollment, Boston above the historically low rates reached in the year University was the largest university in Boston in the 2000. fall of 2004, with 30,101 students. Boston, with only 10% of the state’s population, has 31% of the Medical and Higher Educational statewide college student enrollment. Institutions Tourism and Culture Boston’s medical and educational institutions are an important component of its economy, providing An estimated 17.6 million people visited the Boston employment opportunities for residents and non- metropolitan area in 2005. These visitors included residents alike. Expenditures by the institutions’ tourists, business travelers and convention and patients, students and visitors are also important to meeting delegates, and they spent an estimated $9.8 the city’s economy. billion for hotel accommodations, meals, entertainment, shopping, transportation and other Twenty inpatient hospitals are located within Boston. services. The latest data for Suffolk County indicates They include Massachusetts General Hospital, that in the county alone the total domestic direct Brigham and Women’s Hospital, Beth traveler impact in 2002 was $4.4 billion, supporting Israel/Deaconess Hospital, Children’s Hospital, the 41,050 jobs and a payroll of $1.1 billion, while New England Medical Center and Boston Medical generating $123 million in state tax receipts and $78 Center. In 2004, these hospitals had a combined total million of local tax receipts. of 5,909 beds, admitted 238,711 in-patients, and had nearly 5.1 million outpatient visits. The city is also the Hotel Market home of the medical and dental schools, 25 public neighborhood health clinics, and various health The number of hotel rooms in Boston increased to maintenance organizations and membership clinics. 17,127 in 2006, when the annual average occupancy In 2006, there were 110,884 health services jobs in rate was 76.4%, and the revenue per available room the city. was $150.23. Since July 1997 Boston has built 5,577 rooms in 25 new hotels and 5 expansions. Much of For the 13th straight year, Boston emerged as the this construction was stimulated by the decision to highest-ranking city in the United States for National build the new Boston Convention and Exposition Institutes of Health (NIH) grant awards, receiving Center. more than $1.619 billion in fiscal 2006. Hotel Occupancy Rate Average Daily Rate Revenue Per Available Room (RevPAR) 100.0% $250.00 $250.00