A Focus on Athens
Athens is the medical services center for Northeast Georgia
In 2024, I predict solid growth for Athens’ economy because of remarkable success in landing private-sector economic development projects – for example, Meissner Corp.’s decision to build a major manufacturing campus in Athens will create over 1,700 jobs over the next eight years. In addition, pharmaceutical manufacturer Boehringer Ingelheim plans to expand its Animal Health Global Innovation center, adding 55 jobs. Construction materials manufacturer Duckshin Housing is building a new facility that will create 100 jobs. Athens is well positioned to compete effectively for additional economic development projects.
But success also brings challenges, one of which is to grow the area’s labor force quickly enough to fill new jobs. So far, so good: Athens’ labor force growth is outpacing that of the nation and the state, thanks in part to the area’s vast number of college and technical school graduates. However, wages and salaries must continue to rise so recent graduates will stay there. That same dynamic will raise per capita incomes, for a higher standard of living. But it also will increase Athens’ low cost of doing business – currently only 82% of the national average. Still, it will take a while before the cost of doing business in Athens rivals that of the Atlanta MSA, which is 93% of the national average.
Athens’ primary economic driver is the University of Georgia, with its educated workforce, innovation ecosystem and college sports. Since the pandemic, UGA’s enrollment is up and – no surprise – so are apartment rents. Athens’ film industry is another economic driver. Reynolds Capital recently opened the first phase of the 350,000-square-foot Athena Studios located between Athens and Winterville.
Athens’ economic structure tilts towards higher education and healthcare, which are less cyclical than most industries. And Athens is not overly exposed to global business cycles; exports account for only 4% of its GDP. That means trade shocks and/or trade wars do less damage here.
Demographics are another advantage. With far more young adults than older residents, the age structure of Athens’ population favors economic growth. Another important advantage is the area’s proximity to and high economic integration with the more expensive Atlanta MSA.
Athens is the medical services center for Northeast Georgia, and the outlook for health services is very good, thanks to several developments. The acquisition of Athens Regional Medical Center by Piedmont Healthcare improved the center’s balance sheet and spurred substantial expansion, while the establishment of the UGA Health Science Campus in partnership with Augusta University is helping Athens’ healthcare industry expand its reach into rural areas where the population is older. The recent announcement of a new UGA medical school coming to Athens also indicates the success of that partnership.
High-tech employment will expand too. For example, a cluster of biotechnology industries with links to UGA are boosting prospects for additional growth of life-sciences jobs. UGA’s College of Engineering contributes to economic development, enhances the climate for innovation and helps attract high-tech companies.
The long-term prospects for Athens’ hospitality industry are very good, but the growth trajectory will be lower than before the pandemic mostly because virtual conferencing and meetings have replaced some in-person events. Even so, reason for optimism is that improvements at the Classic Center make Athens an even better place to host meetings and conventions.
But challenges to growth exist, too. The economy is not very diversified, although recent economic development projects will help. Another concern is the area’s overvalued single-family housing market and tight apartment market. The recent runups in home prices and apartment rents may slow the number of retirees who have traditionally moved to Athens because of its amenities and affordability. High rents may also discourage artists and musicians from living in Athens while they build their reputations.
High mortgage rates are a strong headwind for single-family housing, but the ever-expanding student population is a tailwind for multi-unit residential housing. Credit for new apartment projects will be scarce, which will limit more from being launched in 2024. Nonetheless, Athens’ tight housing market – where only 4% of homes are vacant – bodes well for residential development once financial conditions ease and interest rates moderate.
By traditional metrics, the housing market is substantially overvalued, but demand growth plus scant listings of homes for sale will prevent prices from dropping too much. Nonetheless, high mortgage rates and the recent runup in home prices have made homes more expensive, and it will take time for incomes to rise enough to match.
Jeffrey Humphreys is the Director of The Selig Center for Economic Growth at the University of Georgia’s Terry College of Business.
