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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


October 31, 2012

From "Hee Haw" to Hollywood

When people think of Nashville, most people think of one thing: country music. Legendary venues such as the Grand Ole Opry and Ryman Auditorium are the popular sites, but dozens of smaller music venues such as the Bluebird Café, Tootsie's Orchid Lounge, and the Wildhorse Saloon dot the Nashville landscape as well. Public administration officials tout the name "Music City USA" as a way to capitalize on tourism and entertainment revenue. In fact, the city's new $585 million convention center, to be completed in 2013, holds the name Music City Center. The city has been no stranger to celebrity sightings, red carpet events, or music video shoots, but when television dressing room trailers, film equipment trucks, and stars such as Connie Britton (well-known for her roles in Spin City and Friday Night Lights) rolled into Nashville, the landscape began to change.

For some time now, cities around the Southeast, such as Atlanta and New Orleans, have increasingly seen growth from the film industry. Nashville is now joining the ranks. When the new ABC prime-time drama Nashville started filming during the summer of 2012, it produced a spark in Nashville's television industry and has infused millions of dollars into the local economy. Nashville residents, city and state officials, film industry workers, caterers, hotels, and local attractions are taking note of the economic impact on the state's capital city from filming each episode.

Crews of approximately 150 people work on the filming and production of the show, which is scheduled to last at least through the end of 2012. The direct and immediate expenditures can be quantified in several different ways. For instance, some of the television crew members are from out of town, so things such as food and lodging expenses and trade done with local vendors can add up. Local craftsmen such as electricians and carpenters have been recruited to work on the set. Additionally, some 350 to 400 Tennessee vendors have been involved in the show's production.

Producers of the show estimate that $44 million in direct spending could occur in Tennessee if the full 22-episode season is filmed in Nashville. While the longer-term benefits can be impossible to measure, the show's producer considers it "a 43-minute advertisement, prime time, once a week" for Nashville each time the show airs. About nine million people watched the premiere. In a perfect world, this would equate to nine million people potentially wanting to visit Nashville and spend money on souvenirs, food, and visiting local attractions. The Blue Bird Café, which is featured prominently in the show, is collecting little direct immediate revenue, but the publicity it is receiving could result in revenue for years down the road. John Valentine, vice president of Lionsgate, which is one of the production companies filming Nashville, estimates the overall impact could exceed $75 million in one season. This sum, of course, is contingent on the show being extended from its current 13-episode deal to a full 22-episode season.

The city's mayor, Karl Dean, is pleased that the show can provide national exposure to Music City and views it as an asset to Nashville's national profile. Of course, this exposure comes with a price. The state's Economic and Community Development Department has approved reimbursable grants of $7.5 million for the show, which covers 17 percent of spending in Tennessee if a full season airs. A combination of state grants and an additional tax credit has allowed the show to obtain incentives that accounted for 32 percent of the Tennessee-based costs. Based on recent legislation changes that would cap reimbursements at 25 percent, Nashville producers hope to convince state economic and community development officials of a larger, multifaceted incentive package.

Far removed from the barnyards and cornfields that we used to see on Hee Haw, country music is now big business. Music Row is alive and well in Nashville and cashing in on the glamorous side of country. The small screen drama of romance, music tour deals, and even a little local politics as seen on Nashville is providing the old pickin'-and-grinnin' sessions with some competition in the Music City. And if you've never been to a pickin-and-grinnin', well, then you're missing out; come to Nashville and experience one of the finer things in life.

By Amy Pitts, senior REIN analyst, and Troy Balthrop, REIN analyst, both at the Atlanta Fed's Nashville Branch


July 27, 2012

Positive Housing Trends Seen in Middle Tennessee

Staff associated with the Atlanta Fed's Center for Real Estate Analytics traveled to Nashville last week to meet with local real estate industry contacts and discuss recent developments in housing trends there. Contacts included leading real estate agents, builders, lenders, and appraisers. The positive housing trends that have been witnessed in other markets and reported in previous blog posts were echoed by real estate contacts in Middle Tennessee.

Contacts reported that demand has picked up. Middle Tennessee has seen an increase in sales; the Greater Nashville Association of Realtors reported that home sales were up 24 percent year to date in June. Gains were largely thought to be driven by first- and second-time homebuyers in new construction, move-down buyers looking to purchase smaller and cheaper homes, and investors purchasing distressed properties.


Contacts expect sales will continue to increase throughout 2012. Improvements in Nashville's home sales are thought to be driven by several factors—including the relocation of large firms to the area that will soon begin transferring in their employees—and a sense of urgency by buyers looking to take advantage of the low interest rate environment before house prices appreciate significantly in value.

The inventory of vacant developed lots (VDL) is steadily declining; data provided by Metrostudy reveal that VDL inventory is down 24 percent from its peak in the first quarter of 2010. Our contacts referred to this decline several times, and they expressed concern over builders' and developers' inability to access financing for more new construction.


The inventory of distressed properties is also shrinking. Several contacts reported that distressed inventory has been largely absorbed, a notable improvement from a year earlier. This absorption bodes well for prices, given that distressed properties tend to place downward pressure on house prices in a community. Further, our contacts expect the levels of distressed inventory to continue decreasing over the next six months.


With increasing demand and a shrinking supply of lots and distressed properties, it is no surprise that house prices are slowly starting to appreciate in value. Real estate contacts familiar with the market indicated that house prices have reached a bottom.


And when asked about expectations for house price growth going forward, most contacts expect modest growth to occur.


Again, while these responses represent only a segment of the regional housing market, we read the results as further indication that the housing market is making progress toward recovery.

Photo of Jessica DillBy Jessica Dill, a senior analyst in the Atlanta Fed's Center for Real Estate Analytics


October 31, 2012

From "Hee Haw" to Hollywood

When people think of Nashville, most people think of one thing: country music. Legendary venues such as the Grand Ole Opry and Ryman Auditorium are the popular sites, but dozens of smaller music venues such as the Bluebird Café, Tootsie's Orchid Lounge, and the Wildhorse Saloon dot the Nashville landscape as well. Public administration officials tout the name "Music City USA" as a way to capitalize on tourism and entertainment revenue. In fact, the city's new $585 million convention center, to be completed in 2013, holds the name Music City Center. The city has been no stranger to celebrity sightings, red carpet events, or music video shoots, but when television dressing room trailers, film equipment trucks, and stars such as Connie Britton (well-known for her roles in Spin City and Friday Night Lights) rolled into Nashville, the landscape began to change.

For some time now, cities around the Southeast, such as Atlanta and New Orleans, have increasingly seen growth from the film industry. Nashville is now joining the ranks. When the new ABC prime-time drama Nashville started filming during the summer of 2012, it produced a spark in Nashville's television industry and has infused millions of dollars into the local economy. Nashville residents, city and state officials, film industry workers, caterers, hotels, and local attractions are taking note of the economic impact on the state's capital city from filming each episode.

Crews of approximately 150 people work on the filming and production of the show, which is scheduled to last at least through the end of 2012. The direct and immediate expenditures can be quantified in several different ways. For instance, some of the television crew members are from out of town, so things such as food and lodging expenses and trade done with local vendors can add up. Local craftsmen such as electricians and carpenters have been recruited to work on the set. Additionally, some 350 to 400 Tennessee vendors have been involved in the show's production.

Producers of the show estimate that $44 million in direct spending could occur in Tennessee if the full 22-episode season is filmed in Nashville. While the longer-term benefits can be impossible to measure, the show's producer considers it "a 43-minute advertisement, prime time, once a week" for Nashville each time the show airs. About nine million people watched the premiere. In a perfect world, this would equate to nine million people potentially wanting to visit Nashville and spend money on souvenirs, food, and visiting local attractions. The Blue Bird Café, which is featured prominently in the show, is collecting little direct immediate revenue, but the publicity it is receiving could result in revenue for years down the road. John Valentine, vice president of Lionsgate, which is one of the production companies filming Nashville, estimates the overall impact could exceed $75 million in one season. This sum, of course, is contingent on the show being extended from its current 13-episode deal to a full 22-episode season.

The city's mayor, Karl Dean, is pleased that the show can provide national exposure to Music City and views it as an asset to Nashville's national profile. Of course, this exposure comes with a price. The state's Economic and Community Development Department has approved reimbursable grants of $7.5 million for the show, which covers 17 percent of spending in Tennessee if a full season airs. A combination of state grants and an additional tax credit has allowed the show to obtain incentives that accounted for 32 percent of the Tennessee-based costs. Based on recent legislation changes that would cap reimbursements at 25 percent, Nashville producers hope to convince state economic and community development officials of a larger, multifaceted incentive package.

Far removed from the barnyards and cornfields that we used to see on Hee Haw, country music is now big business. Music Row is alive and well in Nashville and cashing in on the glamorous side of country. The small screen drama of romance, music tour deals, and even a little local politics as seen on Nashville is providing the old pickin'-and-grinnin' sessions with some competition in the Music City. And if you've never been to a pickin-and-grinnin', well, then you're missing out; come to Nashville and experience one of the finer things in life.

By Amy Pitts, senior REIN analyst, and Troy Balthrop, REIN analyst, both at the Atlanta Fed's Nashville Branch


July 27, 2012

Positive Housing Trends Seen in Middle Tennessee

Staff associated with the Atlanta Fed's Center for Real Estate Analytics traveled to Nashville last week to meet with local real estate industry contacts and discuss recent developments in housing trends there. Contacts included leading real estate agents, builders, lenders, and appraisers. The positive housing trends that have been witnessed in other markets and reported in previous blog posts were echoed by real estate contacts in Middle Tennessee.

Contacts reported that demand has picked up. Middle Tennessee has seen an increase in sales; the Greater Nashville Association of Realtors reported that home sales were up 24 percent year to date in June. Gains were largely thought to be driven by first- and second-time homebuyers in new construction, move-down buyers looking to purchase smaller and cheaper homes, and investors purchasing distressed properties.


Contacts expect sales will continue to increase throughout 2012. Improvements in Nashville's home sales are thought to be driven by several factors—including the relocation of large firms to the area that will soon begin transferring in their employees—and a sense of urgency by buyers looking to take advantage of the low interest rate environment before house prices appreciate significantly in value.

The inventory of vacant developed lots (VDL) is steadily declining; data provided by Metrostudy reveal that VDL inventory is down 24 percent from its peak in the first quarter of 2010. Our contacts referred to this decline several times, and they expressed concern over builders' and developers' inability to access financing for more new construction.


The inventory of distressed properties is also shrinking. Several contacts reported that distressed inventory has been largely absorbed, a notable improvement from a year earlier. This absorption bodes well for prices, given that distressed properties tend to place downward pressure on house prices in a community. Further, our contacts expect the levels of distressed inventory to continue decreasing over the next six months.


With increasing demand and a shrinking supply of lots and distressed properties, it is no surprise that house prices are slowly starting to appreciate in value. Real estate contacts familiar with the market indicated that house prices have reached a bottom.


And when asked about expectations for house price growth going forward, most contacts expect modest growth to occur.


Again, while these responses represent only a segment of the regional housing market, we read the results as further indication that the housing market is making progress toward recovery.

Photo of Jessica DillBy Jessica Dill, a senior analyst in the Atlanta Fed's Center for Real Estate Analytics