Beige Book Report: Atlanta
January 13, 1977
Gradual expansion continues in the Southeast. Retailers cite widely varying gains in sales; some of the increases are attributed to particularly favorable external factors. Turbulence continues to buffet the hotel business. Free ports and new international banking offices are being established in Georgia. Construction activity includes shopping centers and, in some areas, office buildings. New industrial expansion continues to be rapid in the southeastern states. Growth is picking up in the well-established textile, apparel, and carpet industries. The pace of offshore oil exploration is accelerating.
Most retailers report sales improvements during the holiday season, but the degree of improvement varies widely. An official of a leading department store estimated Atlanta's gains at about 5 percent in real terms for 1976, with record Christmas sales volume. Spokesmen credit favorable weather conditions and the occurrence of a weekend holiday, which provided maximum opportunity for both pre- and post-Christmas shopping, as factors which stimulated sales. A few stores report customer reluctance to make big-ticket purchases. Light tourist traffic during December resulted in declining sales in West Florida, after respectable gains in prior months. These merchants are somewhat apprehensive but report excellent results in their post-Christmas promotions.
Auto sales are very strong in all areas; dealers in Nashville reported equaling or bettering 1973 sales results. Oldsmobile and Cadillac dealers are experiencing no loss of their regular customers to Ford and Chrysler as a result of model size decreases.
The District's hotel business is experiencing ups and downs. In Miami, a hotel workers' strike began on Christmas day and has spread to at least eight hotels. There is no evidence that tourist businesses have been seriously affected. Other unions have not honored the hotel employees' picket lines. The Colony Square development in Atlanta has reached an agreement with a new managing company to operate the Colony Square hotel, following an earlier decision by the Fairmont Hotel Company to terminate its role as manager.
Redevelopment efforts are under way in Miami, in the hope of increasing the area's attractiveness to tourists. Legislation is being introduced to legalize casino gambling. A new hotel and merchandise mart is to be built near the Miami Beach convention center. Also, a proposal for construction of an amusement park halfway between Miami and Miami Beach has been approved by the Miami City Commission.
Acting under a recently enacted constitutional amendment, the first free port has been established in a Georgia county south of Atlanta. The amendment allows counties to exempt certain types of goods from property taxes as a means of attracting industry.
International banking activities are on the increase in the Southeast. Officials of Credit Suisse have announced plans to open a regional office in Atlanta during April. Barclays Bank opened the first foreign-affiliated office in Atlanta last November. A recently enacted state regulation permits lending and other financial services to business firms by offices of foreign banks.
Despite a vacancy rate of about 25 percent, construction of additional office space is being planned in Atlanta. Delta Airlines will construct a new building close to its present facilities at the Atlanta airport to house headquarters offices and a reservations center. The state government is planning to construct a new office building at a cost of about $40 million.
In other parts of the District, there appears to be widespread construction of retail facilities in Louisiana, Mississippi, and Georgia. New apartment construction, however, continues to be held back by first, the low return on investment and, secondly, changes in the tax law requiring funds to be placed "at risk" before the advantages of the tax shelter are realized. Industrial development activities during 1976 added $850 million of new and expanded plants in Georgia, surpassing the 1973 record, and $1.65 billion of investment announcements in Alabama.
In both the textile and apparel industries, there are recent signs that the slowdown which began last spring is ending. Production is recovering. The carpet industry experienced a respectable recovery in 1976; continued gains are foreseen for 1977.
Shipping activities are on the rise. Cargo handled by the state port in Mississippi has risen 14 percent. Tonnage at the state docks in Alabama set a new record, but activity at the Port of Mobile fell slightly. A shipyard reports a sharp increase in inquiries about marine repair services. A Louisiana company which repairs and coats the interior and exterior surfaces of railroad tank and hopper cars is expanding its capacity by 30 percent.
Oil industry sources indicate that, regardless of uncertainties about Carter Administration energy policies, they must begin exploration, drilling, and production to realize revenue from valuable offshore leases which have been dormant for several years. Increased pipeline construction and a scarcity of offshore drilling rigs indicate growing activity.