Why Big Funds Overlook Places Like Columbus And Why They Shouldn’t
A recent article in City Journal summarizes Columbus, Ohio’s job growth success:
“Nine years ago, when the Columbus Partnership, an organization of 65 Central Ohio CEOs, launched the Columbus 2020 initiative, which sought to add 150,000 new jobs to the regional economy in a decade, it seemed like an unreachable ambition. After all, during the 2000s, Columbus, like most of America, actually lost jobs. But Columbus met its goal early. During 2010–17, the region added nearly 164,000 new jobs, a 17.8 percent growth rate that ranks second among major metros in the Midwest—and far outpaced the national figure of 12.5 percent.”
City Journal is right, Columbus, Ohio has had some very good years lately. Population and job growth in the city have been significantly higher than in the rest of the country, so it’s no surprise that it was considered for a new Amazon headquarters. The real estate investment index that I worked on (PPTYX) has higher allocations in Columbus for both residential real estate and retail real estate than Schwab’s real estate investment index.
PPTYX also holds significantly higher allocations of retail investment than a cap-weighted approach:
On the surface, it makes sense to be overweight in Columbus. It has a much higher percentage of high-productivity workers than other cities, which is a great driver of property values:
Over .5% of people in Columbus are high-income, but in residential and retail the Schwab real estate index only has an average weighting of 0.21%. In other words, in this case, as in others, cap-weighting underweights a region relative to its growth drivers.
They also have a higher proportion of high-income people than other cities.
Columbus’ population has grown at a much higher rate than other comparable cities:
“Its metro-area population has grown by 172,000, or 9 percent, since 2010, tops in the Midwest among larger regions. It has added almost 400,000 people since 2000, putting it fewer than 25,000 behind the much-larger Chicago metro’s increase. The Columbus metropolitan area now exceeds 2 million people, and some demographers project that it will hit 3 million by 2050.”
Ohio is bringing in more people than other cities, and the people they’re bringing in are disproportionately wealthier and more productive.
“Its limitations aside, Columbus is improving demographically, economically, and culturally. Except for Chicago, no midwestern city has cracked the code on how to attract newcomers from outside the region. There’s no reason that Columbus can’t be the breakout from the midwestern pack, making itself into a national, not just regional, success story.”
While celebrity cities that have high market capitalization aren’t doing so well, smaller cities like Columbus are turning into very profitable investments.
Originally published on Townhall Finance.
Jerry Bowyer is a Forbes contributor, contributing editor of AffluentInvestor.com, and Senior Fellow in Business Economics at The Center for Cultural Leadership.
Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.
Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for CNBC.com, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.
Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.
Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.
Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.
Jerry lives in Pennsylvania with his wife, Susan, and the youngest three of their seven children.