Moving Forward Together: Economic Whitepaper

WINSTON-SALEM’S

ECONOMIC GROWTH MOVING FORWARD TOGETHER.

JULY 2019 Page 1

ECONOMIC WHITEPAPER Numbers can never truly capture the whole picture of what a community is like, but they can help to quantify a city’s characteristics. By measuring, tracking, and comparing numbers we can get insights on how our city is progressing over time and whether we’re keeping up with other cities like ours. The Winston Salem Chamber has compiled data that shows trending growth and projected success for our city. Indexing the data with other cities that have similar populations and economies also shows that Winston-Salem is doing well when compared to like places.

Along with community leaders and our many partners, we’re part of a collaborative group working to implement an overall plan for successful growth over time. At the Chamber, “together” is our guiding principle and the foundation for the work that we do. It’s a belief that is shared by many throughout the community. Local business leader Don Flow says “The city has embraced a growth mindset and there is a clear understanding that there is no place for complacency. What distinguishes us are the highly collaborative relationships that exist among the business community, the not for profit organizations, the universities and colleges, and the government sector. These relationships are bound together by a common commitment to see the entire city flourish.”

To enhance those collaborations and to unify the community’s message about where we are and how we are moving forward, the Chamber is sharing this economic snapshot. With this resource, we can analyze our economy, clarify goals, and move forward, together.

ECONOMIC STATISTICS Winston-Salem’s economy is showing consistent growth, a trend that’s evident across a variety of data points like GDP, population, the labor force, and more. With this data, we can see that the city’s economic footing is strong and improving. Winston-Salem’s GDP has increased 15.7 percent since 2012, from $24.9 billion to $28.3 billion in 2017 (1).

Winston-Salem continues to see increases in jobs and the labor force over time as well. The labor force has grown by 11,325 individuals in the past five years and is growing at a faster rate than most of the rest of North Carolina – last year’s growth rate of more than two percent is the third highest in North Carolina behind Charlotte and Asheville (2).

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WINSTON-SALEM GDP 2012-2017

EMPLOYMENT GROWTH MAY 2019

The trend of job growth can lead to Winston-Salem achieving a major economic goal, according to Mayor Allen Joines. “Our goal is to be one of the top 50 Metro areas in the country and last year we created 5,300 net new jobs towards that goal. If we maintain that level of growth for the next four years, we will meet our goal,” says Joines.

Average annual wages over the same period of time have risen more than 14 percent, from $39,872 in 2012 to $45,550 today (3). Winston-Salem’s average wages compare favorably to other metros of a similar size. The average wage of $22.47 per hour in Winston-Salem is more than what the average worker makes in Chattanooga, TN, Lexington, KY, Birmingham, AL, and other comparable cities (4).

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AVERAGE WAGES 2013-2017

While our average wages are strong, cost of living and housing costs in Winston-Salem remain low, meaning that residents here have a bit more spending power. When comparing the cost of living to metro areas of a similar size, Winston-Salem is affordable. Based on a national average of 100, Winston-Salem’s cost of living is 91.8 whereas cities such as Greenville, SC and Asheville are much closer to the national average (5).

COST OF LIVING 2018 ANNUAL AVERAGE

Winston-Salem’s median home cost of $144,383 is about $20,000 under the state average, so home ownership is more affordable here (6). Winston-Salem’s housing rates and cost of living are so impressive that they’re earning national attention. In recent weeks, Winston-Salem was ranked the #5 best city for first-time homebuyers by Livability, and the #3 most affordable downtown by MSN.com.

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With an affordable cost of living and good wages, Winston-Salem continues to retain and attract talent, adding steadily to the population as the labor force grows. Our population growth is a trend that’s forecasted to continue. By 2023, the Winston-Salem metro area is expected to be home to nearly 700,000 people, almost a ten percent increase since 2010 (7).

Winston-Salem’s rate of growth is on par with comparable metros. While places like Greenville, SC and Lexington, KY are adding to the population slightly faster, other cities including Birmingham, AL and Memphis, TN aren’t growing as quickly (8).

ANNUAL POPULATION GROWTH 2013-2017

ECONOMIC DEVELOPMENT Last year Winston-Salem hit a 10-year high in new construction totaling more than $700 million of combined residential and nonresidential permits (9). These new investments show that there’s growing activity in economic development, with more people and companies investing here.

Through the chamber’s economic development efforts, we continue to see the same trend of growth. The chamber helped local companies grow with more than $60 million in capital investment last year which brought 700 new jobs. Those projects supported expansions at Grass America, National General Insurance, and The Clearing House.

Winston-Salem’s strong economy offers the right conditions to support thousands of small and mid-sized businesses, headquarters for major corporations including Hanesbrands, Reynolds American, and Garner Foods, and major hospital systems Wake Forest Baptist Health and Novant Health.

Our economy also helps attract new investments and economic development. Nearly two billion Page 5

dollars have been invested into the growth and development of Winston-Salem’s downtown since 2000, a figure that includes the $828 million in public and private investments that formed the Wake Forest Innovation Quarter (10).

Home to more than 170 companies and five institutions of higher learning, the Innovation Quarter is quickly becoming a global example of placemaking and economic development for the 21st century and beyond. It was recently named one of six innovation districts around the world to serve on the inaugural steering committee for the Global Institute on Innovation Districts (11).

The investments made to bring the Wake Forest Innovation Quarter to life have been money well spent as it has energized the city’s overall economy, attracts talent, and encourages business growth, innovation, and collaboration that are essential to Winston-Salem’s future. The Innovation Quarter is currently over 97% leased out of 1.5 million square feet of office, research, and academic space, evidence of the project’s success and of the demand for additional development to continue. Importantly, it has also spurred an increase in entrepreneurialism and small business startups through programs like Venture Café and Forsyth Tech’s Small Business Center.

Dr. Julie Freischlag, chief executive officer of Wake Forest Baptist Health and dean of the Wake Forest School of Medicine, says “The Innovation Quarter is a recent example of the collaboration that can happen when city, county, business and education leaders come together with a common purpose. Our local ecosystem of innovation is growing, as evidenced by increased startup activity in places like Winston Starts, programs like Venture Café and others that help our community stay connected and grow from within. We are confident this spirit of unity and collaboration that already exists will be key in helping us move positively into the future.”

Additional phases of planned development within the Innovation Quarter and across many other sites throughout Forsyth County will continue to drive Winston-Salem’s growth. Notably, there are $70 million in planned investments to the Smith Reynolds Airport including a new Aviation Center for Forsyth Tech, ensuring that we’re able to prepare our workforce for jobs in this important industry sector. With more than 3,500 people currently employed in the aviation industry locally, it is vital to continue to sustain growth and provide career training options in this field (12).

The Aviation Center is yet another example of public, private, and educational partners coming together to invest in our educational assets and workforce strategies. Dr. Janet Spriggs, President of Forsyth Tech, says “We have a framework for partnerships and collaboration in this community that brings everyone to the table — governmental entities, businesses and industries, non-profits, and the highly regarded, high quality public and private higher education partners. All of us are focused collaboratively on growing our reputation as a hub for innovation and entrepreneurship.”

The City of Winston-Salem, Forsyth County, and partner organizations including Winston-Salem Business, Inc. are promoting development opportunities through several other major projects in addition to the Smith Reynolds site, including the Union Cross Industrial Center, Whitaker Park, and more.

Whitaker Park is an important asset for Winston-Salem’s potential growth. With nearly 1.8 million square feet available and additional growth opportunities on surrounding developable land, the

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area is poised to become as vital and vibrant of an economic driver for Winston-Salem as the Wake Forest Innovation Quarter.

The momentum is building towards that vision, as Cook Medical has purchased 850,000 square feet of space with plans to relocate its current headquarters into Whitaker Park and become an anchor tenant. Cook Medical plans to break ground this fall and move in by early 2022.

Local officials are teaming up with economic developers across the state to promote several industrial sites including Whitaker Park through an initiative called the Carolina Core. By working together, these groups can gain visibility for the region as a whole, showcase individual site locations, and tout the advantages of locating here.

Some local leaders also believe that the strong collaborations in Winston-Salem are helping to differentiate it as a potential place to invest, compared with other metros. Wake Forest University President Dr. Nathan Hatch agrees, stating, “Winston-Salem is well-positioned to attract new economic development because of how well-aligned the various players in the city are – from city government to the county, to private business, non-profits, institutions of higher learning, and the local school system. We wouldn’t be where we are today if it weren’t for that unity of purpose to transform our city for the future.”

EDUCATION AND WORKFORCE Along with generating economic investments in capital projects, Winston-Salem is focused on growing our intellectual capital as well – attracting and retaining a diverse workforce is critical.

One of our strongest advantages in being able to do this is our concentration of higher education.

Winston-Salem’s six colleges and universities served more than 27,000 students in 2018, generating a significant impact on our workforce and economy.

The diversity and quality of educational opportunity is exceptional as well. Forsyth Tech offers 71 associates degrees, 5 college transfer degrees, and 79 certificates that qualify students for work in a broad array of industries. Winston-Salem is home to the oldest educational institution for girls and women in America with Salem College, and one of the most unique arts conservatories with UNC School of the Arts. Wake Forest University is ranked #27 in the nation by US News & World Report, and Winston-Salem State University is 7th in the nation on CollegeNET’s Social Mobility Index.

The Winston-Salem/Forsyth County school system, which serves about 55,000 students, also helps students get career-ready through many programs including the Career Academies, Career and Technical Education courses, and more. 100 percent of students who concentrated in the Career and Technical Education program graduated, and nearly 2,000 earned industry-recognized credentials, according to 2017 numbers from the Winston-Salem/Forsyth County Schools.

There is close collaboration between academic institutions and the business community, building degree programs that address the workforce needs of individual employers as well as the broader economy. Forsyth Tech’s Aviation Center is an example of this, as is another program just launched at Forsyth Tech called LEAP – the Learn and Earn Apprenticeship Program. In collaboration with employers, LEAP will offer students the ability to obtain a degree while earning Page 7

an income. Forsyth Tech President Dr. Janet Spriggs says, “Through this apprenticeship program, we will expand the skilled workforce in our region, provide a strong positive impact on our economy and increase our ability to attract new and expanding industries to our community.”

The economic impact of our educational institutions and their graduates is significant. A Winston-Salem State University study shows it has an annual economic impact of more than $490 million in the Triad and generates 8,403 jobs, largely generated by the collective impact of Winston-Salem State University graduates in the area (13). That study examined what the outcomes may be without WSSU, finding that the unemployment rate would be nearly 1% higher and per capita income would drop by about $350 dollars without the university. “WSSU is one of the most important economic engines for the Winston-Salem area,” said Elwood L. Robinson, chancellor of Winston-Salem State University. “With nearly 12,000 alumni living in and around the Winston-Salem area, WSSU provides educated graduates that obtain high paying jobs, build new businesses and generate revenue that increases the tax base.”

ENTREPRENEURIAL ECOSYSTEM With over 3,500 of Triad graduates obtaining business degrees annually, many of them are launching their own businesses (14). Our small businesses, entrepreneurs, and startups are diversifying the economy and making Winston-Salem more resilient to economic change. As they grow, they are creating new jobs and generating a growing economic impact. Winston-Salem has just tied with Charlotte and Austin, TX as the top three cities nationwide with the highest growth in startup companies, which is a testament to the favorable business climate here that encourages small business success (15).

Winston-Salem’s collaborative spirit has helped to create that favorable environment for small businesses. The entrepreneurial ecosystem is comprised of 20 organizations that work together to foster a successful small business community. Allan Younger, the director of Forsyth Tech’s Small Business Center and a board member of The Simon G. Atkins Community Development Corporation says, “In my roles at the Small Business Center and the Enterprise Center, I help to foster connections between people. I see the results of those connections every day as the clients we work with grow and their businesses thrive.”

The Forsyth Tech Small Business Center served 222 businesses in the last fiscal year, creating connections and offering resources to assist entrepreneurs with business plans, funding, marketing, and more. Through a collaboration with other local colleges and universities, the Small Business Center offers access to financial capital for new startups as well. In a program called the Launch Challenge, a total award of $50,000 is split among three to five finalists in each program session, which occurs twice a year. Launch Challenge finalist and small business owner Shereen Gomaa says “participating in the Launch Challenge made me think about my business in new ways and how I could modify my plan to be more successful. My business mentors and the Small Business Center staff have encouraged me and helped me understand how to run a successful business in the long-term.”

Another ecosystem partner, Venture Café, welcomed 6,523 people to Thursday Gatherings in 2018 to discuss entrepreneurial ideas and make connections, offering successful programming that Page 8

has helped to bolster Winston-Salem’s image as a hub of innovation and entrepreneurialism. A new partnership between Venture Café and Piedmont Business Capital has led to the launch of the ACCESS Center for Equity and Success, which will focus on supporting minority and womenowned businesses in Winston-Salem.

Another project that aims to increase startup activity in Winston-Salem is Winston Starts, an accelerator that provides a long runway for new companies to grow to scale. Winston Starts is an important part of the $10 million renovation of 500 West Fifth, the former GMAC building, offering high quality office space to startup companies plus additional resources like business mentors to bolster their success. In just one year, the initial cohort of companies at Winston Starts has attracted more than $13 million in capital and they’ve earned more than $4 million – a 91 percent increase in combined revenue (16).

Flywheel will soon become a new tenant in 500 West Fifth, which will bring in even more entrepreneurs. Flywheel offers coworking space and additional programming that helps startups to scale. One of its graduates, the tech company Fluree, is an example of how incubators such as Flywheel and Winston Starts drive startup success. Fluree has already grown to 17 employees and is expecting to add even more as it attracts investments and seed funding. Fluree recently raised $4.7 million of investment in one of the largest seed funding rounds in North Carolina history.

LOOKING FORWARD As we look ahead, we can see a future in which these early startup companies can become the Winston-Salem’s next major corporations, and it’s our responsibility to create a strong environment for them to succeed as they grow. Attracting corporations and talent, helping our local companies grow, and investing into entrepreneurs and small businesses are all equally important to our economic development efforts.

Winston-Salem has experienced both successes and challenges in these efforts along the way, as have many other cities. The data in this report shows that Winston-Salem’s economy has many strong points and positive trends, and that growth is projected to continue.

There are issues that need our time, attention, and investment to bring about positive change in some areas, too. However, our community has a plan and is working on those improvements while recognizing that our strong points can help to influence change in areas where it’s needed.

Chamber President Mark Owens says, “At the chamber, we are proud to be a part of helping our business and community grow, but we aren’t on this path alone. Winston-Salem and Forsyth County’s success is attributed to a collaborative approach to solving challenges together as a community. I am confident that with this mindset, we can achieve any goal we set ourselves.”

Winston-Salem and Forsyth County have many advantages that can influence our continued improvement. The numbers show steady job growth, an affordable quality of life, and a strong economy that’s friendly to large and small businesses. There are great people behind the numbers, too, working hard to keep moving forward. There are countless success stories in our community, and while one report could never encompass them all, it can show that by working together, we are maximizing Winston-Salem’s potential as a great city.

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SOURCES 1 Jobs EQ 2 NC Department of Commerce, Labor & Economic Analysis 3 Jobs EQ 4 Jobs EQ 5 Cost of Living Index: Council for Community & Economic Research 6 American Community Survey 2013-2017 7 US Census Bureau, Census 2010, and ESRI forecasts for 2018 and 2023 8 Jobs EQ 9 Winston-Salem/Forsyth County Planning Board 10 Businesses, research, residential living come together as Wake Forest Innovation Quarter continues to grow, Winston-Salem Journal, 6/29/2019 11 Innovation Quarter selected to join newly formed Global Institute on Innovation Districts, Wake Forest Innovation Quarter, 6/7/2019 12 Division of Aviation, NCDOT, January 2019 13 The Economic Impact of Winston-Salem State University, Student research, 2019 14 Avalance Consulting Analysis of IPEDS 15 Best Large Cities to Start a Business, WalletHub 16 Winston Starts

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QUICK FACTS: WINSTON-SALEM | FORSYTH CO.

3.6%

$45K

63%

336K

UNEMPLOYMENT

AVERAGE ANNUAL WAGE

RESIDENTS WITH SOME LEVEL OF HIGHER EDUCATION

LABOR FORCE

$72M

16.1%

$20.45

$144,383

CONSTRUCTION PERMITS, Q1

CLASS A OFFICE VACANCY

CLASS A OFFICE AVERAGE RENT

MEDIAN HOME PRICE

Bureau of Labor Statistics | Michael S. Clapp & Associates | WS/FC Planning & Development Services

WINSTON SALEM CHAMBER

$62M

700+

1,000+

40K

IN CHAMBERASSISTED ECONOMIC DEVELOPMENT INCENTIVES LAST YEAR

NEW JOBS CREATED THROUGH CHAMBERASSISTED EXPANSIONS LAST YEAR

MEMBER BUSINESSES

AVERAGE MONTHLY DIGITAL REACH

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THANK YOU TO OUR INVESTORS BB&T NOVANT HEALTH REYNOLDS AMERICAN WELLS FARGO BLUECROSS AND BLUESHIELD OF NORTH CAROLINA COOK MEDICAL FORSYTH COUNTY HANESBRANDS INC. KELLY OFFICE SOLUTIONS ONPAR TECHNOLOGIES TWIN CITY QUARTER WAKE FOREST BAPTIST MEDICAL CENTER WINSTON-SALEM/FORSYTH COUNTY SCHOOLS WOMBLE BOND DICKINSON (US) LLP

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