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Appraisal Regional Analysis of   


The subject is influenced in a general manner by the economic, political, physical and social characteristics of the Louisville/Jefferson County, KY-IN (MSA), known informally as the Louisville
MSA.   A MSA is a geographic area with a significant population nucleus, along with any adjacent communities that have a high degree of economic and social integration with that nucleus.  
Louisville is part of a metropolitan statistical area and the most recent definition of the Louisville/Jefferson County, KY-IN MSA, revised in 2013, includes thirteen counties – nine in Kentucky and
four in Indiana.  The Louisville/Jefferson County, KY-IN (MSA) is the largest MSA in Kentucky and the third-largest MSA in the Federal Reserve's Eighth District.  

Louisville lies along the Ohio River, is located approximately 300 miles south of Chicago, and is the nation’s 27th largest city.  The city is situated geographically within the United States such that it
is often referred to as either the northernmost Southern city, or the southernmost Northern city.  The Louisville metropolitan area is even considered part of the Great Lakes Megalopolis.   

In the post-revolutionary U.S., Louisville was an important western outpost.  Situated at the Falls of the Ohio, Louisville became a key port for the western frontier.  Similar to its inland-port
contemporaries, such as Cincinnati and St. Louis, Louisville had an industrial river economy in the beginning; growth was driven by heavy manufacturing, shipping and trade.  Louisville also gained
attention for its bourbon whiskey, Louisville Slugger baseball bats and Kentucky Derby, cultural hallmarks that live strong today.

Postwar Louisville saw a movement away from heavy manufacturing and away from river trade, as production processes and labor needs changed across the country. Coupled with deurbanization
and population loss, Louisville's economic transition was typical of that of industrial cities.  Atypical was Louisville's ease of adapting to a modern postindustrial service economy.   

As it stands today, the city is a particularly strong hub for the health-care and foodservice industries.  Logistics and distribution, as well as recently expanding manufacturing, are other industries of

This economic transition also helped dampen urban population loss experienced in similar cities and even helped garner healthy population growth in recent years.   

The value of real property is influenced by the interaction of four basic forces. These forces include social trends, economic circumstances, environmental conditions, and governmental controls
and regulations. The interaction of these four forces influences the value of every parcel of real estate in the market.   

The tables and charts presented throughout the following pages include additional data that help tell the story about Louisville's economy.   

A presentation of the Louisville/Jefferson County, KY-IN (MSA) is presented on the following page.

Social Trends
Social forces are trends that are exerted primarily through population characteristics. Real property values are affected not only by population changes and characteristics, but also by various
forms of human activity.

State and Area Population:         

Population growth trends influence employment growth, income levels, and many other key demand parameters analyzed in determining commercial real estate productivity.  

Population is falling in more than half of Kentucky’s 120 counties, with rural areas bearing the brunt of losses from lagging birth rates and people moving elsewhere.  The gap is between growing
urban parts of the state and shrinking rural ones.  For example, only eight of the 66 counties that lost population are in metropolitan areas.  The trend is not new, but it is accelerating.  Between
2000 and 2005, 31 Kentucky counties had population losses, or more than double the number during the 1990’s. This rural population decline is primarily contributed to young people graduating
from college and moving to an employment center other that than their home town with limited employment opportunities.  The Census data also shows a declining youth population in the state.  

The fastest-growing areas were in the state’s “Golden Triangle” of Louisville, Lexington and the Cincinnati suburbs, which accounted for all but one of the 10 counties with the biggest gains.

As shown on the following page, the Louisville MSA comprises approximately 29% of the entire population of Kentucky.  Both the MSA and the state have shown steady growth.  Population growth
tends to be a positive indicator for real estate values.  

The Louisville MSA is projected to grow by approximately 26%, between 2010 and 2040. By 2035 the Louisville MSA is projected to top 1.5 million people.  Jefferson County is forecast to
experience the largest numeric gain over the projection period, accounting for 42% of the predicted growth in the MSA.  

Institutions of higher learning typically are not as vulnerable to economic downswings, and they help to provide an area with a more solid employment base. Noted universities and colleges in Metro
Louisville are the University of Louisville, Jefferson Community College, Sullivan University network, Bellarmine University, Louisville Technical Institute, Louisville Presbyterian Theological
Seminary, Spalding University, Indiana University Southeast, and Indiana Vocational Technical School.

Recreational and Regional Attractions:         

Recreational and regional attractions enhance an area’s quality of life. These activities may also have a significant economic impact on an area by increasing the demand for services and retail
trade created by visitors.

Cultural sites in Metro Louisville include the Louisville Science Center, and My Old Kentucky Home State Park (in nearby Bardstown). The Louisville Slugger Museum, Slugger Park (home of the
Louisville Riverbats minor league baseball team), the Falls of the Ohio Museum, the Kentucky Center for the Arts, the Louisville Zoo, Freedom Hall, and Churchill Downs, home of the Kentucky

Louisville is home to a number of annual cultural events.  Perhaps most well-known is the Kentucky Derby, held annually during the first Saturday of May. The Derby is preceded by a two-week
long Kentucky Derby Festival, which starts with Thunder Over Louisville, the largest annual fireworks display in the nation.  In September is the Bluegrass Balloon Festival, the fifth largest hot air
balloon festival in the nation.  The suburb of Jeffersontown is also the home of the annual Gaslight Festival, a series of events spread over a week.  The month of October features the St. James
Court Art Show in Old Louisville. Thousands of artists gather on the streets and in the courtyard to exhibit and sell their wares, and the event is attended by many art collectors and enthusiasts.
Another art-related event that occurs every month is the First Friday Trolley Hop. A TARC trolley takes art lovers to many downtown area art galleries on the first Friday of every month. The West
Main District in downtown Louisville features what is locally known as "Museum Row". In this area, the Frazier International History Museum features a collection of arms, armor and related historical
artifacts spanning 1,000 years, concentrating on U.S. and UK arms.  Also nearby is the Louisville Science Center, which is Kentucky's largest hands-on science center and features interactive
exhibits, IMAX films, educational programs and technology networks.  The Speed Art Museum is the oldest and largest art museum in the state of Kentucky. Located adjacent to the University of
Louisville, the museum features over 12,000 pieces of art in its permanent collection and hosts regular temporary exhibitions.

Louisville Metro has 122 city parks covering more than 14,000 acres (57 km²). Several of these parks were designed by Frederick Law Olmsted, who also designed New York City's Central Park as
well as parks, parkways, college campuses and public facilities in many U.S. locations. The Louisville Waterfront Park is prominently located on the banks of the Ohio River near downtown, and
features large open areas, which often feature free concerts and other festivals. Cherokee Park features a 2.6-mile (4.2 km) mixed-use loop and many well-known landscaping features. Other
notable parks in the system include Iroquois Park, Shawnee Park and Central Park.

In development is the City of Parks, a project to create a continuous paved pedestrian and biking trail around Louisville Metro while also adding a large amount of park land. Current plans call for
making basically the entire 1,600-acre (6 km2) Floyds Fork flood plain in eastern Jefferson County into park space, expanding area in the Jefferson Memorial Forest, and adding riverfront land and
wharfs along the Riverwalk Trail and Levee Trail.  Some of the new park system has been opened.

College sports are very popular in the Louisville area, especially college basketball.  The Louisville Cardinals have recently built a new basketball stadium in downtown Louisville that was completed
in October 2010.

Louisville has six professional and semi-professional sports teams. The Louisville Bats are a baseball team playing in the International League as the Class AAA affiliate of the nearby Cincinnati
Reds. The team plays at Louisville Slugger Field at the edge of the city's downtown.

Downtown Louisville has undergone a revitalization project that includes both public and private investment.  Numerous projects that have been completed including the building of Slugger Field,
Riverfront Park, 4th Street Live, the new construction of the Louisville Cardinals Stadium, as well as a project that was just completed to expand 4th Street Live.  Market Street has also undergone
a major revitalization that includes numerous new bar and restaurant establishments that has been classified as the NuLu District.  The NuLu District is a fast-growing sector of downtown that has
become very popular with the city.

Overall, the Louisville area has an excellent mix of cultural and recreational attractions.

Economic Forces:
Economic forces are the fundamental relationships between current and anticipated supply and demand and the economic activities in which the population participates in order to satisfy its wants,
needs, and demands through its purchase power.  

The chart below indicates the employment by sector for both the state and the MSA per the US bureau of labor.  As shown the overall employment composition for both the MSA and state are
similar and diverse indicating a stable economic base.

Within the MSA, Jefferson County is the primary county and should continue to experience growth in the professional sector grouping, the health care and social assistance sector, transportation
and warehousing, and hospitality/tourism. Manufacturing remains a question.  Most analysts believe that manufacturing employment will reach some “floor” and remain relatively constant around
that floor for the future.  In the forecast presented below, 2030 is represented as the floor year and holds manufacturing constant around 20,000 in future forecast years.

The major employers of Louisville are consistent with the sector employment shown above.  The chart below lists the 20 largest private employers.  It is noted, that the government and school
systems make up a large component of the area employment.   

Of note for the industries and employment in the region is that in late 2010, Aegon announced that it was consolidating offices and would downsize its Louisville operations by 300 people.  Ford on
the other hand announced it would increase its work force by 1,300 people.

The following chart shows the historical unemployment rates for the MSA, state, and US from 2000 to 2018.  Current local and state levels are 3.40% and 4.50%, which is considered above
average for the local market when compared to the national average of 3.90%.  

Environmental Forces        
Environmental forces are both natural and manmade forces that influence real property values. Some environmental forces include climactic conditions, natural barriers to future development,
primary transportation systems, and the nature and desirability of the immediate areas surrounding a property.

Highway Transportation:    

Highway accessibility is a primary consideration in planning an area’s future growth and development.  The Louisville metropolitan area is accessed via three different interstate highways.  I-64 is a
major east-west corridor, capable of delivering goods to the East or West Coasts.  St. Louis lies to the west on I-64; West Virginia is accessible to the east.  I-65 is a major north-south corridor,
connecting Louisville with Indianapolis, IN and Chicago to the north, and Nashville, TN and Montgomery, AL to the south.  I-71 is a regional interstate highway that connects Louisville with
Cincinnati, OH, as well as I-75, which services not only major points in Ohio but all major points between Detroit, MI and Florida.  Regionally, Indianapolis, Cincinnati, and Nashville are all within a
three-hour drive.

Louisville’s central location in the eastern United States, gives it the claim that over 50% of the United States Population can be reached within a one day drive.  This makes Louisville and ideal
location for distribution.

Louisville's main airport is the centrally located Louisville International Airport, whose IATA Airport Code (SDF) reflects its former name of Standiford Field. The airport is also home to UPS's
Worldport global air hub. UPS operates its largest package-handling hub at Louisville International Airport and bases its UPS Airlines division there. Over 3.5 million passengers and over 3 billion
pounds (1,400,000 t) of cargo pass through the airport each year. Louisville International Airport is also the 4th busiest airport in the United States when in cargo passage, and it is the 11th busiest
in cargo passage in the world.

The Ohio River provides an avenue for water transportation, which includes a considerable amount of barge traffic.  The Ohio River connects with the Mississippi River in St. Louis to the west and
the Allegheny River in Pittsburgh, PA to the east.

Public transportation consists mainly of buses run by the Transit Authority of River City (TARC).  The city buses serve all parts of downtown Louisville and Jefferson County, as well as Kentucky
suburbs in Oldham County, Bullitt County, and the Indiana suburbs of Jeffersonville, Clarksville and New Albany.

Louisville is served by two major freight railroads, CSX (with a major classification yard in the southern part of the metro area) and Norfolk Southern. Five major main lines connect Louisville to the
rest of the region. Two regional railroads, the Paducah and Louisville Railway and the Louisville and Indiana Railroad, also serve the city.


The Louisville area enjoys a distinct four-season year.  The topography is generally green, lush, and moderately hilly.  Humidity is usually fairly high, even in cold temperatures.  Winter
temperatures normally range from mid-teens to mid-40s.  Summer temperatures range from 70s to low 90s.  Annual precipitation is moderate to heavy in volume and heaviest during late winter and

Governmental Forces
Governmental, political and legal actions at all levels have an impact on property values. The legal climate of a particular time or in a particular place may overshadow the natural market forces of
supply and demand.  

Our review of the above data indicates that the Louisville MSA has historically enjoyed a relatively stable economy, evidenced by a historical pattern of increasing income levels, a steady creation
of new jobs, and relatively low unemployment rates. However, Louisville, like rest of the nation has recently experienced set-backs due the national and global recession. The area has experienced
increasing foreclosures, increasing unemployment, and has had other recessionary effects.  This has mostly passed, but the long-term lingering effects of this economic calamity continue as both
the city and country move forward into the future.  

In comparison to the greater Midwest Region, the Louisville economy is faring better than comparable markets.  Louisville saw smaller growth and a less intense boom prior to the recession that
started to take its effects in late 2007 and 2008 through now.  And because the area was not over-built to the degree as many other parts of the Midwest and Nation, the decline has not been as
drastic as seen elsewhere.  

In conclusion, the economic outlook for the Metro Louisville MSA is favorable for the long term overall success of the subject.  In the short term, increased unemployment, increased foreclosures,
tighter lending standards, and more risk averse buyers have led to higher capitalization rates, less new development, increased foreclosures, and overall decreased property values. The fact that
unemployment levels are improving should serve to help spur more activity for the real estate market and lead to future appreciation; however, the real estate market typically lags other more liquid
financial markets.  Housing is a primary economic indicator and historically low interest rates have spurned growth in the housing sector while apartment vacancies have declined and rents have
shown a marked increase.  The economic trends in the Louisville/Jefferson County, KY-IN (MSA) suggest that investment and economic activity is increasing and should continue to do so into the
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