growth

Finding Growth in Challenging Times:

Seven Indicators to Evaluate Population Growth
October 2008
Finding Growth in Challenging Times:
Seven Indicators to Evaluate Population Growth
By Terry Muñoz, Vice President & Industry Practice Leader, Retail, Restaurant
and Real Estate Group, and Mike Mancini, Vice President of Data Product
Management, Nielsen Claritas
Executive Summary
During the past several years, the U.S. retail
industry has been reeling from a slow-growing
population and a protracted economic
downturn. Despite these challenging
conditions, there are areas of the country
that are experiencing population growth and
can offer opportunities for retail businesses.
To find these communities, analysts at
Nielsen Claritas developed a statistical
approach to score the growth potential of
all U.S. markets and suggest strategies for
expansion. By determining the key indicators
of growth in markets of all sizes, this approach
offers a significant advance for retailers
even in tough economic times.
Known collectively as Population Growth
Indicators, seven factors strongly
correlate with fast-growing markets:
1) large land areas, 2) booming suburban
rings, 3) widespread affluence, 4) an
increasing Hispanic population, 5) diversified
employment, 6) long commutes and 7) the
presence of lifestyle shopping centers.
When the Population Growth Indicators are
combined with demographic projections,
retailers have a robust tool to identify
locations with significant potential for
market expansion—markets that may even
lead the way to an economic recovery in
the coming years. Now more than ever,
retail success depends on the ability to
identify growing markets, whether the
task is retail expansion, current market
optimization, or street-level site planning.
Page 1
Introduction
Across the nation and around the world,
the recent crisis in the U.S. financial sector
has thrown an already declining economy
into a tailspin. Home values have dropped,
foreclosures have skyrocketed, venerable
Wall Street firms have failed and lending
for even the creditworthy has dried up.
And, as if these woes are not enough,
another trend is compounding this down-
turn, particularly for companies with siz-
able retail operations—over the last
eight years the U.S. population has
experienced little growth, averaging only
0.9 percent annually.
Slow population growth is particularly
troubling to retailers, which rely on an
expanding consumer base to increase
earnings, extend into new trade territories
and satisfy shareholders—not to mention
Wall Street analysts expecting to see
comparable store sales rise each year.
Starbucks, Linens ’n Things and The Sharper
Image are just a few of the many retailers
recently forced to shutter stores and scale back
expansion plans as a result of disappointing
sales and flawed growth forecasts. And this
gloomy scenario shows no sign of abating
over the coming years, given the stagnating
economy and current social trends marked
by later marriages, smaller families and an
aging population.
Despite this troubling news, there are markets
and population segments within the U.S.
that are experiencing healthy population
growth, offering expansion opportunities
for retail businesses even in a weak national
economy. But finding these locations requires
a different approach to identifying growth
opportunities that goes beyond calculating
new housing starts—a typical metric
employed by site planners. Using a statistical
technique that evaluates population growth
along with historic trends, Nielsen Claritas
analysts have isolated seven demographic
and economic indicators that strongly correlate
to growing markets in both metropolitan
and micropolitan communities. (Metropolitan
areas have a population of at least 50,000;
micropolitan areas have a population
between 10,000 and 50,000.) These drivers
of growth are based on a variety of Nielsen
Claritas data products—including
Pop-Facts®, the Shopping Center Database
and Business-Facts®—in addition to the
PRIZM® segmentation system, which clas-
sifies Americans according to 66 lifestyle
types and 14 social groups.
By combining the seven indicators with real
world experience, this approach offers
retailers a new way of identifying areas for
market expansion in a challenging economic
environment. Businesses hoping to thrive in
this current recessionary period, or wanting
© 2008 The Nielsen Company. All rights reserved
 Finding Growth in Challenging Times: Seven Indicators to Evaluate Population Growth

to position themselves for the future,

America’s Top 20 Markets by Volume Growth: 2000-2008
should look to these Population Growth
Indicators to identify prime markets for new 2008 % Growth Population
store openings, existing store renovations CBSA Name Population 2000-2008 Growth
2000-2008
and high-return marketing programs.
1 Atlanta-Sandy Springs, GA 5,357,017 26.1% 1,109,036
Challenging Market Conditions 2 Dallas-Fort Worth-Arlington, TX 6,164,066 19.4% 1,002,522
During the last few years, retail expansion 3 Phoenix-Mesa-Scottsdale, AZ 4,223,725 29.9% 971,849
opportunities have suffered greatly. The 4 Houston-Sugar Land-Baytown, TX 5,665,312 20.1% 949,905
high cost of capital required to develop 5 Los Angeles-Long Beach, CA 13,304,944 7.6% 939,317
new locations, low consumer confidence 6 Riverside, CA 4,170,780 28.1% 915,959
and growing unemployment have all caused 7 Washington, DC-VA-MD-WV 5,384,723 12.3% 588,540
retailers to scale back their expansion plans 8 New York, NY-NJ-PA 18,871,770 3.0% 548,768
and shopping center developers to delay 9 Miami-Fort Lauderdale, FL 5,526,947 10.4% 519,383
new projects indefinitely. In the commercial 10 Las Vegas-Paradise, NV 1,875,245 36.3% 499,480
real estate industry, retail vacancies have 11 Chicago, IL-IN-WI 9,584,686 5.3% 486,370
soared to the highest level since 1996. In 12 Orlando-Kissimmee, FL 2,078,566 26.4% 434,005
the first quarter of 2008, the vacancy rate 13 Tampa-St. Petersburg, FL 2,747,020 14.7% 351,023
of neighborhood and community shopping 14 Sacramento-Arden, CA 2,129,931 18.5% 333,074
centers reached 7.7 percent—the highest level 15 Charlotte-Gastonia, NC-SC 1,653,103 24.3% 322,655
in 12 years. This past May, the International 16 Austin-Round Rock, TX 1,570,097 25.6% 320,334
Council of Shopping Centers forecast 5,770 17 Seattle-Tacoma-Bellevue, WA 3,338,639 9.7% 294,761
store closings in 2008—an increase of 25 18 Denver-Aurora, CO 2,464,452 13.1% 285,156
percent from only a year ago. In addition, 19 San Antonio, TX 1,985,591 16.0% 273,888
discretionary consumer spending has 20 Minneapolis, MN-WI 3,227,334 8.7% 258,528
declined as the cost of fuel and food has Figure 1. Source: Pop-Facts
risen and home values have slumped.
In general, the nation’s fastest growing and Cleveland, OH—and one metro market,
But not all areas of the country are feeling markets by population tended to be large New Orleans-Metairie-Kenner, LA was
the pinch. Population growth is a local metros in the South and West—areas such battered by Hurricane Katrina in 2005,
phenomenon: one community can fare far as Atlanta, GA; Dallas, TX and Phoenix, AZ. causing a 13.4 percent loss in population
better than the country as a whole. To Nine markets added more than 500,000 between 2000 and 2008 to 1,140,234.
evaluate the landscape, analysts examined people over the last eight years. Many Hardly a permanent decline, the New
the nation’s 936 CBSAs (Core Based Statistical benefited from retirees resettling to warmer Orleans market already shows signs of
Areas), which include both metropolitan climates. With the oldest Baby Boomers coming back: Between 2006 and 2007, its
and micropolitan areas accounting for 93 now in their early 60s, Sun Belt retirement population grew by 13.8 percent—faster
percent of the U.S. population. Between communities are likely to continue to than any other U.S. city with more than
2000 and 2008, 316 CBSAs experienced grow as the number of older Americans 100,000 people.
high population growth, defined by analysts steadily increases.
as a growth rate at least 10 percent above Growing markets come in all sizes, ranging
the national average of 8.5 percent over This population shift also reflects economic dramatically from Los Angeles, CA (pop.
the eight-year period. Meanwhile, 371 forces at work. Since 1990, jobs have been 13,304,944) to Elko, NV (pop. 49,536). But
CBSAs recorded average growth and 249 leaving the industrial heartland. In fact, only when businesses evaluate markets for
CBSAs experienced declining populations. four of the nation’s biggest cities actually expansion, they typically select locations
lost population since 2000: Three were with a population density similar to their
Rust Belt cities—Buffalo, NY; Pittsburgh, PA target audience. To reflect this industry
Page 2 © 2008 The Nielsen Company. All rights reserved
 Finding Growth in Challenging Times: Seven Indicators to Evaluate Population Growth

rate of population growth reveals a number

Three Classifications, 15 Types of CBSA Markets
of Metro Towns and Micro Towns with
Growth Index populations under 100,000 people. The
CBSA Market Groups Characteristics 2000-2008
top three—Palm Coast, FL; Fernley, NV
Metro Cities (A Markets) 200,000+ population and St. George, UT—all grew by more than
A1 Top of the Heap high growth, high diversity and high education 177 50 percent since 2000. Located beyond
A2 Growing Gateways high growth and above-average diversity 183 congested metros, they’ve attracted jobs,
A3 High Growth Cities high growth 143 retailers and residents thanks to low crime
A4 Mid Growth, High Cost below-average growth, high home values 68 rates and fewer traffic jams. Some of the
A5 Mid Growth Cities below-average growth, high home values 75 smaller markets, like St. George, are close
A6 Low Growth Cities low growth 4 to national parks and wilderness areas that
Metro Towns (B Markets) 50,000-200,000 population appeal to young families and retirees.
B1 Elite Towns high growth and above-average education 155 Many, like Palm Coast and Fernley, are
B2 High Growth Towns high growth, average education 157 within commuting distance of a metropolitan
B3 Mid Growth Towns below-average growth, below-average manufacturing 60 city center (Jacksonville, FL and Las Vegas,
B4 Mid-Mfg Towns below-average growth, high manufacturing 64 NV respectively), attracting young families
B5 Low Growth Towns declining populations -7 to nearby jobs.
Micro Towns (C Markets) <50,000 population
C1 Top-ville high growth 170 Population Growth Indicators
C2 Growing Micros above-average growth 126 versus Traditional Measures
C3 Mid-Americana below-average growth 54 Traditionally, corporate real estate professionals
C4 Struggle-ville declining populations -11 have assessed growth opportunities by
Figure 2. Source: Pop-Facts; Index of 100 = U.S. average or 8.5% working with local planning boards to gather
data on new housing starts or planned
practice when evaluating markets, Nielsen
shopping centers. This approach, however,
analysts classified the nation’s CBSAs into
three primary groups and 15 subgroups
Growing Markets by Population Size
based on size and core demographics:
• Metro Cities consists of six subgroups of
“A” markets characterized by large met-
ros with populations over 200,000;
• Metro Towns is comprised of five sub-
groups of “B” markets featuring mid-
sized cities with populations between
50,000 and 200,000;
• Micro Towns is made up of four subgroups
of smaller “C” markets with populations
under 50,000.
The analysis revealed that seven of the 15
groups contain markets growing at high
rates—from the diverse metro areas of
Growing Gateways, growing 83 percent
faster than the national average, to the small
towns of Growing Micros, expanding at a
rate 26 percent above the general population.
A ranking of the markets with the highest
Figure 3. Source: Pop-Facts
Page 3 © 2008 The Nielsen Company. All rights reserved
 Finding Growth in Challenging Times: Seven Indicators to Evaluate Population Growth

is far from foolproof: In Phoenix, AZ many 23,000 foreclosures this past May—the economic traits such as a high concentration
houses built in recent years were bought by seventh worst in the nation, according to of residents employed in construction,
investors rather than residents. When the RealtyTrac, an online marketplace for business services and recreation. And
housing market collapsed, speculators foreclosure properties. In a fast-changing there were even some surprising criteria
couldn’t find buyers and lenders foreclosed economy, relying on outmoded approaches to among the indicators, such as the
on their properties, resulting in more than assess opportunities means a developer may presence of lifestyle-themed shopping
have to wait years for consumers to appear. centers—those open-air malls built to
resemble a pedestrian-friendly urban village.
Population Growth Indicators The new method for identifying growth
Market Drivers Correlation areas allows marketers to extend their The most powerful indicators of growing
1. Space to Grow knowledge by combining standard five-year markets are described in the sections that
Large Land Areas 0.27 growth projections with new measures of follow, accompanied by lists of the top
2. Booming Suburban Rings demographic data, employment variables markets for each indicator.
The Affluentials PRIZM Households 0.20 and lifestyle types. To uncover the most
Middleburbs PRIZM Households 0.23 useful metrics, analysts investigated which 1. Space to Grow: Larger Land Areas
3. Widespread Affluence factors strongly correlated with high-growth Bigger is better when it comes to population
Household Income communities. The research revealed the growth. According to the analysis, markets
$75,000-$100,000 0.26 seven key indicators, including demographic with larger land areas tended to grow the
$100,000+ 0.28 drivers such as high incomes, educational most over the last eight years. The 25
$150,000+ 0.26 attainment and diversity. These Population largest markets rose by an average 10.8
Education Attainment Growth Indicators also featured specific percent—23 percent higher than the
Some College, No Degree 0.28
Some College & Associate Degree 0.24
Bachelor Degree 0.22 America’s Top Markets by Land Area
Home Value 2008 Land Area
$300,000-$750,000 0.36 Population Index
4. Increasing Ethnicity Metro Cities - A Markets
Hispanic Households 0.32 A2 Riverside, CA 4,170,780 1560
5. Diversified Employment A1 Anchorage, AK 368,701 1510
Industry of Employment A1 Phoenix-Mesa-Scottsdale, AZ 4,223,725 834
Construction 0.50 A3 Boise City-Nampa, ID 594,998 675
Retail 0.24 A1 Salt Lake City, UT 1,092,618 546
Business Establishments Metro Towns - B Markets
Finance, Insurance & Real Estate 0.38 B1 Flagstaff, AZ 130,370 1066
Credit Agencies, Not Banks 0.28 B2 Lake Havasu City-Kingman, AZ 203,337 762
Furniture & Home Furnishings 0.40 B2 Ontario, OR-ID 54,800 589
Business Services 0.49 B3 Fairbanks, AK 88,088 422
Engineering & Management Services 0.42 B1 Alamogordo, NM 62,739 379
Amusement & Recreation Services 0.23 Micro Towns - C Markets
6. Long Commutes C2 Elko, NV 49,536 1222
30-60 Minutes 0.25 C1 Pahrump, NV 45,598 1039
>60 Minutes 0.21 C3 Rock Springs, WY 39,444 597
7. High-End Shopping Centers C3 Bishop, CA 18,200 584
Lifestyle Centers 0.28 C3 Riverton, WY 37,684 526
Figure 4. Sources: Pop-Facts and Business-Facts Figure 5. Source: Pop-Facts; Index of 100 = U.S. average or 1,170 square miles

Page 4 © 2008 The Nielsen Company. All rights reserved

 Finding Growth in Challenging Times: Seven Indicators to Evaluate Population Growth
national average. Retailers should not
underestimate the importance of large
markets. Businesses that serve the nation’s
10 largest markets reach more than 80
million Americans—28 percent of the
nation’s total population.
Markets with larger land areas can absorb
growth more easily, leading to even faster
growth. While the average size of a CBSA is
1,710 square miles, analysts found a strong
correlation between growth and markets
like Riverside, CA, (15 times larger than
average); Elko, NV (12 times larger) and
Flagstaff, AZ (10 times larger). Many of
these markets are found in the Mountain
and Pacific states where relatively new
cities have had more room to spread out
before encroaching on the borders of other
CBSAs. (Geographical boundaries in the
desert and mountain areas may limit
expansion opportunities.) There are also plenty
of sparsely populated, but geographically
large communities that are growing thanks
to the allure of small-town charm. Tiny
Elko (pop. 49,536) grew by 34 percent in
the 1990s and another six percent since
2000, in part by offering an array of outdoor
activities like ice fishing, hunting, snowmobiling
and skiing. Accommodating zoning laws
also have helped some Western markets
grow by supporting sprawling development
without the burdensome regulation found
in older cities in the Northeast.
2. Booming Suburban Rings: PRIZM
Affluentials and Middleburbs Households
Development in large areas go hand-in-
hand with the lifestyles that emerge within
these fast-growing communities. When
analysts looked at PRIZM lifestyle segments
in expanding areas, the ones that dominated
fell into two suburban social groups: The
Affluentials (characterized by upscale,
outer-ring suburbs filled with white-collar
couples and families) and Middleburbs
Page 5
Fastest Growing Markets with High Rates of Residents in Suburban Rings
Metro Cities - A Markets
A1 Portland-Vancouver, OR-WA
A1 Minneapolis, MN-WI
A1 Seattle-Tacoma-Bellevue, WA
A3 Lincoln, NE
A3 Holland-Grand Haven, MI
Metro Towns - B Markets
B1 Napa, CA
B4 Racine, WI
B1 Fargo, ND-MN
B1 Bloomington-Normal, IL
B1 Columbia, MO
Figure 6. Sources: Pop-Facts and PRIZM; Index of 100 = U.S. average of The Affluentials and Middleburbs
households; none are in C Markets
(midscale couples of diverse ages and edu-
cations in inner-ring suburban neighbor-
hoods). PRIZM, Nielsen Claritas’ signature
segmentation system, classifies the popu-
lation into 66 segments based on various
socio-economic data, such as income, age,
education, presence of children, population
density and household composition.
Nationwide, the markets with the most
Affluentials and Middleburbs residents tend
to be large metros—cities like Portland, OR;
Minneapolis, MN and Seattle, WA.
Generally speaking, the growth in many of
these areas resembles a doughnut, with the
fast-growing suburban areas forming a ring
around the metropolitan core. While social
commentators like to celebrate the return
of the nation’s downtowns, the real action
is still occurring in America’s suburban
frontier, propelled by several population
torrents: active seniors looking for attractive
retirement communities; young singles
seeking affordable townhouses; and
immigrants who are leapfrogging over urban
apartments to settle in suburban neighbor-
hoods near good schools and steady
employment. Indeed, many fast-growing
2008 Suburban
Population Ring Index
2,182,734 261
3,227,334 253
3,338,639 222
287,701 215
261,387 212
136,092 208
195,375 154
189,883 149
163,626 149
158,941 136
“cities” of the early 21st century—Los
Angeles, CA; Atlanta, GA; Houston and
Dallas, TX—are primarily collections of
suburbs with only marginal links to an
urban core.
Understanding the importance of lifestyle
analysis can help businesses find opportunities
even in markets where growth is slow. At
Cushman & Wakefield, the largest privately
held real estate services firm in the world,
retail analysts look beyond demographics
when assessing the residents living in a client’s
trade area. For prospective shopping center
tenants, brokers analyze the surrounding
customer base using PRIZM lifestyle segments
to determine whether the retailer can
reach its target audience. For landlords, the
Cushman & Wakefield brokers also analyze
trade area customers by PRIZM types, then
develop a target tenant list for the site.
“Analyzing population growth is getting
more granular,” says Matthew Winn, Managing
Director of the Retail Consulting Group at
Cushman & Wakefield in Atlanta, GA. “It’s
no longer enough to say how many people
earning $75,000 a year live within a five-mile
© 2008 The Nielsen Company. All rights reserved
 Finding Growth in Challenging Times: Seven Indicators to Evaluate Population Growth

radius of a shopping center. Now we want

America’s Top Markets by Affluence
to know their lifestyle and psychographics,
and whether the daytime population and 2008 Affluence
Population Index
evening shoppers are a good match for tenants.
The goal is to give prospective tenants a Metro Cities - A Markets
reason to choose your site rather than the A4 San Jose-Sunnyvale, CA 1,833,625 164
one two miles down the road.” A1 Washington, DC-VA-MD-WV 5,384,723 163
A1 Oxnard-Thousand Oaks-Ventura, CA 820,716 161
3. Widespread Affluence: A4 Bridgeport-Stamford-Norwalk, CT 901,429 157
Following the Money A4 San Francisco-Oakland, CA 4,281,491 155
For most of the last century, wealthy Metro Towns - B Markets
Americans have settled in the upscale suburbs B1 Edwards, CO 59,428 150
of large metros. In examining the data further, B1 Napa, CA 136,092 147
analysts found several factors related to B1 Truckee-Grass Valley, CA 101,146 143
high net worth that correlate with high-growth B1 Kahului-Wailuku, HI 144,043 137
communities: college educations, upper- B1 Lexington Park, MD 101,831 135
middle-class incomes and healthy home Micro Towns - C Markets
values. Many of the nation’s affluent mar- C3 Los Alamos, NM 19,258 174
kets—communities such as Los Alamos, C1 Silverthorne, CO 27,334 152
NM; Silverthorne, CO and Jackson, WY— C1 Jackson, WY-ID 27,816 143
are modest in size. This trio of Micro Towns C3 Juneau, AK 30,704 140
each have a population of under 30,000, C1 Gardnerville Ranchos, NV 47,589 137
with a disproportionate number of people Figure 7. Sources: Pop-Facts and PRIZM; Index of 100 = U.S. average of indices of household income,
educational achievement and home values
who have college educations, incomes over
$75,000 (the nation’s median is $43,537) play even harder by skiing, golfing, boating booming coastal metros with exploding
and homes valued between $300,000 and and hiking at nearby recreational parks. population growth. While New York, NY
$750,000. In terms of education, research and Chicago, IL served as magnets for
shows the correlation strongest in markets 4. Increasing Ethnicity: newcomers at the turn of the 20th century,
where residents have at least some college Growing Hispanic Population today immigrants from Latin America and
education or a bachelor’s degree. Immigration drives the nation’s population Asia typically head to Los Angeles and San
growth, and no group has provided more of Francisco, CA and Miami, FL. They settle in
The full list of affluent, growing markets a boost than Hispanics. In 1990, the Hispanic these places for the same reasons earlier
shows a decidedly western skew, partly population in the U.S. was 7.9 percent; waves of Europeans came to the
reflecting the migration of knowledge today, it is nearly 16 percent and rising. U.S.—friends and family members had
workers from manufacturing centers of the According to a recent Goldman Sachs already settled there and formed
Northeast to the high-tech job centers in study, this market is growing three times self-sustaining ethnic communities. This is
the western states. As people become faster than the U.S. population in general. particularly true of less skilled immigrants
more specialized in a given field, their Demographers at the Pew Research Center who rely on kinship and informal networks
incomes increase, but the number of jobs predict that by 2050 the U.S. will be a to land jobs. They’re also attracted to areas
that fit their expertise narrows. “minority majority” nation, with with climates conducive to varied recreational
Hispanics making up 29 percent of the activities and low costs of living. Not
Accordingly, educated people tend to travel total population. surprisingly, those markets with the highest
further to find acceptable jobs. Places like proportion of Hispanics tend to be along or
San Jose, CA; Edwards, CO and Los Alamos, The shift has already occurred in traditional near the Mexican border—places like Rio
NM, are meccas for college graduates who gateway cities like Los Angeles, CA; San Grande City, Laredo and Raymondville, TX.
work hard in science and technology and Antonio and El Paso, TX—border towns and
Page 6 © 2008 The Nielsen Company. All rights reserved
 Finding Growth in Challenging Times: Seven Indicators to Evaluate Population Growth

5. Diversified Employment: Construction,

America’s Top Markets by Hispanic Population
Retail and Business Services
2008 % One of the tried and true economic axioms
Population Hispanic
is that “people follow jobs and retailers follow
Metro Cities - A Markets people.” However, Nielsen Claritas research
A2 Laredo, TX 241,078 94.9% shows that people don’t follow all jobs
A2 McAllen-Edinburg-Mission, TX 728,091 89.6% equally. In fact, over the last eight years the
A2 Brownsville-Harlingen, TX 397,924 86.4% places most likely to experience population
A2 El Paso, TX 750,291 81.9% growth had an abundance of jobs in two
A2 Visalia-Porterville, CA 434,172 56.7% industries—construction and retail—as well
Metro Towns - B Markets as diversified employment opportunities
B2 Rio Grande City-Roma, TX 63,816 97.4% in businesses ranging from finance and
B2 Eagle Pass, TX 53,317 94.9% credit to engineering and recreation. Many
B2 El Centro, CA 169,463 76.3% resort and retirement cities attracted
B2 Las Cruces, NM 199,411 65.3% construction and retail workers as aging
B2 Yuma, AZ 198,120 56.9% Boomers and young families alike streamed
Micro Towns - C Markets into these areas looking for affordable
C3 Raymondville, TX 20,848 86.7% housing and a relaxed lifestyle. Retailers
C1 Nogales, AZ 45,234 80.6% followed the increased population, providing
C1 Del Rio, TX 48,545 79.1% products and services for the expanding
C3 Alice, TX 41,322 77.1% consumer market.
C4 Las Vegas, NM 29,220 76.5%
Figure 8. Sources: Pop-Facts and PRIZM; U.S. average = 15.9% Hispanic The fastest-growing markets also have
America’s Top Markets by Diversified Employment something else in common: solidly diversified
economies. Analysts found a strong correlation
2008 Diversified
between growing communities and a white-
Population Employment Index
collar workforce involved in business services,
Metro Cities - A Markets
finance, engineering and management services,
A2 Las Vegas-Paradise, NV 1,875,245 130
as well as amusements and recreation.
A1 Naples-Marco Island, FL 333,295 129
Viable opportunities in business services,
A2 Cape Coral-Fort Myers, FL 608,182 126
management and engineering create vibrant
A3 Provo-Orem, UT 495,921 123
economies nourished by an educated, well-
A3 Spokane, WA 453,400 119
paid workforce. Successful economies also
Metro Towns - B Markets
seem to promote a leisure-intensive lifestyle,
B5 Key West, FL 76,322 127
as many fast-growing communities feature
B1 Hilton Head Island-Beaufort, SC 169,612 125
a significant number of jobs involved in
B1 Truckee-Grass Valley, CA 101,146 125
gambling, recreation, hotels, theme parks
B1 Bozeman, MT 84,398 121
and cultural venues. Among the hotspots
B1 Carson City, NV 55,550 121
experiencing strong construction starts, a
Micro Towns - C Markets
growing retail environment and a diversified
C1 Heber, UT 21,562 143
employment base are resort communities
C1 Jackson, WY-ID 27,816 131
such as Jackson, WY; Key West, FL and
C1 Kill Devil Hills, NC 34,521 127
Hilton Head Island, SC.
C1 Montrose, CO 39,620 124
C1 Gardnerville Ranchos, NV 47,589 123
Figure 9. Sources: Pop-Facts and Business-Facts; Index of 100 = U.S. average score of eight employment
categories with high correlations to growing markets
Page 7 © 2008 The Nielsen Company. All rights reserved
 Finding Growth in Challenging Times: Seven Indicators to Evaluate Population Growth

But an over-reliance on construction and As one Naples real estate broker put it, frustrating are the minutes spent in traffic
finance jobs can have a downside risk. Both “We’ve gone from an extraordinary real jams caused by the undesirable side effects
industries have been hurt by the housing estate market to a merely normal one.” of fast growth: feeder roadways not built
crisis and credit crunch. As construction jobs to accommodate rush hour traffic, the
grow scarce during a protracted downturn 6. Long Commutes: A Price of Growth absence of public transit in the hinterlands
in the housing industry, workers leave Infrastructure is also important in growing and uncontrolled sprawl that did not
town. In markets that relied too heavily on communities. Fast growth correlates with account for car-dependent lifestyles. These
construction—such as Las Vegas, NV; significant numbers of air transport jobs, are the ills of life in the fast-growth lane,
Phoenix, AZ and Naples, FL—analysts workers with home offices and, unfortunately, though they can be mitigated by planners
expect to see a marked slowdown in popu- long commutes. Obviously, thriving who recognize the presence of Population
lation growth and a rise in housing foreclo- communities need good airport connections Growth Indicators in their communities
sures. Las Vegas, whose population grew to accommodate business and vacation and address the issues accordingly.
36 percent over the last eight years, is pro- travelers, as well as high-speed Internet
jected to expand by less than half, 17 per- access so workers can connect to employers 7. High-End Shopping Centers:
cent, between now and 2013—still a from home offices. Fast-growing communities Lifestyle Centers
respectable growth rate, but not likely also tend to saddle workers with long commute One unexpected result of the boom in
enough to fill the city’s inventory of empty times, typically much longer than the affluent commuter suburbs is the emergence
homes. In Naples, a glut of vacation proper- national average of 25 minutes. The long of high-end shopping centers known as
ties has forced builders to lay off workers as commute likely reflects many workers living “lifestyle centers.” A kind of outdoor mall,
the pace of population growth is expected in the more affordable suburban fringes of they feature natural sunshine, tree-lined
to decline from 52 percent during the last metro areas. It’s not just the miles, though, streets, stress-relieving fountains and plenty
eight years to 16 percent for the next five. that lengthen these commutes. More of shops and restaurants. Unlike the massive,
windowless suburban malls anchored by a
America’s Top Markets for Long Commutes department store, these centers resemble
quaint villages filled with high-end retailers
2008 > 30 Min
Population Commute Index like Talbots, Coach, Chico’s, Banana Republic
and Starbucks. And they’re designed for
Metro Cities - A Markets
upscale suburban professionals who want
A4 New York, NY-NJ-PA 18,871,770 182
the convenience of driving up to the shops,
A1 Washington, DC-VA-MD-WV 5,384,723 163
parking their cars and downing a
A4 Bremerton-Silverdale, WA 244,382 162
Frappuccino® while lounging on an over-
A4 Vallejo-Fairfield, CA 421,678 158
stuffed chair. Ironically, these suburban
A4 Poughkeepsie-Newburgh, NY 679,838 149
creations are designed to resemble the
Metro Towns - B Markets
downtown commercial districts that shop-
B2 East Stroudsburg, PA 171,184 174
pers fled long ago.
B2 Picayune, MS 57,241 173
B2 Athens, TX 81,248 173
At a time when mall expansion is declining,
B1 Granbury, TX 58,925 160
lifestyle centers are growing at a rate of
B1 Oak Harbor, WA 81,252 156
several dozen annually. Today, there are
Micro Towns - C Markets
more than 400 of these tabernacles of con-
C1 Culpeper, VA 46,776 191
sumerism, with their narrow pedestrian
C1 Pahrump, NV 45,598 170
streets and little plazas. And they’re
C3 Walterboro, SC 39,658 163
sprouting up in growing mid-sized metros
C3 La Follette, TN 41,179 141
and college towns like Yakima, WA; Ann
C1 Bonham, TX 34,172 141
Arbor, MI and Bend, OR. Because lifestyle
Figure 10. Source: Pop-Facts; Index of 100 = U.S. average of those with commutes over 30 minutes
and between 30-60 minutes
Page 8 © 2008 The Nielsen Company. All rights reserved
 Finding Growth in Challenging Times: Seven Indicators to Evaluate Population Growth

contemporary western lifestyle. These mar-

America’s Top Markets by Lifestyle Shopping Centers
kets are pegged to lead the nation’s econom-
2008 Lifestyle ic recovery over the next five years.
Population Centers Index
Metro Cities - A Markets But when Nielsen Claritas analysts combined
A5 Yakima, WA 235,661 1049 their five-year population projections with
A3 Sioux Falls, SD 219,419 858 the Population Growth Indicators, a map
A2 Greeley, CO 247,702 590 emerged that suggested different growth
A1 Ann Arbor, MI 347,834 572 strategies and opportunities for retailers.
A3 Boise City-Nampa, ID 594,998 464 After assessing each market according to
Metro Towns - B Markets both its projected growth over the next five
B1 Bend, OR 159,560 1716 years and the presence of Population Growth
B1 Brainerd, MN 91,205 1348 Indicators, Nielsen Claritas analysts used a
B1 Bozeman, MT 84,398 1180 strategic planning method to provide four
B1 St. George, UT 138,103 1049 recommendations for businesses seeking to
B1 Panama City-Lynn Haven, FL 167,152 1011 expand their operations.
• Dominate: With both strong projected
Figure 11. Sources: Pop-Facts and the Shopping Center Database; Index of 100 = U.S. average of the pro-
portion of lifestyle centers to total shopping centers in market; there are no lifestyle centers in C Markets growth and strong potential for growth
based on the Population Growth
centers require a relatively large population Coast, FL should experience the greatest
Indicators, these markets should repre-
base to thrive, developers have yet to build percentage of growth among all the
sent safer bets for retail expansion over
any in Micro Towns (“C” Markets). However, nation’s cities, thanks to its location as a
the next five years. These markets
their presence in larger markets reflects the bedroom community halfway between
include college towns and booming
need to create new shopping experiences Daytona and St. Augustine, FL. Others, like
resort locations like Las Vegas, NV;
for consumers bored with traditional malls. Greeley, CO and Heber, UT, are resort com-
Austin, TX and Bend, OR.
Growing markets provide residents with munities that cater to active retirees and
new retail experiences at places like families who appreciate hiking, skiing and a
lifestyle shopping centers.

CBSAs by Market Strategy—Projected Growth vs. Demographic Potential

Conclusion: Predicting the Future
Populations do not necessarily grow in a
linear fashion, and current growth patterns
won’t necessarily continue. Every year,
Nielsen Claritas analysts generate five-year
projections for all CBSAs (in addition to
cities, counties and states) by combining
public U.S. Census Bureau estimates and
demographic data at small levels of geogra-
phy. Between 2008 and 2013, they estimate
that CBSAs will grow an average of 5.2 per-
cent nationwide, though in some smaller
markets in the South and West the pace
may rise above 25 percent as Boomers head
to Sun Belt retirement communities and
smaller towns to wind down their working
years. According to their analysis, Palm
Figure 12. Sources: Pop-Facts, Business-Facts and the Shopping Center Database
Page 9 © 2008 The Nielsen Company. All rights reserved
 Finding Growth in Challenging Times: Seven Indicators to Evaluate Population Growth
• Invest: With moderate projected growth,
but strong potential based on their
Population Growth Indicators, these
markets may grow faster than expected,
indicating possible opportunities for
retailers. Among these markets are such
knowledge worker havens as Los Alamos,
NM; San Jose, CA; Boulder, CO and
Minneapolis, MN.
• Maintain: Markets in this category may
be riskier for retailers because, though
their projected growth is above average,
their potential according to the Population
Growth Indicators is below average. In
markets like New Orleans, LA; Coeur
d’Alene, ID and Brownsville, TX, retailers
may want to more thoroughly research any
expansions plans.
• Innovate: With weak scores for both
projected and potential growth, the many
small markets in this group would need
extra money and attention—perhaps a
new retail concept or a different product
mix—to become a promising retail oppor-
tunity. Among the communities in this
category are college towns like
Columbia, MO; Corvallis, OR and
Greensboro, NC.
Admittedly, any strategic plan that combines
historical indicators with future estimates
has inherent limitations. The hallmarks of
growth can evolve over time. And as the
Population Growth Indicators show, growth
can manifest itself in unexpected ways.
In addition, the importance of specific
indicators can vary depending on a retailer’s
target audience.
Nevertheless, retailers can use this analysis
to quickly assess a market’s potential and
determine where it fits into their overall
development strategy. Even in a sluggish
economy with slow population growth, this
innovative modeling approach can suggest
Page 10
expansion opportunities in overlooked markets.
With this new approach to analysis based on
the Population Growth Indicators, retailers
now have a tool to help them identify these
rising stars and stake out the best locations
to attract their target customers. For those
retailers willing to embrace this paradigm shift
in understanding growth, many may be in a
position to reap the rewards for their expansion
efforts—or at least avoid costly mistakes.
Behind the Numbers
For the methodology, Nielsen Claritas
analysts examined hundreds of variables
construction workers will create high
before determining several dozen that were
growth. More likely, construction workers
correlated to percent growth from 2000 to
are attracted to markets that are already
2008. Variables with strong positive and
growing and need new homes, roads and
negative correlations were grouped by vari-
shopping centers—as well as the workers
able type and selected to reflect collineari-
to build them.
ty (e.g., variables like income and educa-
tion that tend to track together). This
For other variables, like income, education
process reduced the set of Population
and business services employment, the
Growth Indicators to the core seven that
cause versus effect is less clear. While high
were then used to score and classify CBSA
growth markets are more likely to attract
markets. And the maps and tables reflect
educated professionals in search of opportunity,
markets that are outperforming others,
an abundance of well-educated professionals
according to a proprietary population growth
may also lead to high growth in a market
analytical approach that utilizes Pop-Facts
as potential employers are drawn by the
demographic estimates and projections
talent pool. In this case, the presence of
data.
educated residents is a cause, rather than
an effect, of growth. Diversity is another fac-
Inverse or negative correlations (such as high
tor that could be a cause—diverse markets
school education) were not used because
are more dynamic and grow faster—or an
analysts did not want to “double-count”
effect, because growing markets tend to
against low growth markets; by definition,
attract more immigrants.
markets with fewer college graduates will
have a higher percentage of residents with
Ultimately, markets with an educated and
only a high school education or less.
diverse work force likely will attract busi-
ness services and technology innovators
While correlations provide valuable insight,
and, because people tend to follow jobs—
a strict cause and effect relationship should
growth will follow. These assumptions were
not be inferred. For example, a high percentage
made when scoring, classifying and organ-
of construction workers in a market may be
izing CBSA markets along the Dominate-
highly correlated to growth, but it’s doubtful
Invest-Maintain-Innovate dimensions cited
that simply having an abundance of
in the conclusion.
© 2008 The Nielsen Company. All rights reserved
 Finding Growth in Challenging Times: Seven Indicators to Evaluate Population Growth

Case Study: Growth Within Markets and ‘The New U’

Site location analysis is a local business,
helping retailers identify growing mar-
kets, as well as profitable neighborhoods
within markets. Population Growth
Indicators can pinpoint a growing neigh-
borhood, consider the U Street Corridor
in Northwest Washington, D.C., an area
whose population jumped 23 percent
between 2000 and 2008. Once known
as the “Black Broadway” for its clubs
where luminaries like Duke Ellington and
Ella Fitzgerald performed, the area dete-
riorated after the 1968 riots sparked by
the assassination of Dr. Martin Luther
King. By the mid-1970s, the area was
a center of drug dealing, crime and
poverty.
But a decade ago, the area began to
change for the better with the opening
of a municipal office building and a new
subway stop that brought new jobs and
retailers. Young people in search of
urban living near downtown jobs moved
into inexpensive rowhouses and apart-
ments. Soon, new bars and ethnic
restaurants arrived to cater to hip twen-
tysomethings, and chains like Starbucks
and Maggie Moo’s moved in near classic
joints like Ben’s Chili Bowl and the
Florida Avenue Grill. Michael Sussman, a
real estate developer who built two
condominium buildings in the neighbor-
hood, describes the transformation:
“The new residents who moved in were
kids who thought it was cool to live
among diverse people and funky restau-
rants,” he says. “But once they made up
a critical mass, the retailers followed.
Restaurants that once avoided this area
began fighting to get a location here.”
The U Street Corridor was renamed
“The New U.”
Since 2000, the revitalized area has
become a magnet for the young and
upscale. When Nielsen Claritas analysts
examined the area, they found that the
population increase coincided with ris-
ing affluence, according to the
Population Growth Indicators. During
the last eight years, the number of
households earning over $75,000 more
than doubled to 1,897, and the median
U Street Corridor, Washington, D.C.
Figure 13. Source: PRIZM
home value jumped 167 percent to
$684,013. Lifestyles have also improved
rapidly. Using the PRIZM segmentation
system, analysts determined that last
year the dominant lifestyle segment was
No. 29-American Dreams (characterized
as urban, multi-ethnic and middle-
class). This year, the neighborhood was
classified No. 4 Young Digerati (young,
urban and wealthy)—a remarkable rise
of 25 rungs on PRIZM’s socioeconomic
ladder. On a Saturday night, the side-
walks are packed with young clubbers,
cell phones glued to their ears, ducking
into sushi bars and jazz clubs. And with
the younger generation continuing to
seek urban amenities far from the cul-
de-sac landscape, the New U’s future
lifestyle looks bright.

For more information call (877) 707-2382 or visit us at www.claritas.com.

Nielsen Claritas
© 2008 The Nielsen Company. All rights reserved. CORP_COL_5064_1008