Mississippi Gulf Coast “GO Zone” – It’s Not JUST Casinos!

Industry experts and local officials believe that Katrina is only one of the factors that should lead to an excellent real estate opportunity in the years to come.  Other factors are the continuing expansion of the Casinos, jobs created by the expanding defense industry and the migration of baby boomers to lower cost warm weather spots near the Gulf. Most experts agree that the real estate boom has only started and may run for the next 3 to 5 years.

As an added incentive to investors, the State of Mississippi is offering significant “GO Zone” tax incentives to invest in the areas that were most impacted. The combination of a high growth area, with the opportunity for appreciation and added “Go Zone” tax incentives, make investing in Mississippi an attractive alternative for real estate investors.

According to the OFHEO.gov House Price Index report of Quarter 1, 2007, Biloxi-Gulfport was the sixth greatest appreciating market in the country for year over year appreciation, appreciating at 16%.

The Mississippi Gulf Coast “Go Zone” story has been dominated by the massive influx of the Gaming and Hospitality industry. But that is only part of the story.

Aerospace & Defense

South Mississippi's aerospace infrastructure includes federal and university research units that focus on propulsion, remote sensing, visualization and scientific computing. It also has aerospace parks, military aviation bases, technology transfer offices and test ranges.

Let’s take a look at the short list of companies in the “Go Zone” that populate the Mississippi Gulf Coast Aerospace Corridor;
BAE Systems,
Pratt &  Whitney,
Rocketdyne Rocket Engine Assembly Facility,
Applied Technologies,
General Dynamics,
ITT Industries Inc.,
Lockheed Martin,
Northrop Grumman,
Pratt & Whitney,
Rolls-Royce Naval Marine Inc.

South Mississippi has leading-edge research and practical experience with composites that go into aircraft; it has the plants that use composites to make fixed-wing and rotary unmanned aircraft; it builds the next generation of warships that will launch robot aircraft; it has a weapons maker working with lasers; it has the satellite makers whose high-flying craft and remote sensors are key to command and control as well as surveillance; it has the companies that build the engines that power aircraft and spacecraft; it has the engine testing facilities.

As one Defense Company executive said: "I think you're finding our futures really are coming together here in quite an unusual way."

With a high quality of life and low cost of doing business, the Mississippi Gulf Coast has been a contender for some of the most high-profile projects in the aerospace industry. And it's now even more appealing, thanks to the availability of major “Go Zone” incentives designed to help companies that want to invest in the future of Mississippi and the Gulf Coast region
.

NASA Stennis Space Center
NASA’s Stennis Space Center is a significant source of employment and income in the local area. If SSC had not been in operation in 2006, considering both direct and indirect effects, a very conservative estimate of reduction in employment for the local area would be more than 19,500 jobs.

Kessler Air Force Base & Medical Center
Just down the road 30 minutes and you will find Kessler Air Force Base. Kessler AFB is the leading training center in high tech surveillance. Kessler currently employs 11,200 people, including nearly 7,600 military positions. In addition, the base's presence created more than 3,500 local and contract jobs.  As one of the Air Force's major training centers, on any given day more than 3,500 students train at Kessler in more than 460 courses in technical subjects such as communication-electronics, medical, personnel, airfield management, weather forecasting and air traffic control.

Kessler Medical Center, the second largest Air Force medical center, has made great strides in rebounding from the damage inflicted by Hurricane Katrina. The facility is rapidly returning to its pre-Katrina status, both from the standpoint of the physical rebuilding as well as service levels. In early 2006, the 81st MDG provides medical care with a staff of more than 700 people, less than one-third of the more than 2,220 assigned Aug. 28, 2005. By the time the graduate medical education programs returned in July 2007, the staff increased to more than 1,770. 

Air Force, Air Education and Training Command officials have allocated more than $138 million to pay for repairs to the medical center and replace Katrina losses with new state-of-the-art equipment. 

High Tech Marine Manufacturing

In addition to the Aerospace Corridor there is also high tech marine manufacturing. Located in Pascagoula, Mississippi, and in continuous operation since 1938, Ingalls is Mississippi's largest private employer, with more than 10,000 employees. Ingalls is located on the Pascagoula River at the Mississippi Sound, strategically positioned for easy access to the deep waters of the Gulf of Mexico, via a totally unobstructed 350-foot-wide by 40-foot-deep, 12-mile channel -- with no air draft restrictions. The shipyard is also easily accessed by the nation's interstate highway system, and by rail.

“In an appeal to business and government leaders in Jackson County, Northrop Grumman Ship Systems President Philip Teel said the Ingalls shipyard needs workers to keep up with the $9 billion backlog of Navy ships it has slated. “At the highest levels of government there are questions of whether we will be able to get that work done in the time frame they need it to be done,” Teel told members of the Jackson County Area Chamber of Commerce at its annual membership meeting in Moss Point Tuesday. Teel said the Ingalls yard is short 400 craftspeople and 250 salaried positions. He blamed housing and insurance as two big problems. He said the yard has a three-year plan to solve the work force problem.”

Bottom Line

The first being that although the Casino industry is adding tens of thousands of good paying jobs to the area it is not the only industry that is thriving along the Gulf Coast of Mississippi. We have not even touched on the infrastructure business and general service industry that is booming.

Two years after Katrina there is still a major affordable work force housing shortage.

WeI can tell you from being actively involved in this market that it is about to explode. From single family homes in Waveland being lovingly rebuilt by church volunteers, to north county subdivisions where dozens of houses will soon rise, to Bayside Park  “People are really starting to pick up the pace,” says Mickey Lagasse, the county’s chief building official. “I think we’re going to see a huge boom in construction in the next few years.”

One area of High Ground that is south of 1-10 is now getting much attention from developers. Platted and zoned lots in Bayside Park. Our builder has been building Hurricane resistant homes, built to withstand 140 mph winds and now brings their expertise to South Mississippi. Where others have been building homes in the $250,000 plus range north of I-10 we are offering investors homes starting in the low $120s to meet the overwhelming demand for affordable workforce housing. 
This is area is experiencing double digit appreciation and offers the investor a great opportunity for ROI. Home values are appreciating in this area fast as well. According to the OFHEO.gov House Price Index report of Quarter 1, 2007, Biloxi-Gulfport was the sixth greatest appreciating market in the country for year over year appreciation, appreciating 15.16%. Last quarter alone, Biloxi-Gulfport appreciated 4.77%.

Lot's in Bayside Park that were $1500 6 months ago are now listed at $15,000. With all investment opportunities timing is everything. The same is true here. I feel this is a great investment opportunity for those that get involved at this stage.
To gain maximum benefit from this investment opportunity I encourage those interested to lock in today. Don’t overlook the fact that Rental Property owners can qualify for the ”GO Zone Investor incentives” including the  50% accelerated depreciation incentive that translates into a substantial tax windfall. This investor incentive can be carried back 5 years and forward 10. The builder is also offering up to $5000 in contributions toward interest payments and closing costs.

Sources: www.ssc.nasa.gov, www.keesler.af.mil,  www.mscoastaerospace.com/ , www.ss.northropgrumman.com/company/ingalls.html, www.boeing.com, MSNBC: Housing Boom

In determining whether go zone investment real estate is right for you, an understanding of go zone tax credits, rental income investment incentives, location, rental market, economic environment and future potential profit are all factors that must be considered.