Thousands of high paying WPAFB STEM jobs create multiplier effect in the Dayton region, leading to strong housing demand
We first started investing in Dayton-area multi-family assets in 2006. Dayton is home to Wright Patterson Wright Patterson Air Force Base, the largest single site employer in the State of Ohio with nearly 18,000 employees. Many of these jobs were high-paying Science, Technology, Engineering and Math oriented jobs that are highly coveted by economic development officials across the country.
These high-paying jobs were part of what drew us to this region. However, we were also concerned about what could happen if these jobs were moved or redeployed. This was a real fear due to the nationwide “Base Realignment and Closure” (BRAC) process that had been underway since the end of the Cold War. Nevertheless, we were assured that Wright Patterson’s missions were so broad and so important that the government would first need to shut down the Air Force before they could shut down “Wright-Patt.”
Indeed, Wright Patterson emerged as a clear winner in the BRAC process. Multiple nationwide missions were merged and moved into WPAFB’s mission, and by May of 2023, “inside the gate” employment at Wright Patterson had grown to nearly 35,000 jobs. Fast forward to August of 2024, and “inside the gate employment has almost doubled to 38,000 employees today (from 18,000 employees in 2002).
The Multiplier Effect
Economists estimate that every one high-paying STEM job can generate 5 additional jobs in the service sector (e.g. healthcare, transportation, retail, dining and entertainment, etc.). Combined, these jobs help stimulate demand across all sectors of the local economy, including demand for housing.
But the Wright Patt multiplier effect is even more powerful, because it is also home to the Air Force Material Command (“AFMC”). The AFMC is the global procurement wing for the Air Force. Without the AFMC, the Air Force could not function. The AFMC is the USAF’s largest command in terms of funding and second in terms of personnel. AFMC’s operating budget represents 31 percent of the total Air Force budget and AFMC employs more than 40 percent of the Air Force’s total civilian workforce. The AFMC also draws vendors and manufacturers from around the world to the Dayton region so they can be closer to the the USAF procurement process.
For example, Joby Aviation recently announced that it will build a new $500 million Dayton manufacturing facility that will create nearly 2,000 new jobs. Joby is a California-based company that is developing an all-electric, vertical take-off and landing air taxi vehicle. Joby expects that the USAF will be a major customer, and the company chose Dayton for its new manufacturing facility to be closer to the AFMC. Similarly, the Sierra Nevada Corporation recently opened the second of two MRO (“Maintenance, Repair & Overhaul”) facilities at the Dayton airport. Sierra Nevada’s new facility is the first large scale MRO facility constructed in Dayton since World War II. Sierra Nevada expects that its Dayton MRO expansion program will create 350 new jobs, many of which will pay over $100,000 per year.
Robust Dayton-Area Job Growth Leads to Strong Housing Demand
Not surprisingly, after hemorrhaging nearly 1.1 million jobs in the 1990’s and early 2000’s, job growth in Dayton was approaching all-time highs as of October of 2023. Much of this is due to the economic activity generated by Wright Patterson Air Force base. However, Dayton also benefits from an excellent transportation network, and a strong system of higher education focused on the growing employment opportunities in the region.
Accordingly, given Dayton’s robust job growth and the relative lack of new supply of both for rent and for sale housing, it was only a matter of time before Dayton-area rent growth began to strengthen to levels not seen in decades. Indeed, according to Madera Residential Research and Real Page, Dayton is now leading the nation in rent growth. In addition, as you can see in the below chart, eight of the top 17 rent growth leaders are located in the Midwest.
Undoubtedly, these rankings are due to pronounced slow downs in rent growth in formerly hot markets like Phoenix, Miami and Houston. However, unlike in past cycles, formerly hard hit Midwestern markets may also be starting to benefit from a deeper understanding of damage caused by the “China Shock” in the 1990s, and recent efforts of elected leaders to reverse these effects through a renewed policy emphasis on re-shoring and near-shoring.
