Transitions: 2019 Economic Forecast for Metro Denver February 6, 2019

Size: px

Start display at page:

Download "Transitions: 2019 Economic Forecast for Metro Denver February 6, 2019"

Samson Scott
5 years ago
Views:

1 Transitions: 2019 Economic Forecast for Metro Denver February 6, 2019 Prepared by: Can Stock Photo / jkirsh In Partnership with:

2 Consumer Changes and Influences Slowing population growth Aging of the population Tax Cuts & Jobs Act Housing affordability Can Stock Photo / lemony

3 Metro Denver Annual Change in Population 75,000 65, Population = 3.24 Million Net Migration Natural Increase 55,000 45,000 35,000 25,000 15,000 5,000-5, Source: Colorado Division of Local Government, State Demography Office.

4 Metro Denver Aging Changes Housing, Spending Needs and Patterns 60, Population = 2.8 Million 2020 Population = 3.3 Million, +17% 50,000 40, % 30,000 20, % 10, Source: Colorado Division of Local Government, State Demography Office.

5 Population Growth Slows, Still Rapid Increase in , Population = 3.3 Million 2030 Population = 3.7 Million, +14% 60,000 50, % 40,000 30, % 20,000 10, Source: Colorado Division of Local Government, State Demography Office.

6 Consumers Are Confident & Spending Retail Change in Various Markets (YTD) National: +5.3% (Oct) Denver: +5.2% (Sep) Aurora: +5.0% (Oct) Broomfield: +4.9% (June) Consumer Confidence Index % 10% 5% 0% -5% -10% -15% Retail Trade Growth Rate Metro Denver Retail Trade Growth Mountain Region Consumer Confidence Sources: Colorado Department of Revenue; The Conference Board. 2017e=DRP Estimate; 2018f=DRP Forecast.

7 Metro Denver Wages Increasing Faster than Inflation, not Faster than Housing Costs 15% YOY Percentage Change 10% 5% 0% -5% -10% -15% CPI Avg Annual Wage Median Home Price Sources: U.S. Bureau of Labor Statistics; National Association of REALTORS.

8 Metro Denver #12 and Boulder #7 for Highest Median Home Price, 3Q 2018 Median Home Prices (in thousands) $700 United States Metro Denver Boulder $642 $600 $500 $472 $400 $300 $272 $200 $100 $0 Source: National Association of REALTORS. 2018e=DRP Estimate; 2019f=DRP Forecast.

9 Apartment Vacancy and Rental Rates Rising at Moderate Pace Metro Denver Vacancy Rate Metro Denver Rental Rate 13% $1,600 $1,500 Vacancy Rate 11% 9% 7% 5% $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 Monthly Rental Rate 3% $700 Source: Denver Metro Apartment Vacancy & Rent Survey. 2019f=DRP Forecast.

10 Multi-family 51% of New Construction in 2017, 42% in 2018 (30+ year average = 28%) 30,000 25,000 Metro Denver Building Permits* Multi-Family (5+ units) Single-Family Attached (2-4 units) Single-Family Detached (1 unit) 20,000 15,000 10,000 5, e 2019f * The Census Bureau tracks building permits by the number of housing units in the structure. Source: U.S. Census Bureau, Building Permits. 2018e=DRP Estimate; 2019f=DRP Forecast.

11 Business Changes and Influences Low unemployment and rising wages Lower oil prices Technology changing everything Active construction market Can Stock Photo / stuartmiles

12 Metro Denver Employment Slowing, But Still Positive 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% U.S. Employment = 149 million +2.4 M in M in 2019 Colorado Employment = 2.7 million +68,000 in ,000 in 2019 Metro Denver Employment = 1.7 million +43,000 in ,000 in 2019 U.S. Colorado Metro Denver Source: U.S. Bureau of Labor Statistics, Current Employment Statistics. 2018e=DRP Estimate; 2019f=DRP Forecast.

13 Labor Force Continues to Expand, Unemployment Rises 74% 72% 70% 68% 66% 64% 62% 60% 58% 56% Labor Force Participation Rates (seasonally adjusted) % 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Unemployment Rates U.S. Colorado U.S. Colorado Metro Denver Source: U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics. 2019f=DRP Forecast.

14 Employment Growth Varies Across the State Nonfarm Job Growth Rates by Metro Area, YTD December 2018 U.S. 1.6% Colorado 2.7% Greeley 4.4% Colorado Springs 4.0% Fort Collins 3.2% Denver Boulder Grand Junction 2.4% 2.2% 2.6% Pueblo 0.4% -2% -1% 0% 1% 2% 3% 4% 5% Source: U.S. Bureau of Labor Statistics, Current Employment Statistics.

15 Metro Denver Employment Growth by Supersector Largest: 307,000 workers Professional & Business Services Wholesale & Retail Trade Government Education & Health Services # Jobs 2018e = 1.69 M 2019f = 1.72 M Leisure & Hospitality Financial Activities Natural Resources & Construction Manufacturing 2019f 2018e Other Services Transp., Warehousing & Utilities Smallest: 58,600 workers Information -1% 0% 1% 2% 3% 4% 5% 6% Source: Colorado Department of Labor & Employment. 2018e=DRP Estimate; 2019f=DRP Forecast.

16 Proprietors Are Another Significant Component Of Employment 1,000, , , , , , ,000 Proprietors Employment 25.6% of Colorado s Total Employment (US avg = 22.6%) 689, , , , , , , , , , , , , Source: U.S. Bureau of Economic Analysis.

17 Office Market Still Healthy, but Showing Signs of Change Vacancy Rate 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Millions of Square Feet (MSF) 4Q 2018 Total Space= MSF Lease Rate = $26.62 YOY Change = 0% Under Construction = 4.1 MSF Direct Vacancy Rate Sublet Vacancy Rate Completed Sq. Ft. Source: CoStar Group, Inc. 2019f=DRP Forecast Completions = 3.8 MSF

18 Record Level of Industrial Space Completed in 2018 Vacancy Rate 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Direct Vacancy Rate Sublet Vacancy Rate Completed Sq. Ft Millions of Square Feet (MSF) Source: CoStar Group, Inc. 2019f=DRP Forecast. 4Q 2018 Total Space= MSF Lease Rate = $8.05NNN YOY Change = +3.9% Under Construction = 4.6 MSF 2018 Completions = 5.75 MSF

19 Retail Market Healthy Despite Major Company Closures Vacancy Rate 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Millions of Square Feet (MSF) 4Q 2018 Total Space= MSF Lease Rate = $19.12 NNN YOY Change = +5.2% Under Construction = 1.0 MSF Direct Vacancy Rate Sublet Vacancy Rate Completed Sq. Ft. Source: CoStar Group, Inc. 2019f=DRP Forecast Completions = 1.6 MSF

20 2018 Record Year for Sq. Ft. Completed 7.0 Office Industrial Retail 6.0 Millions of Square Feet f Source: CoStar Group, Inc. 2019f=DRP Forecast.

21 Questions? Development Research Partners West Belleview Avenue, Suite 100 Littleton, Colorado (303) Patricia Silverstein, President

MAINTAINING MOMENTUM:

MAINTAINING MOMENTUM: 2018 National Economic Update September 12, 2018 noun mo men tum \ mō-ˈmen-təm, mə- \ 1 b : the strength or force that allows something to continue or to grow stronger or faster as