Transitions: 2019 Economic Forecast for Metro Denver February 6, 2019 Prepared by: Can Stock Photo / jkirsh In Partnership with:
Consumer Changes and Influences Slowing population growth Aging of the population Tax Cuts & Jobs Act Housing affordability Can Stock Photo / lemony
Metro Denver Annual Change in Population 75,000 65,000 2019 Population = 3.24 Million Net Migration Natural Increase 55,000 45,000 35,000 25,000 15,000 5,000-5,000 2000 2005 2010 2015 2020 2025 2030 Source: Colorado Division of Local Government, State Demography Office.
Metro Denver Aging Changes Housing, Spending Needs and Patterns 60,000 2010 Population = 2.8 Million 2020 Population = 3.3 Million, +17% 50,000 40,000 +61% 30,000 20,000 2010 2020 +14% 10,000 0 0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96 100 Source: Colorado Division of Local Government, State Demography Office.
Population Growth Slows, Still Rapid Increase in 65+ 70,000 2020 Population = 3.3 Million 2030 Population = 3.7 Million, +14% 60,000 50,000 2020 2030 +43% 40,000 30,000 +14% 20,000 10,000 0 0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96 100 Source: Colorado Division of Local Government, State Demography Office.
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 160 140 120 100 80 60 40 20 0 15% 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.
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.
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.
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% 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 $700 Source: Denver Metro Apartment Vacancy & Rent Survey. 2019f=DRP Forecast.
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 5,000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e 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.
Business Changes and Influences Low unemployment and rising wages Lower oil prices Technology changing everything Active construction market Can Stock Photo / stuartmiles
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 2018 +1.6 M in 2019 Colorado Employment = 2.7 million +68,000 in 2018 +50,000 in 2019 Metro Denver Employment = 1.7 million +43,000 in 2018 +31,000 in 2019 U.S. Colorado Metro Denver Source: U.S. Bureau of Labor Statistics, Current Employment Statistics. 2018e=DRP Estimate; 2019f=DRP Forecast.
Labor Force Continues to Expand, Unemployment Rises 74% 72% 70% 68% 66% 64% 62% 60% 58% 56% Labor Force Participation Rates (seasonally adjusted) 2000 2001 2002 2003 2004 2005 2007 2008 2009 2010 2011 2012 2014 2015 2016 2017 2018 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2000 2002 Unemployment Rates 2004 2006 2008 2010 2012 2014 2016 2018 U.S. Colorado U.S. Colorado Metro Denver Source: U.S. Bureau of Labor Statistics, Local Area Unemployment Statistics. 2019f=DRP Forecast.
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.
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.
Proprietors Are Another Significant Component Of Employment 1,000,000 950,000 900,000 850,000 800,000 750,000 700,000 Proprietors Employment 25.6% of Colorado s Total Employment (US avg = 22.6%) 689,184 769,255 797,046 820,325 848,671 901,450 958,940 650,000 600,000 550,000 594,535 633,235 500,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: U.S. Bureau of Economic Analysis.
Office Market Still Healthy, but Showing Signs of Change Vacancy Rate 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 9 8 7 6 5 4 3 2 1 0 Millions of Square Feet (MSF) 4Q 2018 Total Space= 191.5 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. 2018 Completions = 3.8 MSF
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. 7 6 5 4 3 2 1 0 Millions of Square Feet (MSF) Source: CoStar Group, Inc. 2019f=DRP Forecast. 4Q 2018 Total Space= 220.4 MSF Lease Rate = $8.05NNN YOY Change = +3.9% Under Construction = 4.6 MSF 2018 Completions = 5.75 MSF
Retail Market Healthy Despite Major Company Closures Vacancy Rate 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 6 5 4 3 2 1 0 Millions of Square Feet (MSF) 4Q 2018 Total Space= 169.3 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. 2018 Completions = 1.6 MSF
2018 Record Year for Sq. Ft. Completed 7.0 Office Industrial Retail 6.0 Millions of Square Feet 5.0 4.0 3.0 2.0 1.0 0.0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019f Source: CoStar Group, Inc. 2019f=DRP Forecast.
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