Policy Watch. National and International. Local

Transcription

1 February2015

2 The Monthly Economic Indicators is a comprehensive analysis of economic conditions in the seven-county Metro Denver area, or the region comprised of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson Counties. There are two metropolitan statistical areas (MSAs) located within the Metro Denver region: the Boulder MSA (Boulder County) and the Denver-Aurora-Lakewood MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties). This report presents recent data and long-term trends for the seven-county region, MSAs, or counties, depending on availability. The analysis includes four sections: labor force and employment, the consumer sector, residential real estate, and commercial real estate. Notable Rankings According to Brookings Mountain West quarterly Mountain Monitor report, Metro Denver s economic output grew faster than any other city in the country during the third quarter of The report stated that Metro Denver s output was 1.5 percent higher in the third quarter 2014 than the second quarter. Further, employment in Metro Denver rose 0.7 percent over-the-quarter and housing prices rose 2.3 percent over-the-quarter. The Milken Institute s 2014 Best-Performing Cities Index was released, including two Colorado metropolitan areas among the top 20. The Denver-Aurora-Broomfield MSA ranked 12th, up three spots from last year, and the Boulder MSA ranked 13th, down four spots from last year. The index considered nine separate components including job growth and earnings. The Denver-Aurora-Broomfield MSA ranked 10th for the number of highly concentrated hightech industries and 16th for one-year wages and salaries growth. The Boulder MSA ranked first for the number of highly concentrated high-tech industries and 23rd for one-year wages and salaries growth. Forbes released a list of America s fastest growing cities in 2015, ranking the Denver-Aurora-Broomfield MSA sixth. The ranking was based on six criteria including year-over-year job growth, population growth, gross metropolitan product, and unemployment rates. The Denver-Aurora-Broomfield MSA was noted for a 4 percent unemployment rate, job growth rate of 2.66 percent, and a median pay of $64,300. Texas cities Houston, Austin, and Dallas claimed the top three spots. Popular Mechanics released a report on the 14 best startup cities in America, ranking Boulder seventh. The report stated that Boulder was the location of the U.S. government s nuclear-weapons development program in 1952, which led to the demand for University of Colorado Boulder physicists and engineers to fill Department of Defense and NASA contracts. The program also led to the location of Ball Aerospace. Boulder has been a haven for innovation since that time, with the city boasting six times the national average of high-tech startups in WalletHub ranked the best metropolitan areas for STEM professionals in 2015, and the Denver-Aurora-Lakewood MSA ranked fourth. The study considered job openings per capita for STEM graduates, annual median wage growth for STEM jobs, and the projected number of STEM jobs needed in The study reported that the Denver-Aurora- Lakewood MSA ranked fourth for the projected number of STEM jobs needed in 2018, sixth for the percent of all workers in STEM jobs, and seventh for openings per capita for STEM graduates. NerdWallet released a report of the 20 best cities for job seekers in 2015, and ranked Denver fifth. The ranking considered criteria including job availability, workforce growth, and affordability. The company said Denver scored better than the national average on all three metrics, with residents making about $45,242 annually and recording the third highest wage of the top ten cities. The top four cities included Lincoln, Neb., Fort Worth, Texas, Columbus, Ohio, and Minneapolis, Minn. Forbes released their annual ranking of the most promising companies in the country, and Craftsy ranked 30th. The Denver-based company, which offers popular video instruction services, reported $43 million in revenue and 221 employees. All companies on the top 100 list were privately held and generated under $300 million annually. Nielsen released their latest Local Watch report and stated that Denver tied with Boston as the top market in the country for people using digital devices to stay current with local news and information. The company defines this category of people as people who use digital apps and social media to get local news and says they account for 15 Metro Denver Economic Development Corporation February 3, 2015 Page 1

3 percent of adults over 18 locally. The report also said that Denver is fifth among the U.S. top TV markets when it comes to subscription video on demand (Netflix and Amazon). Thrillist released a list of the 15 most beautiful music venues in the world, rating Red Rocks Amphitheatre among them. The company noted that Red Rocks Amphitheatre is a naturally formed, acoustically perfect amphitheater that sits 6,500 feet above sea level, and provides unrivaled views. Also on the list were the Sydney Opera House, Ryman Auditorium, Gorge Amphitheater, and the Great American Music Hall. According to the National Endowment of the Arts, Colorado was ranked first for trips to theaters, concert halls, and museums. The report stated that in Colorado, more than 63 percent of survey respondents went to performance events as kids and 46 percent took lessons in violin, ballet, or another art form. Further, nearly 52 percent of adults in the state reported attending a live performing arts events, which was above the national average of 37.4 percent. AAA honored the Four Season Hotel Denver with a 2015 five-diamond award. The award is the auto club s highest ranking and is given to the country s highest-rated hotels and restaurants. This year the club awarded its highest rating to 121 hotels and 63 restaurants, representing just 0.3 percent of the 58,000 rated hotels. AAA inspectors noted that the Four Seasons has a sleek, modern décor and rooms with the ultimate in luxury bedding. SolarPowerRocks.com released the 2015 State Report Card and ranked Colorado as the sixth best state in the nation for solar power. Colorado received a score of 3.85 out of 5 and the company noted that Colorado was the first state to pass a Renewable Energy Portfolio Standard, for which it was awarded an A grade, but it received an F grade for not providing solar tax credits. According to NerdWallet, the Denver-Aurora-Broomfield MSA is the fifth healthiest place in the country. The ranking considered criteria such as the percentage of residents who are a healthy weight, the American Fitness Index, and the percentage of residents with health insurance. Data for the Denver-Aurora-Broomfield MSA revealed that 85.9 percent of people have health insurance, there are physicians and surgeons per 100,000 residents, and 83.8 percent of people reported engaging in physical activity. The healthiest place in the country was Boston, Mass. Allied Van Lines released the Magnet States Report and found that Colorado is the number five state for having inmigration. According to the report, the state attracts more people to move here than it has moving out. The report was based on people who use the company s moving service. The company found that 2,011 people left the state while 2,485 moved in during Apartment List released a list of the 13 best communities for raising a family in Colorado. Metro Denver communities secured seven of the rankings including Castle Rock (1st), Longmont (3rd), Thornton (5th), Boulder (7th), Aurora (10th), Westminster (11th), and Denver (13th). The ranking considered each community s safety, housing costs, school quality, and child friendliness. Castle Rock was noted as having nearly one-third of the population under 18, with nearly all of them graduating from high school, and a high household income. Policy Watch National and International Local The European Central Bank (ECB) announced plans for quantitative easing, with a sovereign bond purchasing program. The ECB expects to purchase around 60 billion euros per month through the end of 2016, putting the total at over 1 trillion euros. Around one-quarter of the bonds will likely be focused on German bonds, rather than the debt of the countries in crisis at which the program is aimed. Governor Hickenlooper unveiled a $3 million program designed to get long-term unemployed workers into jobs. The program will provide comprehensive assistance to individuals who have been unemployed for more than 26 weeks and will offer companies tax breaks to hire long-term unemployed workers and provide workers pay for internships, training, and career coaching. Metro Denver Economic Development Corporation February 3, 2015 Page 2

4 As part of President Obama s National Network for Manufacturing Innovation, the Institute for Advanced Composites Manufacturing Innovation was formed. The program, designed to pursue research and the use of advanced composite materials, includes 122 companies, nonprofits, and universities across the country. Colorado universities will receive up to $14 million in federal funding over five years as part of this group. U.S. Representative Ed Perlmutter from Golden said the program is expected to accelerate the innovation of clean energy technologies, while influencing manufacturing competitiveness, job creation, and energy efficiency in the U.S. and supporting the regional manufacturing economy in Colorado. National Economic Overview The U.S. Bureau of Economic Analysis (BEA) released the advanced estimate of real gross domestic product (GDP) for the fourth quarter of The estimate showed that GDP increased at an annual rate of 2.6 percent through the fourth quarter, down from the third quarter estimate of 5 percent. The advanced estimate represents incomplete source data that is subject to further revision in the coming months. The positive fourth quarter GDP growth is attributed to increases in personal consumption expenditures, state and local government spending, and residential fixed investment. The second estimate of fourth quarter 2014 GDP will be released February 27. The January conference of the Federal Open Market Committee (FOMC) reported that economic activity continued to expand at a solid pace. The release stated that the underutilization of the labor force is diminishing, household spending is rising, and business fixed investment is advancing. The Committee reported that the inflation rate is expected to rise gradually toward 2 percent as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate. Further, if inflation rises faster than expected, increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated. The next committee meeting will be held on March 18. Economic Indexes & Notable Data Releases National & International The U.S. trade deficit fell to $39 billion in November, down from the October deficit of $42.2 billion (revised). Imports decreased to $235.4 billion, falling $5.2 billion between October and November, and exports fell $2 billion to $196.4 billion. The goods and services deficit increased 5.1 percent (+ $22.3 billion) year-to-date compared with the same period the year before. Exports increased 2.9 percent and imports increased 3.3 percent during the same period. Capital goods exports decreased $2.3 billion, while services exports decreased $0.1 billion. Imports of industrial supplies and materials decreased $4.6 billion, while services imports decreased less than $0.1 billion. The Conference Board Leading Economic Index for the U.S. increased through December to 121.1, rising 0.5 percent between November and December. Economists at the Conference Board reported that the growth was driven by the majority of the indexes components and that this level of growth suggests that the short-term outlook is improving. However, the slow growth in residential construction and average weekly hours in manufacturing is still a concern. The Institute for Supply Management s Purchasing Managers Index fell 3.2 percentage points to 55.5 percent in December, compared with the November level of 58.7 percent. The December index level marked the 19th consecutive month of expansion, as measured by a value greater than 50. Of the 18 manufacturing industries tracked in the index, 11 industries reported growth. The Supplier Deliveries Index increased 2.5 percentage points over-the-month to 59.3 percent, while the Employment index recorded a 1.9 percentage points increase during the same period. The New Orders index reported the largest over-the-month decline, falling 8.7 percentage points to 57.3 percent. Survey respondents stated that the unreached labor agreements between the International Longshoremen and Warehouse Union and the Pacific Maritime Association have strongly affected their deliveries from overseas. The Institute for Supply Management s Non-Manufacturing Index decreased 3.1 percentage points in December to 56.2 percent, compared with the November level of 59.3 percent. The December index marked the 59th consecutive month of growth, as measured by a value over 50. The index tracks 18 non-manufacturing industries and 12 industries reported growth between November and December. Ten of the non-manufacturing composite indices reported over- Metro Denver Economic Development Corporation February 3, 2015 Page 3

5 Local the-month decreases, with the Business Activity and Production Index (-7.2 percent) recording the largest decrease. The Backlog of Orders and Inventories Indices also reported significant declines over-the-month, falling 6 percent and 5.5 percent, respectively. The Leeds Business Confidence Index reported a positive outlook for the first quarter of The index value of 60.8 for the first quarter of 2015 was 1.3 points above the previous quarter. Overall expectations for the state economy rose from 63.9 in the fourth quarter to 66.2 in the first quarter. According to the report, the index is on more stable footing than at any time in the 11-year history of the index. Further, the Colorado economy reported the greatest optimism, the national economy reported the largest increase in optimism, and hiring expectations declined to the least bullish component of the index. PricewaterhouseCoopers and the National Venture Capital Association released the latest MoneyTree report and stated that 2014 was the biggest year for venture capital since Venture capitalists invested $48.3 billion in 4,356 deals in 2014, a 61 percent increase in dollars and a 4 percent increase in the number of deals compared with According to the report, this was the first year in the report s history where two deals exceeded $1 billion each. Internet-specific companies raised $11.9 billion, representing 25 percent of total venture capital money, while software companies raised $19.8 billion, representing 41 percent of total venture capital money. The fourth quarter was the best quarter Colorado has had in venture capital funding since the fourth quarter of Colorado received 86 venture capital deals valued at $793 million, an increase of 71 percent from the prior year. Following the national trend, software investment led Colorado s funding. Requiring oil and natural gas wells to be 2,000 feet from buildings would generate a loss of 49,000 jobs between 2015 and 2040 in Colorado. The University of Colorado Boulder Leeds School of Business released a study in partnership with the Common Sense Policy Roundtable and found that the 2,000-foot requirement would cause the state s gross domestic product (GDP) to decline by as much as $6.4 billion annually. Further, personal income would fall as much as $4.4 billion annually. The study assumed that the 2,000-foot requirement would lead to a 50 percent reduction in oil and gas production. The Colorado Department of Education reported that the percentage of Colorado high school students who graduated on time rose to 77.3 percent in 2014, an increase of nearly 5 percentage points since The high school completion rate was 79.5 in 2014, which includes all students who received a diploma rather than just those who finished in four years. The dropout rate fell 0.1 percentage points between 2013 and 2014 to 2.4 percent, a decline of 118 student dropouts. The Colorado Division of Property Taxation announced residential and business property values rose quickly over the past two years. The assessed residential property values rose 14.3 percent statewide between June 2012 and During the same period, assessed commercial property values rose 9.4 percent, farmland values rose 11.1 percent, and industrial property values rose 5.5 percent. The data suggests that the fast gains in home values are bringing the state closer to the point of having to lower the residential property assessment rate. Oil and gas property represents about one-tenth of overall assessed property tax base and declined 4 percent between June 2012 and The Colorado Center on Law and Policy released their annual State of Working Colorado report, which states the number of mid-wage jobs has declined by 25,500 jobs since The report stated that while there has been employment growth in both low-wage and high-wage jobs, the mid-wage jobs are still struggling to grow. The company further stated that Colorado has 150,000 jobs that need to be created to keep up with the state s population growth. The National Western Stock Show reported total attendance levels of over 682,500 people, the second highest attendance level since the show expanded to the 16-day run in Attendance was 45,500 people higher than the 2014 level and 54,200 people above the 2013 level. The event recorded a new single-day record attendance level of 68,757 people and a high opening-day level of 47,200 people. The year s events, in combination with the $754,750 raised at the Junior Livestock Auction, raised enough money to fund 80 scholarships for students in Colorado and Wyoming studying agriculture and rural medicine. Metro Denver Economic Development Corporation February 3, 2015 Page 4

6 Labor Force and Employment Metro Denver Industry Cluster Headlines The 2014 industry cluster reports for Metro Denver are now available on the Metro Denver EDC website. Aviation Frontier Airlines announced plans to outsource 1,160 jobs from Denver International Airport. The outsourced jobs include operations and reservations workers in Denver. The company stated that the move to outsource is necessary for Frontier Airlines to remain competitive in the marketplace. United Airlines recalled 40 furloughed workers at Denver International Airport. The employees will help meet the operational needs for the spring and summer months. Bioscience Medtronic Inc., a medical-device maker, acquired Covidien for $49.9 billion. The sale will create the largest medical device company in the world and both companies have a large presence in Colorado, making the state the third-largest base of employees for the combined company. Medtronic announced it would cut $850 million in expenses from the combined company by the end of Cleantech Gevo Inc., a Douglas County-based biofuels company, will reduce employment levels at their headquarters by 41 percent. The staff levels will fall from 56 people to 33 people. The company stated that the staff reduction is part of their ongoing expense management strategy. Healthcare and Wellness Catholic Health Initiatives began the process of laying off 1,500 employees nationwide. It is unclear how many of the layoffs will occur in the Metro Denver area. The company said that the reduced workforce is partly in response to less people seeking care through its hospitals. IT-Software Denver-based virtual computer technologies producer Dizzion raised $3.9 million in venture capital. The funding will help the company double its staffing levels over the next few months. The company creates virtual computer desktop services for medium-sized and large businesses and maintains desktop software. SK Hynix memory solutions (SKHMS), a provider of NAND flash solutions, opened a new engineering center in Longmont. The center currently has 12 employees and continues to staff the site with leading engineering experts in storage and firmware design. Other headlines The Sears retail store and Sears Auto Center in Cherry Creek announced plans to shut down in late March. The company stated that 66 employees will be laid off, but they will be able to apply for work at other Sears or Kmart stores in the area. There will be 133,493 square feet of vacant retail space and 18,769 square feet of vacant space from the auto shop. Redevelopment plans are under discussion. Employment in Metro Denver rose 3.2 percent between December 2013 and 2014, or an additional 48,100 jobs during the period. The employment growth consisted of a 3.3 percent increase in the Denver-Aurora MSA, or an additional 43,600 jobs, and a 2.5 percent increase in the Boulder MSA, representing 4,500 jobs. The natural resources and construction supersector reported the largest percentage increase over-the-year in employment, rising 8.3 percent and adding 7,100 jobs. The education and health services supersector also reported a significant increase in employment, rising 5.8 percent Metro Denver Economic Development Corporation February 3, 2015 Page 5

7 over-the-year, and added the most jobs during the period (10,700 jobs). The leisure and hospitality supersector added 7,400 jobs and increased employment by 4.6 percent during the same period. The information supersector (-1.5 percent) and the transportation, warehousing, and utilities supersector (-0.2 percent) were the only supersectors to report employment declines over-the-year. Colorado employment rose 2.6 percent in December compared with the previous year s level, adding 62,900 new jobs over the same period. National employment levels increased 2.2 percent over-the-year, with the addition of nearly 3 million jobs. Nonfarm Wage & Salary Employment (000s, not seasonally adjusted) Month of Month of Month of Year-to- Date Average Year-to- Date Average Year-to- Date Average Annual Growth Rate Annual Growth Rate Dec-14 Nov-14 Dec % Change Total 11-County Metro Denver* 1, , , , , % -4.3% 0.8% Denver-Aurora MSA 1, , , , , % -4.3% 0.8% Boulder-Longmont MSA % -4.7% 0.9% Natural Resources & Construction % -16.3% -0.7% Manufacturing % -10.2% -0.4% Wholesale & Retail Trade % -5.7% -0.1% Transp., Warehousing & Utilities % -6.2% 0.5% Information % -4.5% -5.4% Financial Activities % -4.4% -0.1% Professional & Business Services % -6.2% 3.5% Education & Health Services % 3.0% 3.2% Leisure & Hospitality % -3.4% 2.6% Other Services % -1.8% 1.7% Government % 1.5% -0.2% Federal Gov't % 0.6% -1.6% State Gov't % 4.0% 0.4% Local Gov't % 0.8% 0.0% Colorado 2, , , , , % -4.5% 1.2% United States 141, , , , , % -4.3% 1.1% *Includes the Denver-Aurora-Broomfield MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties) and the Boulder-Longmont MSA (Boulder County). Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary Employment Outlook The Manpower Employment Outlook Survey expects first quarter hiring in the Denver-Aurora-Broomfield MSA to slow slightly compared with the previous quarter. The percentage of companies hiring decreased 1 percentage point between the fourth and first quarter, with 20 percent of companies expanding their employment levels. The percentage of companies planning to decrease employment levels declined 2 percentage points from the fourth quarter. The majority of companies intend to maintain staff levels through the first quarter of the year, with the level rising 2 percentage points over-the-quarter to 72 percent. The survey reported that sectors with the best job outlooks were construction, transportation, and wholesale and retail trade, while manufacturing planned to reduce staffing levels. Metro Denver Economic Development Corporation February 3, 2015 Page 6

8 Employment Outlook Survey Quarter 1 Quarter 4 Quarter 1 YTD YTD Ann Avg Denver-Aurora-Broomfield MSA Percent of Companies Hiring 20% 21% 18% 20% 18% 13% Percent of Companies Laying Off 6% 8% 3% 6% 3% 10% Percent of Companies No Change 72% 70% 78% 72% 78% 73% Percent of Companies Unsure 2% 1% 1% 2% 1% 5% United States Percent of Companies Hiring 19% 19% 17% 19% 17% 15% Percent of Companies Laying Off 6% 7% 7% 6% 7% 10% Percent of Companies No Change 73% 72% 73% 73% 73% 72% Percent of Companies Unsure 2% 2% 3% 2% 3% 3% Source: Manpower Inc. Hiring expectations in the U.S. were unchanged through the first quarter of 2015 compared with the prior quarter. The percentage of employers planning to increase employment levels remained at 19 percent for the first quarter. Companies planning to decrease employment levels decreased 1 percentage point from the prior quarter and was 1 percentage point lower than the previous year. The percentage of companies planning to maintain staffing levels (73 percent) was unchanged from the prior year but up by 1 percentage point compared with the last quarter. The survey analysts stated as overall demand improves, they expect to see consistent, gradual strengthening in U.S. hiring expectations. Unemployment The unemployment rate throughout the Metro Denver area was unchanged through December, remaining at 3.8 percent compared with the prior month. However, the Metro Denver unemployment rate was 1.8 percentage points below the December 2013 level of 5.6 percent. Adams County recorded the largest decline in unemployment over-the-year, falling 2 percentage points to 4.5 percent. Boulder County reported the lowest unemployment rate of the seven county region at 3 percent, followed by Douglas County, which fell 1.5 percentage points over-the-year to 3.2 percent. Four of the seven counties recorded annual unemployment rates below 5 percent during Colorado s unemployment rate fell 1.9 percentage points over-the-year to 4 percent during the month of December. The national unemployment rate in December was 0.1 percentage points below the prior month s level and was 1.1 percentage points below the previous year. Labor Force Statistics (000s, not seasonally adjusted civilian labor force) December YTD Avg 2013 YTD Avg Labor Unemployment Labor Unemploy- Labor Unemploy- Ann Avg Unemploy- Ann Avg Unemploy- Force Rate Force ment Rate Force ment Rate ment Rate ment Rate Metro Denver 1, % 1, % 1, % 8.2% 5.8% Adams County % % % 9.4% 6.5% Arapahoe County % % % 8.1% 5.7% Boulder County % % % 6.8% 4.9% Broomfield County % % % 7.7% 5.8% Denver County % % % 9.0% 6.6% Douglas County % % % 6.9% 4.7% Jefferson County % % % 7.9% 5.4% Colorado 2, % 2, % 2, % 8.1% 5.6% United States 155, % 155, % 155, % 9.3% 5.5% Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary Metro Denver Economic Development Corporation February 3, 2015 Page 7

9 December unemployment insurance claims decreased in Metro Denver, falling 11.4 percent between November and December. The December level was also 16.9 percent lower than the year-ago level. Claims throughout Colorado also decreased over-the-month, falling over 5 percent, and were 16.4 percent below the previous year s level. Weekly First-Time Unemployment Insurance Claims Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Dec-14 Nov-14 Dec % Change 2009 Metro Denver 1,679 1,896 2,021 1,415 1, % 2,541 Colorado 3,288 3,469 3,932 2,657 3, % 4,752 Note: Reference week data includes the 19th day of the month for all months except November and December, which include the 12th day of the month. Source: Colorado Department of Labor and Employment, Labor Market Information. Consumer Sector Sentiment & Spending The Consumer Confidence Index for the U.S. rose significantly in January, reporting a level of from the revised December level of 93.1, an increase of 10.5 percent over-the-month. The national index for January 2015 was 29.6 percent above the January 2014 level. Analysts at The Conference Board stated the Present Situation Index rose 12.7 percent to 112.6, while the Expectations Index rose 8.9 percent to 96.4 in January. They also reported that consumer confidence reached the highest level since August 2007 and that consumers had a significantly higher degree of optimism regarding the short-term outlook for the economy, labor market, and earnings. Colorado is included in the Mountain Region Index and the area reported significant growth in consumer confidence. The index rose to in January from the December revised level of 99.7, rising 15.4 percent over-the-month and 52.5 percent over-the-year. For the Mountain Region Index, the Present Situation Index rose to in January from in December, while the Expectations Index rose to from 97.2 in December. Consumer Confidence Index Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Jan-15(p) Dec-14 Jan % Change Mountain % United States % Source: The Conference Board. (p) = preliminary National retail sales at the end of 2014 were strong compared with the prior year, with total retail sales for 2014 rising 3.9 percent above the 2013 total. Retail sales reached $442 billion in December, an increase of 3.2 percent compared with December Motor vehicle sales rose 8.6 percent over-the-year, but declined 0.7 percent between November and December. The building materials sector reported an increase of 5.2 percent between December 2013 and 2014, but fell nearly 2 percent over-the-month. Gasoline sales fell 14.2 percent over-the-year and 6.5 percent over the month. Further, gasoline sales for 2014 were 3 percent below 2013 sales, which was likely due to the steady decline in the price of gasoline. Core retail sales, which excludes motor vehicle, building material, and gasoline sales, reported a 0.1 percent decrease between November and December. Metro Denver Economic Development Corporation February 3, 2015 Page 8

10 Total Retail Sales ($000s) Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth Annual Growth May-14 Apr-14 May % Change Total Metro Denver 8,537,363 8,039,236 8,405,140 40,783,912 39,438, % -11.6% 7.4% Adams County 1,940,488 1,736,123 1,832,460 8,914,329 8,358, % -17.4% 11.7% Arapahoe County 1,655,467 1,561,049 1,658,808 7,926,262 7,871, % -8.2% 2.6% Boulder County 735, , ,848 3,635,560 3,536, % -9.1% 2.1% Broomfield County 187, , , , , % -8.3% 49.4% Denver County 2,060,878 2,001,273 2,027,648 10,035,040 9,717, % -13.5% 8.1% Douglas County 673, , ,111 3,162,167 3,141, % -5.7% 16.9% Jefferson County 1,283,288 1,245,122 1,264,406 6,233,375 6,001, % -10.5% 3.8% Colorado 13,937,560 13,184,834 13,455,660 67,704,786 64,192, % -12.2% 7.8% Source: Colorado Department of Revenue. Metro Denver retail sales continued to improve through May. Metro Denver retail sales increased 1.6 percent over-theyear, with total retail sales reaching over $8.5 billion in May. Five of the seven Metro Denver counties reported over-theyear growth and all seven counties posted over-the-month increases. Douglas County reported the largest decline in retail sales between May 2013 and 2014, falling 7.2 percent to $674 million. Arapahoe County retail sales also fell 0.2 percent over-the-year. The largest increase in retail sales over-the-year was in the City and County of Broomfield, where sales rose 9.9 percent to $188 million. Adams County reported the greatest over-the-month increase in sales, rising 11.8 percent, while the City and County of Denver reported the smallest growth, increasing 3 percent. Retail sales in Colorado were 3.6 percent higher in May 2014 than May According to the U.S. Bureau of Labor Statistics, the U.S. Consumer Price Index (CPI) decreased 0.6 percent between November and December but recorded a 0.8 percent increase over-the-year. The core CPI which excludes food and energy costs increased 1.6 percent over-the-year but fell 0.2 percent over-the-month. The increase in the overall CPI between December 2013 and 2014 was attributed to a 3.3 percent increase in the food and beverage index, a 3 percent increase in the medical care index, and a 2.5 percent increase in the housing index. The over-the-month decrease in the overall CPI was mainly attributed to a 3.9 percent decline in the apparel index and 3.4 percent decrease in the transportation index. According to the AAA Daily Fuel Gauge Report, the national average fuel price for January decreased 9.8 percent from December to $2.05 per gallon. The January average fuel price was 37.4 percent lower than the prior year s level ($3.28 per gallon). Metro Denver reported a 14.4 percent decrease in the average fuel price between December and January. The average fuel price of $1.84 per gallon for January in Metro Denver was $0.22 lower than the national average. The area reported average fuel prices 41.7 percent lower in January 2015 than the previous year s level. Stock Market The nation s stock market indices continued to fall through January, with all four stock market indices reporting declines between December and January. The DJIA reported the largest decline over-the-month, falling 3.7 percent to 17,165. The S&P 500 and the NASDAQ also reported declines between December and January, falling 3.1 percent and 1.9 percent, respectively. The Bloomberg Colorado index reported the smallest decline, falling 1.1 percent over-the-month. The three national indices recorded negative returns for the start of the year. The Bloomberg Colorado index also reported negative returns as the stock prices of Colorado s oil and gas companies continue to fall. Metro Denver Economic Development Corporation February 3, 2015 Page 9

11 Stock Market Indexes Month of Month of Month of YTD Return YTD Return Ann Avg Return Ann Avg Return Jan-15 Dec-14 Jan Bloomberg Colorado % -1.5% 45.3% 16.9% S&P 500 1, , , % -3.6% 12.8% 3.0% NASDAQ 4, , , % -1.7% 16.9% 1.4% DJIA (Dow Jones) 17, , , % -5.3% 11.0% -0.6% Travel & Tourism Sources: Bloomberg.com; Yahoo! Finance. The average hotel occupancy rate in Metro Denver fell 6.7 percentage points to 58.3 percent occupancy in December compared with the November level. However, the December level was 3.9 percentage points higher than the previous year. The average room rate for December was $ per night, 9.1 percent lower than the November level, but 8.4 percent higher over-the-year. Metro Denver Hotel Statistics Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Dec-14 Nov-14 Dec % Change Percent of Hotel Rooms Occupied 58.3% 65.0% 54.4% 75.8% 70.8% 7.1% 59.0% 61.9% Average Hotel Room Rate $ $ $ $ $ % $ $84.42 Source: Rocky Mountain Lodging Report. Spokespeople for Denver International Airport (DIA) reported that nearly 4.03 million passengers passed through the airport in November, decreasing 12.7 percent from the 4.6 million passengers in October. The November 2014 level was 0.1 percent lower than the November 2013 level, recording 3,662 fewer passengers through the airport. Number of Airline Passengers Residential Real Estate Denver International Airport Passengers Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual Nov-14 Oct-14 Nov % Change ,029,659 4,616,603 4,033,321 49,075,222 48,040, % 50,167,485 42,275,913 Source: Denver International Airport, Traffic Statistics. The Sterling Ranch mixed-use community planned for Douglas County was given approval to begin construction on the development. The first phase of the community will have 660 single-family homes on 325 acres. The company expects to break ground on the first neighborhood, called Providence Village, in the spring. Providence Village will include 144 single-family homes, a school, church, recreation center, fiber-optic internet, and 85 acres of open space. Home Resales The National Association of Realtors (NAR) released the December analysis of U.S. existing-home sales, reporting that sales rose 2.4 percent between November and December to 5.04 million homes sold annually. The 2014 annual sales level was 4.93 million home sales, representing a 3.1 percent decline from the 2013 level of 5.09 million sales. The housing inventory fell through December with an 11.1 percent decrease over-the-month, representing a 4.4-month supply, and was 0.5 percent lower over-the-year. NAR economists said that the declining housing supply increased concerns over housing affordability in the coming months, with low housing selections and a potential for fast-paced price appreciation offsetting demand from buyers. Further, housing costs are rising faster than wages and have become a burden for potential buyers trying to save enough for a down payment. Metro Denver Economic Development Corporation February 3, 2015 Page 10

12 Existing home sales in Metro Denver increased between November and December, rising 2.9 percent to 3,869 total homes sold during the month of December. The December home sales were 3.1 percent higher compared with the previous year. Unsold homes on the market were 19.6 percent lower in December 2014 than November and 45.2 percent lower than the previous year s inventory level. The average sales price for single-family homes rose 4.5 percent between November and December to $380,848 and was 13.8 percent higher than the previous year s price. The average sales price of condominiums ($238,229) decreased 0.3 percent over-the-month but was 16.8 percent higher over-the-year. Previously-Owned Home Sales Activity Month of Month of Month of YTD Total YTD Total YTD Total Ann Total Ann Total Dec-14 Nov-14 Dec % Change Home Sales (Closed) 3,869 3,759 3,751 53,719 53, % 42,070 53,482 Unsold Homes on Market 4,355 5,420 7,941 4,355 7, % 16,456 20,301 Average Sales Price-Single Family $380,848 $364,407 $334,683 $363,604 $335, % $264,803 $289,971 Average Sales Price-Condo $238,229 $239,035 $204,044 $224,997 $198, % $159,628 $181,054 Median Sales Price-Single Family $320,000 $313,000 $273,000 $219,000 $236,240 Median Sales Price-Condo $188,500 $190,000 $159,000 $135,000 $157,000 Note: Data consists of the 11 counties in the Denver-Aurora and Boulder MSAs. Source: Denver Metro Association of Realtors. Home Prices NAR data shows the December median existing-home sales price across the U.S. was $209,500, an over-the-year increase of 6 percent. Median housing prices continued to increase over-the-year across the nation s four regions through December. The South reported the largest increase between December 2013 and 2014, rising 6.6 percent to a median home price of $184,100. The West reported the highest median home price ($299,600), which was 5.6 percent above the previous year s level. The Midwest ($159,100) and the Northeast ($246,600) also reported significant increases in the median home price, rising 5.3 percent and 3.2 percent, respectively. Median Sales Price of Existing Single-Family Homes ($000s) Quarter 3 Quarter 2 Quarter 3 YTD Avg YTD Avg YTD Avg Median Median 2014 (p) 2014 (r) % Change Boulder MSA $439.9 $448.8 $410.9 $435.8 $ % $345.5 $325.3 Denver-Aurora MSA $315.5 $316.3 $286.9 $306.7 $ % $219.9 $239.1 United States $217.3 $212.0 $207.1 $206.8 $ % $172.1 $195.2 Source: National Association of REALTORS. (p) =preliminary (r) =revised A separate NAR report revealed that growth in median home prices throughout the Metro Denver area slowed during the third quarter of the year. The Boulder MSA reported a 2 percent decrease ($439,900) in home prices between the second quarter of 2014 and the third quarter of However, Boulder home prices were 7.1 percent higher than the third quarter of The Denver-Aurora MSA reported a slight decline in home prices, reporting a 0.3 percent decrease in prices over-the-quarter to $315,500. Between the third quarter of 2013 and 2014, the Denver-Aurora MSA recorded a 10 percent increase in the median sales price. The national median sales price rose 2.5 percent over-the-quarter to $217,300 and was nearly 5 percent higher than the previous year s level. Of the 175 MSAs included in the third quarter 2014 report, the Boulder MSA reported the eighth highest median price and the Denver-Aurora MSA median price was 19th highest. Metro Denver Economic Development Corporation February 3, 2015 Page 11

13 According to the S&P/Case-Shiller home price index, Denver housing prices were unchanged through November compared with October. The Denver index was in November, an absolute decrease of 0.01 points. Of the 20 cities tracked by the index, 10 reported over-the-month increases and 10 recorded declines. However, 19 cities continued to record overthe-year increases while Cleveland reported the only decline over-the-year. Denver s home prices in November 2014 were 7.5 percent higher than the prior year s level. San Francisco (+8.9 percent) recorded the largest over-the-year increase, while Minneapolis (+1.5 percent) reported the smallest increase. The national home price index rose 4.7 percent between November 2013 and Analysts with the company stated that low inventory levels and stiff mortgage qualification standards remain the largest difficulties to the housing recovery. Foreclosures Housing foreclosures throughout the Metro Denver area declined in five of the seven counties between December 2013 and Metro Denver recorded a 7.9 percent decrease in foreclosures in December compared with the previous year, but the total was 25.1 percent higher than the previous month. Arapahoe (+18.3 percent) and Jefferson (+19.2 percent) Counties reported increases in foreclosures over-the-year. The City and County of Broomfield reported the largest decline in foreclosures over-the-year, falling 83.3 percent, but this represented a decline from six foreclosures to one. Boulder County also reported significant declines in foreclosures through December, falling 31.8 percent over-the-year to 15 total foreclosures. Real Estate Foreclosures Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total Dec-14 Nov-14 Dec % Change Total Metro Denver* ,342 7, % 26,509 12,311 Adams County ,210 1, % 5,646 2,499 Arapahoe County ,314 1, % 6,233 3,125 Boulder County % 1, Broomfield County % Denver County ,087 1, % 6,141 3,351 Douglas County % 2, Jefferson County , % 4,027 1,880 *The total number of election and demand setups (initial filings) received by county public trustees. Filings may be subsequently cured or withdrawn. Sources: Colorado Division of Housing and county public trustees. RealtyTrac released the 2014 foreclosure report, stating the U.S. foreclosure rate decreased 18 percent between 2013 and The total filings for 2014 (1.12 million) was 61 percent below the peak level of 2.87 million properties in The 2014 total foreclosure level was the lowest annual total since 2006, when there were 717,500 foreclosure filings. Vice president of RealtyTrac Daren Blomquist stated that the 2014 foreclosure level represents a market that is close to finding a floor and stabilizing at a historically normal level. He also stated that a recent increase in foreclosure starts and scheduled auctions the last few months of 2014 is an indication that lenders are planning to clean their records of deferred distress in the beginning of Metro Denver Economic Development Corporation February 3, 2015 Page 12

14 New Homes The Census Bureau report on new home sales after adjustment for seasonal trends stated that national home sales increased in December to 481,000 annual sales from the revised November level of 431,000 annual sales. The December home sales level was 11.6 percent higher than November and was 8.8 percent above the previous year s level. Only one of the four national regions reported decreases between November and December. With 54,000 total sales, the Midwest reported an over-the-month decrease of 11.5 percent. The Northeast reported the largest increase, rising 53.6 percent over-the-month to 43,000 total sales. The South and the West recorded growth during the same period, rising 17.7 percent and 3.1 percent, respectively. The Northeast and the West reported increases in home sales between December 2013 and 2014, rising 72 percent and 23.6 percent, respectively. The South recorded a 0.8 percent increase over-the-year to 253,000 sales, the highest number of sales across all four regions. The Midwest reported the only over-the-year decrease in sales, falling 10 percent. The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index fell 1 point to 57 in January, marking the third consecutive month the index hovered in the upper 50s. NAHB spokespersons reported that the higher confidence levels reflect the steady improvement in builder sentiment. They also said that the January level was in line with the 2015 forecast, with steady economic growth, rising consumer confidence, and a growing labor market supporting the housing market through The report stated that the decline is attributed to a 4 point decline in expectations for future sales and a 2 point decline in prospective buyers traffic, while the current sales conditions index remained unchanged. According to the Census Bureau, the seasonally adjusted annual number of nationwide residential building permits decreased in December (1.03 million permits), falling 1.9 percent from November, but was 1 percent higher than December The over-themonth decrease in permits is attributed to a 12.4 percent decline in multi-family units (338,000 permits) between November and December. Singlefamily attached permits also declined over-the-year, falling 3.6 percent compared with November. Singlefamily detached permits nationwide rose 4.5 percent between November and December and were 8.1 percent above the December 2013 level. The Northeast reported a decrease in permits over-themonth, falling 16.8 percent to 99,000 permits. The West reported the largest decline in permits overthe-month, falling 20.5 percent to 225,000 permits. The South (+9.6 percent) and the Midwest (+6.7 percent) reported increases in permits over-themonth and were the only regions to report an increase in permits over-the-year. Residential building permits for the Metro Denver area improved significantly through December compared with the prior year. Metro Denver reported a 47.6 percent increase in total permits issued between December 2013 and 2014, with 811 more permits issued. Single-family detached permits rose 65.1 percent over-the-year, while single-family attached permits rose 825 percent with 33 additional permits. Much of total permit growth was attributed to a significant increase in multifamily permits, rising 35.7 percent and reporting 400 additional permits in December 2014 compared with December Compared with November 2014, permits though December in Metro Denver rose 49.8 percent with 836 additional permits. The single-family attached market type reported an 85 percent increase in permits over-the-month, while the multi-family market type recorded a 78.4 percent increase. Metro Denver Economic Development Corporation February 3, 2015 Page 13

15 Residential Building Permits Month of Month of Month of YTD Total YTD Total YTD Total Total Total Dec-14 Nov-14 Dec % Change Single-Family Detached Units ,944 7, % 2,690 19,069 Single-Family Attached Units % Multi-Family Units 1, ,120 9,545 8, % 1,465 3,108 Total Units 2,516 1,680 1,705 18,866 16, % 4,288 22,551 Note: The source for this series changed with August 2014 data from The Homebuilder Association of Metro Denver to the U.S. Census Bureau; data cannot be compared with prior reports. Source: U.S. Census Bureau. Apartment Rental Market The Denver Metro Apartment Vacancy and Rent Survey for the fourth quarter of 2014 reported the first quarter of rising vacancy rates after three consecutive quarters of falling vacancy rates. The Metro Denver apartment vacancy rate rose 0.8 percentage points to 4.7 percent from the third quarter level. However, the vacancy rate was 0.5 percentage points below the prior year. Increases in five of the six submarkets contributed to the over-the-quarter growth. The Boulder/Broomfield submarket reported the largest increase in vacancy between the third and the fourth quarters, rising 3.9 percentage points to 7.2 percent vacancy. This large increase is attributed to new units entering the rental market. The City and County of Denver also reported a significant increase in the vacancy rate, rising 1.1 percentage points to 4.6 percent. Arapahoe County (4.9 percent), Douglas County (4 percent), and Jefferson County (3.8 percent) reported vacancy rate increases overthe-quarter of less than one percent. Adams County (3.7 percent) reported the only decline in the vacancy rate during the same period, falling 0.2 percentage points. Apartment Statistics Quarter 4 Quarter 3 Quarter 4 YTD Average YTD Average YTD Average Annual Average Annual Average % Change Apartment Vacancy Rate 4.7% 3.9% 5.2% 4.6% 4.6% 8.1% 9.7% Average Monthly Rental Rate (all units) $1,169 $1,145 $1,042 $1,126 $1, % $877 $817 Source: Denver Metro Apartment Vacancy and Rent Survey. While vacancy rates increased during the fourth quarter, the average rental rate of apartments in Metro Denver proceeded to increase. The fourth quarter average rental rate in Metro Denver ($1,169) was 2 percent higher than the previous quarter s level. This rate was also 12.2 percent higher than the fourth quarter of 2013, marking the 19th consecutive quarter of over-the-year gains. All six submarkets continued to report average rental rates above $1,000 during the fourth quarter, with average rental rates ranging from $1,096 in Adams County to $1,384 in Douglas County. Adams County (+15.5 percent), Jefferson County (+12.9 percent), and Arapahoe County (+12.5 percent) reported the largest increases in rental rates between the fourth quarters of 2013 and Commercial Real Estate Rush Enterprises, one of the nation s largest medium- and heavy-duty truck sales companies in the country, purchased a 15-acre site to build the company s second largest dealership. The 125,400-square-foot truck sales and services center will be located at 6955 East 50th Avenue in Commerce City. The $18 million facility will be built by W.E. O Neil Construction and will be a Peterbilt Ford Truck sales and leasing center consisting of three buildings: an 83,000-squarefoot service center, a 24,000-square-foot body shop, and a 17,500-square-foot sales building. Red Rocks Community College will build a central location for the health care professions. The $22.5 million expansion includes constructing the new 50,000-square-foot Arvada Health Professions and Science Building and renovating an existing one. The expansion project is the largest in the school s history and allows all of the school s health professional programs to be in one location. Metro Denver Economic Development Corporation February 3, 2015 Page 14

16 The TOD Group Inc. and Trailbreak Partners LLC announced plans to build a new mixed-use development along the light rail line that extends from Denver Union Station to Wheat Ridge. The 21-acre development called Clear Creek Transit Village is zoned for up to 1,125 residential units and 250,000 square feet of commercial space. The companies expect the ground breaking to take place in 2016, with the first phase focused on residential use. The Loft Brokers, a Denver-based real estate company, purchased the Melbourne International Hotel and Hostel in Arapahoe Square. The company plans to redevelop the property into a mixed-use building. The ground floor of the new structure will include offices and a wine bar and restaurant, while the second floor will have nine residential lofts. The company expects the completed project during the summer of Office Market The Newmark Grubb Knight Frank analysis of the Metro Denver office market stated that 2014 marked the fifth consecutive year of robust expansion in the market. During the fourth quarter, the office market absorbed 208,700 square feet of space, bringing the annual total to 1.5 million square feet. Further, the Central Business District and the Northwest submarkets recorded the strongest growth of the year, absorbing 453,300 square feet and 386,300 square feet, respectively. There were 11 office projects under construction during the fourth quarter, totaling 2 million square feet. CBRE Research released the fourth quarter analysis of the office market in Metro Denver, reporting that the market had significant growth. The report stated that vacancy rates continued to fall, average lease rates increased, and net absorption was positive. Further, investment sales were $445.1 million in the fourth quarter, with annual transaction sales reaching over $2 billion. The company expects that additional construction will begin in both the suburban and downtown submarkets in future quarters as demand for quality space outpaces current availability. The Metro Denver office market recorded declines in the vacancy rate and growth in the average lease rate through the fourth quarter of According to CoStar, the direct vacancy rate fell 0.5 percentage points to 10 percent vacancy. The 2014 direct vacancy rate was the lowest fourth quarter vacancy rate since the fourth quarter of 2001 when the vacancy rate was 9.8 percent. The average lease rate rose 3.7 percent during the fourth quarter compared with the previous year s level. The average lease rate gained $0.81 per square foot between the fourth quarters of 2013 and Office property construction continued through the fourth quarter and projects completed to date were significantly higher than prior years. There was 2.85 million square feet of space under construction during the fourth quarter of 2014, a 59.2 percent increase from the prior year. There was 1.16 million square feet of space completed as of December 2014, which was the highest level since the fourth quarter of The largest office projects completed in 2014 were the first two buildings of the Charles Schwab campus in Lone Tree, each spanning 187,500 square feet. Other notable completed construction in Denver for 2014 include a 147,400-square-foot mixed use building on Market Street between 15th and 16th streets, which has residential, office, and restaurant space; 123,000 square feet of coworking space at 3001 Brighten Boulevard called Industry ; and 112,600 square feet at One Union Station. Metro Denver Economic Development Corporation February 3, 2015 Page 15

17 Office Market Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 5,962 5,958 5,938 5,922 5,909 5,891 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 10.0% 10.5% 11.2% 12.1% 12.5% 12.9% Vacancy Rate (with sublet) 10.6% 11.0% 11.6% 12.4% 12.9% 13.6% Avg. Lease Rate (direct, per sq. foot, full service) $22.87 $22.74 $22.06 $20.89 $19.91 $19.92 New Construction Completed (year-to-date) 1.16 MSF, 0.98 MSF, 0.95 MSF, 0.87 MSF, 0.49 MSF, 1.14 MSF, Currently Under Construction Industrial & Flex Market 23 Bldgs 2.85 MSF, 25 Bldgs 18 Bldgs 1.81 MSF, 19 Bldgs 15 Bldgs 1.79 MSF, 23 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 8 Bldgs 0.90 MSF, 10 Bldgs 14 Bldgs 0.85 MSF, 7 Bldgs 13 Bldgs 0.45 MSF, 8 Bldgs According to Newmark Grubb Knight Frank, the Metro Denver industrial market recorded the 12th consecutive quarter of positive absorption during the fourth quarter. The report stated that Metro Denver has record low vacancy rates and construction costs continue to rise, leading to rising lease rates and speculative construction in the market. Further, the East submarket represented more than 70 percent of total market absorption, including the six largest building deliveries in The company believes that the area s success in pre-leasing and rising lease rates encourages speculative construction. The CBRE Research analysis of the Metro Denver industrial market stated that the market had steady growth through the end of The fourth quarter industrial market recorded rising lease rates, increasing construction, and positive absorption. The report stated the construction activity was prompted by food production and third party logistics industries. The company expects developers to take note of the favorable supply and demand imbalance in the market and pursue new buildings of 100,000 square feet or less. CoStar Realty data recorded growth in the industrial market during the fourth quarter of The fourth quarter direct vacancy rate was 0.9 percentage points lower than the fourth quarter of The average lease rate rose 20.3 percent between the fourth quarters of 2014 and 2013, adding $1.03 per square foot to the average lease rate. There was also a 5.7 percent increase over-the-quarter in the average lease rate. There was 2.6 million square feet of industrial space completed in 2014, the highest level since the fourth quarter of There were 23 completed buildings through the fourth quarter, with six of them over 250,000 square feet. There was also 1.35 million square feet of space under construction during the period. Some of the notable buildings completed in 2014 included two Enterprise Business Center buildings, the third building of the Mile High Business Center, and the ViaWest Denver Data Center Compark. Metro Denver Economic Development Corporation February 3, 2015 Page 16

18 Industrial Market Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 6,937 6,933 6,914 6,904 6,893 6,883 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 3.0% 3.4% 3.9% 5.1% 6.6% 5.9% Vacancy Rate (with sublet) 3.3% 3.6% 4.2% 5.6% 6.9% 6.5% Avg. Lease Rate (direct, per square foot, NNN) $6.10 $5.77 $5.07 $4.70 $4.57 $4.67 New Construction Completed (year-to-date) 2.60 MSF, 2.13 MSF, 0.93 MSF, 0.58 MSF, 0.32 MSF, 0.07 MSF, Currently Under Construction 23 Bldgs 1.35 MSF, 6 Bldgs 19 Bldgs 1.77 MSF, 8 Bldgs 5 Bldgs 2.01 MSF, 15 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 8 Bldgs 1.05 MSF, 7 Bldgs 5 Bldgs 0.05 MSF, 2 Bldgs 3 Bldgs 0.08 MSF, 1 Bldg The Metro Denver flex market reported slight improvements through the fourth quarter of the year. The direct vacancy rate for flex space fell 0.1 percentage points to 8.8 percent between the third and fourth quarters of 2014, the lowest fourth quarter rate since the data has been collected. The average lease rate rose 1.7 percent over-the-quarter to $9.81 per square foot. The fourth quarter lease rate was also 4.6 percent higher than the prior year s level and added $0.43 per square foot. The flex market reported 571,000 square feet of new space was completed through the end of the year and 320,000 square feet of space remains under construction. Flex Space Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 1,468 1,466 1,459 1,454 1,451 1,451 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 8.8% 8.9% 10.6% 12.6% 13.3% 14.0% Vacancy Rate (with sublet) 10.0% 10.3% 12.0% 14.1% 14.5% 15.3% Avg. Lease Rate (direct, per square foot, NNN) $9.81 $9.65 $9.38 $8.77 $8.78 $9.07 New Construction Completed (year-to-date) 0.57 MSF, 0.37 MSF, 0.10 MSF, 0.13 MSF, 0 MSF, 0.05 MSF, Currently Under Construction Retail Market 9 Bldgs 0.32 MSF, 3 Bldgs 6 Bldgs 0.53 MSF, 6 Bldgs 3 Bldgs 0.23 MSF, 5 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 3 Bldgs 0.08 MSF, 3 Bldgs 0 Bldgs 0 MSF, 1 Bldg 2 Bldgs 0 MSF, 0 Bldgs According to an analysis by CBRE Research, the Metro Denver retail market stabilized during the fourth quarter of The retail market recorded positive net absorption of 720 square feet and construction activity was high in the urban core and infill markets. The market had nearly 255,000 square feet of space under construction during the period, while investment sales were over $230.7 million. The company expects that Metro Denver will remain on an expansionary path through The retail market in Metro Denver reported mixed trends through the fourth quarter of The direct vacancy rate decreased 0.1 percentage points between the third and fourth quarter of 2014, and was 0.4 percentage points below the third quarter 2013 level. The fourth quarter direct vacancy rate was the lowest level since the beginning of the data series in the first quarter of The average lease rate for retail space decreased over-the-quarter, falling 0.4 percent, but was 0.5 percent higher over-the-year, adding $0.07 per square foot. Metro Denver Economic Development Corporation February 3, 2015 Page 17

19 Most of the retail spaces completed have been relatively small projects. Of the 51 buildings completed in 2014, 39 of them are smaller than 10,000 square feet, with an overall average size of 11,600 square feet. Adams and Arapahoe Counties recorded the largest amount of retail space completed during 2014, both reporting over 182,000 square feet of completed space. Boulder County reported the third highest completed retail space at nearly 73,000 square feet. The City and County of Denver, the City and County of Broomfield, Douglas, and Jefferson Counties reported less than 56,000 square feet of competed space each in Retail Market Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 11,513 11,505 11,461 11,378 11,323 11,285 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 5.6% 5.7% 6.0% 6.5% 6.9% 7.5% Vacancy Rate (with sublet) 5.7% 5.8% 6.3% 6.7% 7.2% 7.7% Avg. Lease Rate (direct, per square foot, NNN) $15.47 $15.53 $15.40 $14.79 $14.61 $14.89 New Construction Completed (year-to-date) 0.59 MSF, 0.36 MSF, 1.15 MSF, 0.59 MSF, 1.02 MSF, 0.41 MSF, Currently Under Construction 51 Bldgs 0.87 MSF, 37 Bldgs 43 Bldgs 0.19 MSF, 16 Bldgs 69 Bldgs 0.42 MSF, 29 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 46 Bldgs 0.85 MSF, 7 Bldgs 25 Bldgs 0.20 MSF, 14 Bldgs 22 Bldgs 0.57 MSF, 6 Bldgs Metro Denver Economic Development Corporation February 3, 2015 Page 18

20 Monthly/Quarterly Direction Annual Direction Positive Changes 9 of of 18 Nonfarm Employment +3, ,500 Growth Employment up 0.2% from Nov. to Dec. YTD employment up 2.8% through Dec. 20% 20% % Companies Hiring Companies expecting to add workers decreased YTD average up 2 percentage points (Denver Area) from 4Q 2014 to 1Q 2015 compared with 2014 Unemployment Rate 3.8% 4.9% Unemployment unchanged Nov. to Dec. Down from 2013 YTD average of 6.5% -11.4% -12.9% Initial Unemployment YTD average claims decreased through Insurance Claims Claims decreased from Nov. to Dec. Dec Total Retail Sales 6.2% 3.4% Metro sales increased from Apr. to May YTD sales up through May 2014 Mountain Region Consumer Confidence Index Index up 15.4% from Dec. to Jan. YTD average up 52.5% through Jan % 75.8% Hotel Occupancy Decreased 6.7 percentage points from Nov. to Dec. YTD occupancy up 5 percentage points from last year -12.7% 2.2% DIA Passengers YTD passengers increased through Nov. Passengers decreased from Oct. to Nov Bloomberg Colorado Index % Index down 1.1% from Dec. to Jan. YTD return through Jan Dow Jones Industrial 17, % Average Index down 3.7% from Dec. to Jan. YTD return through Jan Home Sales (closed) 3,869 53,719 Sales up 2.9% from Nov. to Dec. YTD sales up 0.1% through Dec Median Home Price $315,500 $306,700 (Denver-Aurora MSA) Down 0.3% from 2Q 2014 to 3Q 2014 YTD price 10.3% higher through 3Q 2014 Foreclosures 443 5,342 Up 25.1% from Nov. to Dec. Down 29% YTD through Dec Residential Building Permits 2,516 18,866 (Total) Permits increased 49.8% from Nov. to Dec. YTD permits up 15.7% through Dec % 4.6% Apartment Vacancy Rate Vacancy increased 0.8 percentage points from 3Q 2014 to 4Q 2014 YTD average unchanged from 4Q % -1 percentage points Office Vacancy Rate (with Vacancy rate down 0.4 percentage points from 4Q 2014 vacancy rate down from 11.6% Sublet) 3Q 2014 to 4Q 2014 one year ago 3.3% -0.9 percentage points Industrial Vacancy Rate Vacancy rate down 0.3 percentage points from 4Q 2014 vacancy rate down from 4.2% (with Sublet) 3Q 2014 to 4Q 2014 one year ago Retail Space Vacancy Rate (with Sublet) 5.7% -0.6 percentage points Vacancy rate down 0.1 percentage point from 3Q 2014 to 4Q Q 2014 vacancy rate down from 6.3% one year ago Metro Denver Economic Development Corporation February 3, 2015 Page 19

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