Monthly Economic Summary

Transcription

1 Monthly Economic Summary A Monthly Summary of Economic Conditions in Metro Denver (Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson Counties) West Belleview Avenue Suite 100 Littleton, Colorado Page 1

2 The Monthly Economic Summary 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-Broomfield MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties). This report presents recent data and longterm 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 Forbes ranked Colorado as the fifth best state for business in its annual Best States for Business list. The rankings were based on criteria such as business costs, labor supply, regulatory environment, economic climate, growth prospects, and quality of life. Colorado ranked first for labor supply and was the only state in the top 10 that is not a right-to-work state. The state also ranked high in growth prospects (fourth) and quality of life (ninth). The Brookings Institute ranked Denver 36th among the 100 largest metro areas for the strength of its economic recovery. Denver also ranked 12th for recovery of home prices, 18th for employment, 53rd for output, and 77th for unemployment rate. The MetroMonitor index ranked New Orleans as the city with the strongest recovery. Inc. magazine recognized 10 Colorado companies on its first-ever Hire Power Awards program, which ranked companies by the number of jobs created from 2008 to Denver-based Smashburger was the highest ranked Colorado company at ninth overall and second in the food and beverage category, creating 995 jobs. Other Metro Denver companies on the list included Steven Roberts Original Desserts (27th), Richfield Hospitality in Greenwood Village (51st), and Louisville s Market Force Information (92nd). Colorado ranked ninth for entrepreneurial friendliness by the Small Business and Entrepreneurship Council. The rankings were based on the state s tax, regulatory, and government spending measures. South Dakota ranked first on the list. Colorado s positive aspects included no death tax, relatively low corporate income and capital gains taxes, and low consumption-based taxes. The U.S. Green Building Council ranked Colorado first for LEED-certified building square footage per capita, as reported in the annual Resource Rich Colorado, published by the Colorado Energy Coalition. The report also measures Colorado s competitive position in categories such as oil, natural gas, coal, renewable energy, and sustainability. The state also ranked high for installed solar capacity (fourth), natural gas production and reserves (fifth), recoverable proved coal reserves (eighth), installed wind capacity (ninth), and crude oil production (10th). Colorado ranked 11th for overall health in 2012, up three spots from last year s rankings. The America s Health Rankings 2012, published by the United Health Foundation, cited the state s low obesity and diabetes rates and residents high activity levels as areas that helped move Colorado higher in the rankings. A high incidence of smoking and binge drinking, increased rate of infectious diseases, and a low ranking for immunization coverage were mentioned as weak points. Vermont ranked first and Mississippi and Louisiana tied for least healthy state. Colorado School of Mines (58th) and the University of Colorado Boulder (88th) were named to Kiplinger s Personal Finance list for the 100 Best Values in Public Colleges. Colleges were rated based on outstanding education and economic value and were ranked based on attributes such as tuition, fees, room and board, financial aid availability, SAT and ACT scores, selectivity, and student-faculty ratios. Page 2

3 According to data from TripAdvisor, Colorado is the least-expensive ski destination in North America. Durango was found to be the best value for skiers when considering hotel, food, equipment, and lift tickets costs. However, the most expensive ski location was Vail, followed by Aspen. Travel + Leisure magazine ranked two Colorado hotels on its list of the top 30 hotels in the world. The Osprey at Beaver Creek ranked 21st and the Sebastian Vail was 30th. The Four Seasons Denver was the only Metro Denver hotel to earn a spot on the broader top-500 list and placed ninth among the 13 Colorado hotels that were included. Denver International Airport (DIA) ranked sixth on the Weather Channel s list of the 10 U.S. airports with the biggest problems. The list is based on the 29 busiest airports and identified which locations had the most weather delays. DIA s weather problems are mainly due to snow and approximately 41 percent of delays are weather-related. The airport with the most delays was San Francisco, chiefly due to low clouds and foggy conditions. ESRI, a geographic information company, ranked two shopping malls in Metro Denver in the 50 biggest in the nation. The combined Larkridge and Larkridge South complexes in Thornton ranked 19th at two million leasable square feet and 58 stores. Southlands Town Center in Aurora ranked 38th with 1.7 million leasable square feet and 165 stores. The Mall of America in Bloomington, Minnesota ranked first with 4.2 million square feet. Policy Watch National & International The U.S. reached the debt limit of $16.4 trillion on December 31st and must take measures to avoid a government default on loans. Increasing the debt limit was not part of the fiscal package passed by Congress and will be decided upon in the next two months. Treasury Secretary Timothy Geithner will take measures to stave off default through the end of February. These measures will include the suspension of some investments in pension and health benefit funds for federal workers and the suspension of sales of state and local government series treasury securities. Approximately $200 billion will be freed up by these measures. The U.S. government reached an agreement on the fiscal cliff and extended tax cuts for Americans making less than $400,000 and married couples making less than $450,000. Those who fall above the cut off will see marginal tax rates increase to 39.6 percent from 35 percent, as well as higher tax rates on dividends and capital gains (23.8 percent). A 2 percentage point payroll tax cut was not extended, which will immediately affect most U.S. workers and is estimated to pull $100 billion out of the economy in The bill also extended expanded unemployment benefits and refundable tax credits for low-income families and college students. The top estate tax rate was set at 40 percent, and limits on itemized deductions and personal exemptions were reinstated. The agreement did not include a deal on the debt ceiling issue or spending cuts for various government categories. Instead, these issues should be settled in the next few months. The European Union (EU) members agreed to give the European Central Bank the authority to act as a banking watchdog for 17 EU countries that currently use the euro and non-euro countries that choose to opt-in. The central bank will be able to take away a bank s license, investigate institutions, and financially sanction banks for failing to follow rules. The supervisor in charge of the program will be operational in March 2013 and fully functional one year later. The move is a response to the financial crisis in the euro zone and an attempt to prevent future crises. Local The Colorado Legislative Council Staff and the governor s Office of State Planning and Budgeting (OSPB) both released their December budget and revenue forecasts. Economists for the Legislative Council expect Page 3

4 higher growth in jobs and revenue than previously predicted and raised estimates for the General Fund by 1.4 percent or $111 million for the current fiscal year and 2 percent or $176 million for the next fiscal year. OSPB forecasts for the General Fund were raised by 2.1 percent or $160 million for the current fiscal year and 1.7 percent or $141 million for the next fiscal year. Governor John Hickenlooper and the executive director of the Colorado Department of Transportation (CDOT) announced a new budgeting program called Responsible Acceleration of Maintenance and Partnerships (RAMP). RAMP will allow the state to coordinate project expenditures more efficiently and allow CDOT to use an additional $300 million per year during a five-year period. Around 10,500 jobs will also be created or sustained over the period. Under the program, CDOT will fund multi-year projects based on the year the money is spent rather than waiting for all necessary funds to begin a project. RAMP will be implemented in early Governor John Hickenlooper announced a plan to proceed with expansion of Medicaid in Colorado as part of the Affordable Care Act. The governor s office estimates that as many as 160,000 currently uninsured Coloradans will gain access to health insurance coverage under the expansion plan. The federal government will cover 100 percent of the cost for the additional insured from 2014 through the end of In 2017, Colorado s contribution will be 5 percent of the total cost and will increase to a maximum of 10 percent in The cost of expanded coverage is expected to be partially offset by savings and efficiencies in the new program and could help reduce costs for businesses by lowering the long-term growth of health insurance costs. The minimum wage in Colorado will increase $0.14 to $7.78 beginning January 1, The tipped hourly wage will also rise to $4.76. About 58 percent of the jobs created nationally during the current economic recovery are low-wage jobs, meaning the extra $300 per year of this increase will affect an important component of Colorado workers. A constitutional amendment in Colorado calls for wage increases that are linked to the Denver-Boulder Consumer Price Index. Colorado will receive almost $30 million over four years for early childhood education. The grant comes from the federal program Race to the Top. The state intends to use the money for a statewide quality rating system for licensed early learning facilities to provide professional development to qualified teachers, institute a kindergarten entry assessment, and create an Office of Early Childhood in the Department of Human Services. General Economic Overview The Bureau of Economic Analysis (BEA) released revised third quarter data showing an upwardly revised annual growth rate for gross domestic product of 3.1 percent. The rate was previously calculated to be 2.7 percent and is significantly improved from the second quarter growth rate of 1.3 percent. The increase came from growth in personal consumption expenditures, heightened spending by state and local governments, and decreased imports. Fiscal tightening and increased taxes may affect growth in the future, and a weak global economy may dampen the recent growth of exports. The next BEA release will be on January 30, The Federal Open Market Committee (FOMC) met in early December to determine the extent of accommodative policy measures it would continue to take. In order to continue to stimulate economic growth, the committee announced that it will continue to purchase mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at $45 billion. In addition, principal payments from its holdings of agency debt and agency mortgage-backed securities will be reinvested in agency mortgage-backed securities and it will resume rolling over maturing Treasury securities at auction beginning in January. The committee also noted that accommodative measures would be taken until significant improvement in the unemployment rate was seen, defined to be a rate of no more than 6.5 percent. The committee maintained the objective inflation rate of 2 Page 4

5 percent in the medium term, and the federal funds rate at zero to 0.25 percent. The next meeting will be January 29-30, Economic Indexes & Notable Data Releases National & International The U.S. trade deficit increased to $42.2 billion in October from $40.3 billion in September. Exports decreased to $180.5 billion or 3.6 percent, while imports decreased to $222.8 billion or 2.1 percent. Exports dropped the most in four years as the global economy weakened and manufacturing slowed. Economists noted that the decline was not surprising considering lowered consumer demand in recent months. The Conference Board s Leading Economic Index declined 0.2 percent to 95.8 in November after increasing 0.3 percent in October. The economy remains uncertain and businesses are concerned about tighter fiscal policies called for under the fiscal cliff. Economists expect growth to be slow in the beginning months of 2013, as domestic and international concerns dampen business activity. Economists at the National Association for Business Economists (NABE) forecast moderate growth for 2013, expecting the economy to grow 2.1 percent. Growth is not predicted to drastically reduce unemployment, which NABE believes will average 7.7 percent for However, growth is expected to gradually increase during the year. The Institute for Supply Management s Purchasing Managers Index rose 1.2 percentage points to 50.7 percent in December. The number represents expansion in the manufacturing sector for the third time in seven months. Survey respondents reported mixed trends from weak demand to flat or strengthening business. The Institute for Supply Management s Non-Manufacturing Index increased 1.4 percentage points in December to 56.1 percent. The increase indicated growth at a faster rate in the non-manufacturing sector. Respondents to the survey noted that business conditions were improving and future growth was expected. Local Personal income growth in Colorado slowed in the third quarter to 0.6 percent from 1.5 percent in the second quarter. The state showed stronger growth than the nation, which increased 0.5 percent. North Dakota was the highest growth state in the third quarter, with 1.4 percent growth. According to the U.S. Census Bureau state population estimates, Colorado was the seventh fastest-growing state between July 2011 and July The state s population increased by 1.4 percent and is growing nearly twice as fast as the nation. High birth rate, low death rate, and positive net migration were the main factors contributing to the increase, reported the Colorado State Demography Office. The Goss Institute s Colorado Business Conditions Index fell to 53.8 in December from 54.9 in November. Despite the decline, the index remains above the growth neutral point. The manufacturing sector, particularly metal-producing firms, and the construction industry were specifically noted as growing sectors in the state. The Leeds Business Confidence Index fell slightly for the first quarter of 2013 to 51.3 from 51.6 in the fourth quarter of The index, created by the University of Colorado Boulder, measures the confidence of business leaders in six categories, including state and national economy, industry sales, industry profits, and hiring plans. Confidence improved for sales expectations, and the differential between the state and national economy narrowed, showing confidence in the local economy is still greater. Overall, businesses remain cautious of expansion and investment due to the uncertainty of U.S. fiscal tightening, the European debt crisis, and high unemployment. Page 5

6 The Conference Board released data showing that online job advertisements increased in Colorado by 5,900 in December compared to the previous month. Year-to-date totals are up 28,100 for 2012, which is an increase of 32.8 percent over Metro Denver advertisements increased by 5,600 between November and December. Labor Force and Employment Employment in Metro Denver rose 0.4 percent in November and 5,200 jobs were added since October. Wholesale and retail trade was the supersector that reported the largest gain, with 3,300 jobs added or a 1.5 percent increase. Three supersectors posted losses in employment during the month: natural resources and construction (-2.6 percent), leisure and hospitality (-1.4 percent), and other services (-0.2 percent). Over-the-year, the greatest number of jobs added were in education and health services (9,600 jobs) and wholesale and retail trade (8,000 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 Nov-12 (p) Oct-12 Nov % Change Total 11-County Metro Denver* 1, , , , , % 2.1% -3.1% Denver-Aurora MSA 1, , , , , % 2.1% -3.0% Boulder-Longmont MSA % 2.2% -3.4% Natural Resources & Construction % -1.4% -4.9% Manufacturing % -1.5% -9.0% Wholesale & Retail Trade % 2.1% -2.9% Transp., Warehousing & Utilities % 2.8% -9.8% Information % 1.4% -14.2% Financial Activities % -0.6% -0.8% Professional & Business Services % 5.5% -6.1% Education & Health Services % 3.9% 2.9% Leisure & Hospitality % 2.6% -0.6% Other Services % 2.0% 1.6% Government % 1.8% 3.4% Federal Gov't % -0.7% 0.5% State Gov't % 2.8% 1.8% Local Gov't % 2.1% 4.8% Colorado 2, , , , , % 2.3% -1.9% United States 135, , , , , % 1.1% -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 Colorado employment showed similar trends to the Metro area, with 10,900 jobs added between October and November, an increase of 0.5 percent. Compared to November 2011, Colorado employment increased 2.3 percent, slightly lower than the Metro Denver gain of 2.9 percent. The U.S. also reported increased employment, which rose 0.3 percent over October 2012 and 1.4 percent over November Page 6

7 Metro Denver Industry Cluster Headlines Aerospace Energy Boulder-based Golden Spike Co. announced plans to launch a commercial program to carry passengers to the moon. The company would charge approximately $1.5 billion for two passengers to fly to the moon and back and anticipates 15 to 20 flights in the first decade. The service will be marketed to nations, individuals, and corporations. Sierra Nevada in Louisville was awarded a $10 million contract by the National Aeronautics and Space Administration (NASA) as part of an effort to create a U.S. space taxi for astronauts. The contract applies to work through May 2014 to develop ways to meet NASA flight safety and performance rules. President Barack Obama signed into law the National Defense Authorization Act, championed by Senator Michael Bennet, which will benefit the Colorado aerospace industry. The act allows the administration to transfer less-sensitive satellite products from the U.S. Munitions List to a less restrictive Commerce Control List, which in turn allows companies to sell the products to approved nations. The bill will help aerospace companies stay competitive globally but maintain national security interests. Vestas Wind Systems announced that it cut hours at its four Colorado wind turbine factories. Employees at a plant near Pueblo will see hours cut to 24 per week. Employees at the turbine blade factories in Brighton and Windsor will have their hours cut to 32 per week. Hours are unaffected at the Vestas nacelle plant in Brighton. The wind energy tax credit was extended by Congress, which is a key component to the success of Colorado wind energy companies. The credit was extended for one year and will save 2.2 cents per kilowatt-hour of energy produced by new wind energy facilities over 10 years. The renewed credit applies to projects begun in 2013 and operational in A research team at the University of Colorado Boulder received a $9.2 million grant from the Department of Energy. The grant will go towards the study of the use of E. coli bacteria for biofuel. The goal of the study is to re-engineer a non-pathogenic strain of E. coli to product ethylene and isobutanol that can be converted in gasoline and other products. Tendril Networks Inc., based in Boulder, laid off 59 workers. The home energy management company noted that it would need restructuring to achieve profitability, as this round of layoffs followed job cuts earlier in According to a study by IHS Inc., unconventional oil and gas operations could support 121,000 jobs in Colorado by the end of the decade. Jobs included in this category would be operations such as the Niobrara oil field, and others that involve oil sands, shale formations, or tight sands, like the Piceance Basin. Financial Services Allonhill LLC reported that it will be laying off 140 workers by mid-january. The workers were mostly in Denver and worked on its transactional mortgage business segment. The company will shift focus to more profitable areas of the mortgage industry. Allonhill assesses and verifies loan data for large banks, institutional investors, hedge funds, and other financial institutions involved in mortgage lending or investing. Page 7

8 Urban Lending Solutions will hire 100 workers at its locations in Broomfield and Littleton. The mortgage services firm employs 1,915 workers in Colorado and at its headquarters in Pittsburgh, PA. The company was also ranked among the Inc. 500 fastest-growing companies in the country. Healthcare & Wellness Kaiser Permanente plans to hire 500 workers in the next three years for a new IT campus in Greenwood Village. The campus is expected to open by January 2013, and the recruiting and hiring process has already begun. The company recently hired 140 to staff a Denver call center, opened two new medical offices in Fort Collins and Loveland, and plans to open offices in Lone Tree and Greeley in 2013 and 2014, respectively. The University of Colorado Health announced that it purchased 66 acres of land in Broomfield s North Park area and plans to build a medical campus. The organization has not determined whether it will be a satellite campus or a full-service hospital. Other Business and Employment Headlines Steven Roberts Original Desserts and its subsidiary Ticklebelly Desserts have purchased a 386,000- square-foot distribution center in Aurora, formerly owned by Albertsons. The company may add up to 800 jobs in the next three years. The $11 million deal will allow the company to consolidate the bakeries, warehouse, and corporate headquarters into one location. Steven Roberts manufactures a line of frozen desserts for restaurants, hotels, theaters, and gourmet grocery stores, and Ticklebelly Desserts produces dessert shots, cake pops, and dessert minis. Employment Outlook Results of the Manpower Employment Outlook Survey for the first quarter of 2013 suggest improved prospects for employment. The number of companies in the Denver-Aurora-Broomfield MSA that plan to hire rose 6 percentage points over the fourth quarter of 2012 and 7 percentage points over-the-year. This is the greatest percentage of companies planning to hire since the fourth quarter of The percent of companies that expect to lay off workers was unchanged from the fourth quarter of 2012 and the percent of companies planning no employment changes dropped 7 percentage points. Employment Outlook Survey Quarter 1 Quarter 4 Quarter 1 YTD Avg YTD Avg Ann Avg Denver-Aurora-Broomfield MSA Percent of Companies Hiring 23% 17% 16% 23% 16% 28% Percent of Companies Laying Off 8% 8% 9% 8% 9% 11% Percent of Companies No Change 66% 73% 70% 66% 70% 50% Percent of Companies Unsure 3% 2% 5% 3% 5% 11% U.S. Percent of Companies Hiring 17% 17% 14% 17% 14% 24% Percent of Companies Laying Off 8% 9% 9% 8% 9% 11% Percent of Companies No Change 72% 72% 70% 72% 70% 59% Percent of Companies Unsure 3% 2% 7% 3% 7% 6% Source: Manpower Inc. Page 8

9 The results for the U.S. were mainly unchanged from results in the fourth quarter of The percent of companies planning to lay off workers decreased slightly by 1 percentage point, while the percent of companies unsure of decisions rose by the same amount. Hiring prospects are higher than year-ago numbers, with the percent of companies saying they plan to hire rising 3 percentage points. Uncertainty among survey respondents regarding hiring decisions also decreased 4 percentage points. The Metro Denver unemployment rate declined 0.1 percentage points between October and November, matching the September rate, which was the lowest reported since December Counties in the metro region posted mixed trends, with four counties posting declines: Arapahoe (-0.1 percentage points), Broomfield (-0.1 percentage points), Boulder (-0.1 percentage points), and Douglas (-0.2 percentage points). Adams County and the City and County of Denver posted rates that increased 0.1 percentage points, and Jefferson County s rate was unchanged. The Metro Denver year-to-date unemployment rate improved over-the-year by declining 0.5 percentage points, and each county also declined between 0.2 and 0.6 percentage points. Labor Force Statistics (000s, not seasonally adjusted civilian labor force) Nov 2012 (p) 2012 YTD Avg 2011 YTD Avg Ann Avg Ann Avg Labor Unemployment Labor Unemploy- Labor Unemploy- Unemploy- Unemploy- Force Rate Force ment Rate Force ment Rate ment Rate ment Rate Metro Denver 1, % 1, % 1, % 3.7% 5.9% Adams County % % % 4.2% 6.3% Arapahoe County % % % 3.7% 5.8% Boulder County % % % 3.3% 5.8% Broomfield County % % % 3.5% 5.8% Denver County % % % 4.1% 6.7% Douglas County % % % 3.1% 5.3% Jefferson County % % % 3.6% 5.4% Colorado 2, % 2, % 2, % 3.7% 5.7% United States 154, % 154, % 153, % 4.6% 5.8% Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary The weekly average number of unemployment insurance claims in Metro Denver decreased over-the-year by 5.9 percent but increased by 14.7 percent between October and November. This monthly jump in claims may point to a seasonal trend, reflected in the data for several years. Colorado reported a similar trend of a decrease in yearago claims (-4.3 percent) and an increase over-the-month (12.8 percent). Despite the monthly increase, year-todate averages are showing decreases in the average number of claims for both the Metro Denver region and Colorado. Weekly First-Time Unemployment Insurance Claims Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Nov-12 Oct-12 Nov % Change 2007 Metro Denver 1,869 1,630 1,986 1,598 1, % 1,211 Colorado 3,699 3,279 3,866 3,073 3, % 2,211 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. Page 9

10 Consumer Sector Sentiment & Spending The Conference Board s Consumer Confidence Index declined 9.1 percent in December compared to November but rose 0.5 percent over-the-year. The year-to-date average shows a significant improvement over 2011, increasing 15.1 percent. The monthly decline is most likely due to uncertainty surrounding the impending fiscal cliff. Economists for the Conference Board did note that consumers were markedly more upbeat about the current business situation and labor market despite the decline in the index. The Mountain Region s Consumer Confidence Index showed a similar trend to the national index, declining 19.5 percent over-the-month but increasing 1.3 percent over the year-ago number. The year-to-date average increased more than the national average, rising 19.1 percent over Consumer Confidence Index Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Dec-12 (p) Nov-12 Dec % Change 2007 Mountain % United States % Source: The Conference Board. (p) = preliminary U.S. retail sales rose 3.7 percent in November compared to year-ago data. Sales also increased slightly over October 2012 by 0.3 percent. Motor vehicle sales rose over-the-month by 1.4 percent after falling between September and October by 1.9 percent. As consumers regain confidence in the economy, durable good purchases, such as motor vehicles, are an encouraging sign that consumers are willing to buy big ticket items rather than delaying purchases. Metro Denver retail sales increased 17.5 percent between August and September and 12 percent over-the-year. The City and County of Denver showed the strongest monthly gain in consumer activity, as sales rose 32.2 percent. The only county to report a decline over August sales was Arapahoe County. Compared to September 2011, the City and County of Denver also reported the greatest increase in retail sales of 29.2 percent, and every other county in Metro Denver increased as well. Colorado sales reported trends similar to the Metro Denver region, with September sales increasing 8.9 percent over-the-month and 4 percent over September Total Retail Sales ($000s) Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth Annual Growth Sep-12 Aug -12 Sep % Change Total Metro Denver 9,374,252 7,979,840 8,366,476 71,426,402 66,199, % 9.2% -0.1% Adams County 1,737,491 1,742,823 1,656,801 14,816,273 13,417, % 15.6% 0.7% Arapahoe County 1,766,163 1,533,269 1,651,435 14,095,295 12,471, % 6.1% 1.6% Boulder County 934, , ,492 6,681,197 6,335, % 15.2% -14.3% Broomfield County 155, , ,829 1,244,039 1,194, % 9.2% 414.4% Denver County 2,710,001 2,049,276 2,097,085 18,118,703 17,759, % 8.3% -3.3% Douglas County 718, , ,115 5,808,602 5,481, % 8.2% -1.3% Jefferson County 1,352,722 1,151,267 1,266,719 10,662,293 9,541, % 6.0% 1.0% Colorado 14,500,452 13,311,774 13,948, ,327, ,871, % 9.7% 0.4% Source: Colorado Department of Revenue. The non-seasonally adjusted U.S. Consumer Price Index (CPI) increased 1.8 percent in November compared to the year-ago index but decreased 0.5 percent compared to October s CPI. The core CPI, which excludes energy Page 10

11 and food prices, was virtually unchanged between October and November and increased 1.9 percent over-theyear. The AAA Daily Fuel Gauge Report showed national average gas prices for the beginning of January ($3.29 per gallon) rose over-the-year by 0.4 percent. However, prices decreased 2.8 percent compared to month-ago prices. The Metro Denver average price ($2.95 per gallon) declined both over-the-year (-1.7 percent) and compared to the previous month (-1.1 percent). Stock Market The four stock market indexes posted gains in December over November numbers. The S&P 500 index posted the largest monthly gain of 0.7 percent, followed by the Dow Jones Industrial Average index at 0.6 percent. Stock market indexes have been volatile while investors awaited a fiscal cliff deal. News of the eventual deal assisted in pushing up indexes towards the end of December, as consumers regained some confidence that fiscal tightening measures would not push the U.S. back into a recession. Year-to-date returns also showed strong increases over 2011 numbers with each of the four indexes reporting gains. Stock Market Indexes Month of Month of Month of YTD Return YTD Return Ann Avg Return Dec-12 Nov -12 Dec Bloomberg Colorado % -3.6% 17.7% S&P 500 1, , , % 0.0% 3.5% NASDAQ 3, , , % -1.8% 9.8% DJIA (Dow Jones) 13, , , % 5.5% 6.4% Travel & Tourism Sources: Bloomberg.com; Yahoo! Finance. The November occupancy rate in Metro Denver hotels declined 17.6 percentage points over October s rate and decreased 0.4 percentage points over the year-ago number. While it is a typical seasonal trend for occupancy to decline between October and November, the decline was quite pronounced in The average room rate decreased 13.5 percent over-the-month but increased 1.4 percent over the November 2011 rate. Year-to-date occupancy and room rates were up by 1.8 percent and 1.7 percent, respectively. Metro Denver Hotel Statistics Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Nov-12 Oct-12 Nov % Change Percent of Hotel Rooms Occupied 56.8% 74.4% 57.2% 69.5% 68.3% 1.8% 67.0% 60.3% Average Hotel Room Rate $ $ $ $ $ % $ $86.05 Source: Rocky Mountain Lodging Report. Spokespeople for Denver International Airport said passenger traffic in October increased over September by 2.9 percent. The total number of passengers in October also increased 3.3 percent over the October 2011 total. Yearto-date totals are up 0.5 percent in Page 11

12 Denver International Airport Passengers Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual Oct-12 Sep-12 Oct % Change Number of Airline Passengers 4,505,553 4,379,049 4,361,142 44,667,716 44,464, % 49,863,286 35,652,084 Residential Real Estate Home Resales Source: Denver International Airport, Traffic Statistics. According to the National Association of Realtors (NAR), existing home sales rose 5.9 percent in November over month-ago sales and reached the highest point since November Economists for the organization say that lower rental vacancy rates, higher rents, and historically low interest rates are prompting people to buy homes. Existing home sales rose the most in the South, increasing 7.9 percent, followed by the Midwest (7.2 percent), the Northeast (6.9 percent), and the West (0.8 percent). Over-the-year, Midwest sales posted the largest increase of 21.4 percent. Home resale activity in Metro Denver increased 20.3 percent over-the-year in November. The year-to-date total shows an even stronger increasing trend, as home sales closed rose 18.4 percent compared to the same period in Sales prices of single-family homes and condominiums are also improving with an increase in the average sale price of single-family homes of 11.2 percent over year-ago numbers and an increase in average condominium prices of 29 percent. This was the 10th consecutive month of such increases for both categories. Previously-Owned Home Sales Activity Month of Month of Month of YTD Total YTD Total YTD Total Ann Avg Ann Avg Nov-12 Oct-12 Nov % Change Home Sales (Under Contract) 3,893 4,624 3,365 53,322 44, % 61,663 30,089 Home Sales (Closed) 3,692 4,095 3,068 42,899 36, % 49,789 47,919 Unsold Homes on Market 8,847 9,719 12,634 8,847 12, % 24,603 20,676 Average Sales Price-Single Family $306,773 $304,237 $275,951 $303,286 $280, % $310,418 $268,926 Average Sales Price-Condo $198,080 $179,803 $153,526 $179,036 $158, % $180,321 $168,226 Median Sales Price-Single Family $250,000 $255,000 $230,300 $250,000 $229, % $245,000 $221,000 Median Sales Price-Condo $153,750 $145,500 $125,000 $142,000 $125, % $150,000 $149,500 Note: Data includes the seven-county Metro Denver region plus Elbert, Park, Gilpin, and Clear Creek Counties as well as portions of the Loveland area. Source: MetroList, Inc. Home Prices The national median existing home price rose 10.1 percent over the year-ago price in November to $180,600. According to the NAR, it was the ninth consecutive monthly year-over-year price gain, which has not occurred since May The region posting the largest gain in home prices was the West, with prices rising 23.9 percent compared to November 2011 levels. Prices in the South increased 10.5 percent, more than the Midwest (7 percent) and Northeast (-2 percent). The NAR s data for median home prices in metro areas shows that prices in the Boulder and Denver-Aurora- Broomfield MSAs have decreased slightly over-the-quarter by 1.6 and 0.2 percent, respectively. However, the prices have increased over the third quarter of 2011 in both areas, with Boulder MSA prices increasing 6.1 percent and Denver-Aurora-Broomfield MSA increasing 10.5 percent. Metro areas throughout the U.S. posted a range of over-the-year changes, with the largest decline in prices of 16.1 percent in the Raleigh-Cary MSA and Page 12

13 the largest gain of 34.9 percent in the Phoenix-Mesa-Scottsdale MSA. The Denver MSA ranked 25th in terms of positive gains over-the-year, and the Boulder MSA ranked 53rd out of 147 MSAs. Median Sales Price of Existing Single-Family Homes ($000s) Quarter 3 Quarter 2 Quarter 3 YTD Avg YTD Avg YTD Avg Median Median 2012 (p) 2012 (r) % Change Boulder MSA $382.1 $388.2 $360.1 $381.4 $ % $376.2 n/a Denver-Aurora-Broomfield MSA $260.3 $260.7 $235.6 $249.1 $ % $245.4 $228.1 United States $186.1 $181.3 $173.0 $175.3 $ % $217.9 $158.1 Source: National Association of REALTORS. (p) =preliminary (r) =revised The S&P/Case-Shiller Home Price Index increased slightly between September and October for almost half of the 20 cities tracked in the index. Both the 10-city and 20-city composite indexes declined 0.1 percent, the first decline in six months for both measures. The Denver index improved slightly to from in September S&P/Case-Shiller Home Price Indices Despite these small decreases, the indexes rose 100 compared to October 2011 by 4.3 percent for the 20- city composite index and 3.4 percent for the 10-city composite. The Phoenix index continued to show the Denver 20-City Composite strongest increase, rising 21.7 percent, followed by Detroit at 10 percent. Denver s index increased 6.9 percent, ranking it as the seventh highest for growth. Foreclosures Source: Standard & Poor's. RealtyTrac reported that November foreclosure filings were down nationally during the month, a decrease of 3 percent from October 2012 and 19 percent from November This was the 26th consecutive month showing an over-the-year decline in foreclosure activity. Analysts believe the drop in activity is evidence that the nation is past the worst of the foreclosure problem after the housing bubble burst six years ago. Numbers across the country were mixed, as some states reported large over-the-year drops in activity and others reported increased activity. Foreclosures in Metro Denver declined to the lowest level since August 2008 during November. Each county reported a decline over-the-year, ranging from 16.7 percent in the City and County of Broomfield to 53.8 percent in Boulder County. Jefferson County was the only county to report an over-the-month increase (11.6 percent), and the remaining six counties posted declines of 8.7 percent (City and County of Denver) to 40.5 percent (Douglas County). Page 13

14 Real Estate Foreclosures Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Nov-12 Oct-12 Nov % Change 2007 Total Metro Denver* 936 1,088 1,473 14,109 15, % 26,520 Adams County ,954 3, % 6,192 Arapahoe County ,367 3, % 6,237 Boulder County % 981 Broomfield County % 252 Denver County ,895 3, % 7,405 Douglas County ,438 1, % 1,865 Jefferson County ,510 2, % 3,588 *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. New Homes National new home sales increased over-the-month (4.4 percent) and over-the-year (15.3 percent). The Northeast region posted the largest increase over November 2011, with sales rising 68.8 percent, followed by the South (17.2 percent) and the West (13.7 percent). The Midwest was the only region to report a decline in sales of 5.8 percent. Over-themonth numbers showed more of a mixed trend, with the Northeast (12.5 percent) and the South (21.1 percent) reporting increases and the Midwest (-12.5 percent) and the West (-17.8 percent) reporting declines. (000s) 1,600 1,400 1,200 1, U.S. New Home Sales, Seasonally Adjusted Annual Rate 0 Aug 1964 Aug 1972 Aug 1980 Aug 1988 Aug 1996 Aug 2004 Aug 2012 New home building permits throughout the country rose 3.6 percent in November compared to October. Compared to November 2011, permits increased significantly by 26.8 percent. Multifamily structure permits rose the most by 30.6 percent, and single-family home permits increased 25.3 percent. The region with the largest gain in permits was the Midwest, as permits rose 49.5 percent over year-ago numbers. The South and West also posted substantial increases, rising by 29.2 percent and 22.2 percent, respectively. The only region to report a decline in permits was the Northeast (-5 percent). Source: U.S. Census Bureau. The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index reached its highest point since April 2006, rising for the eighth consecutive month to 47 in December. Builders across the country reported the best sales conditions in more than five years. Economists believe there is still room for improvement and that housing markets will continue to recover in The main obstacle for the market continues to be difficult credit conditions, as families struggle to qualify for mortgages with more stringent lending standards. Residential building permits increased significantly in Metro Denver between October and November by 77.9 percent. The largest increase was in multi-family units with permits rising percent. Permits for singlefamily attached units also increased by 21.5 percent, but single-family detached units declined slightly by 1.6 percent. Over-the-year, each category of permit rose, with the largest increase occurring in multi-family unit permits (274.1 percent) and the smallest in single-family detached units (40.9 percent). Page 14

15 Residential Building Permits Month of Month of Month of YTD Total YTD Total YTD Total Total Total Nov-12 Oct-12 Nov % Change Single-Family Detached Units ,986 3, % 7,082 13,793 Single-Family Attached Units % 4,632 4,425 Multi-Family Units ,381 1, % 3,015 4,085 Total Units 1, ,189 5, % 14,729 22,303 Apartment Rental Market Source: Home Builders Association of Metro Denver. The Denver Metro Apartment Vacancy and Rent Survey reported decreasing vacancy and increasing rental rates in Metro Denver s apartment market. The third quarter vacancy rate dropped 0.5 percentage points quarter-overquarter and rents increased 0.6 percent. The year-to-date average vacancy rate decreased by 0.4 percentage points compared to the same period in 2011, and the average rent rose 5.6 percent. The vacancy rate in each of the seven counties was at the lowest level since 2000 or The vacancy rate decreased from the second quarter to the third quarter in all counties except Douglas County, with Douglas County posting a slight increase from 3.9 to 4.1 percent. The lowest vacancy rate occurred in Boulder/Broomfield at 2.9 percent. The average rental rate decreased in Adams County from the second to the third quarter of 2012; however, average rental rates increased in all other counties. The largest increase of 3.2 percent occurred in Jefferson County. Apartment Statistics Quarter 3 Quarter 2 Quarter 3 YTD Average YTD Average YTD Average Annual Average Annual Average % Change Apartment Vacancy Rate 4.3% 4.8% 4.9% 4.7% 5.1% 6.2% 9.8% Average Monthly Rental Rate (all units) $986 $980 $936 $973 $ % $856 $809 Source: Denver Metro Apartment Vacancy and Rent Survey. Commercial Real Estate Centura Health plans to build a $177 million comprehensive health facility in Westminster. The facility will be a 350,000-square-foot expansion of the recently opened St. Anthony North Medical Pavilion. An emergency room, ambulatory surgery center, inpatient beds, an outpatient center, a women s health center, and clinic space will be included in the facility. The project is funded by Catholic Health Initiatives and scheduled to be completed in early United Properties plans to build a new industrial development in Stapleton called the Enterprise Business Center. The 710,000-square-foot complex will support more than 300 jobs and will have energy efficient and green-building design features. Page 15

16 Office Market The direct office vacancy rate decreased to 12.2 percent in the fourth quarter of 2012, according to CoStar Realty Information Inc. Indeed, this was the lowest fourth quarter vacancy rate since 2007 when 11.8 percent of the office square footage was vacant. The average lease rate of $20.76 per square foot reflected a 0.9 percent increase over the third quarter rate and 4.4 percent over the rate posted in the fourth quarter of Construction activity picked up in 2012, although the amount of space added is still low compared to historic standards. About 870,000 square feet of new office space was completed throughout Metro Denver during 2012 compared to just 490,000 square feet added in Office Market Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 5,857 5,853 5,846 5,829 5,811 5,781 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 12.2% 12.4% 12.6% 13.1% 13.7% 12.9% Vacancy Rate (with sublet) 12.4% 12.7% 13.1% 13.9% 14.7% 13.8% Avg. Lease Rate (direct, per sq. ft, full service) $20.76 $20.57 $19.88 $19.90 $20.20 $21.53 New Construction Completed (year-to-date) 0.87 MSF, 0.83 MSF, 0.49 MSF, 1.14 MSF, 1.56 MSF, 2.19 MSF, Currently Under Construction Industrial & Flex Market 8 Bldgs 0.90 MSF, 10 Bldgs 7 Bldgs 0.95 MSF, 9 Bldgs 14 Bldgs 0.85 MSF, 7 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 14 Bldgs 0.45 MSF, 8 Bldgs 22 Bldgs 1.17 MSF, 8 Bldgs 63 Bldgs 2.0 MSF, 37 Bldgs Industrial market data from CoStar Realty Information Inc. also shows the lowest direct vacancy rate during the fourth quarter compared to the same time during the past four years. The direct vacancy rate of 5.2 percent was also 0.6 percentage points lower than the third quarter. The average lease rate was unchanged from the previous quarter but increased 2.2 percent over the same period in Data also show a significant increase in the square footage of industrial space under construction compared to both the previous quarter and the year-ago number. There was about 583,000 square feet of industrial space completed during 2012, which was almost double the amount completed in Industrial Market Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 7,338 7,334 7,328 7,318 7,311 7,299 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 5.2% 5.8% 6.5% 6.0% 7.1% 6.9% Vacancy Rate (with sublet) 5.4% 6.0% 6.6% 6.4% 7.5% 7.2% Avg. Lease Rate (direct, per square foot, NNN) $4.67 $4.67 $4.57 $4.70 $4.84 $5.12 New Construction Completed (year-to-date) 0.58 MSF, 0.27 MSF, 0.32 MSF, 0.07 MSF, 0.23 MSF, 2.47 MSF, Currently Under Construction 8 Bldgs 1.05 MSF, 7 Bldgs 6 Bldgs 0.60 MSF, 7 Bldgs 5 Bldgs 0.05 MSF, 2 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 3 Bldgs 0.08 MSF, 1 Bldg 6 Bldgs 0.03 MSF, 2 Bldgs 41 Bldgs 0.17 MSF, 3 Bldgs Page 16

17 Flex Space Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 1,422 1,419 1,417 1,417 1,412 1,402 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 12.0% 11.8% 12.9% 13.7% 13.9% 12.9% Vacancy Rate (with sublet) 12.2% 11.9% 13.0% 13.8% 14.5% 13.5% Avg. Lease Rate (direct, per square foot, NNN) $8.86 $8.80 $8.86 $9.02 $9.25 $9.60 New Construction Completed (year-to-date) 0.13 MSF, 0.12 MSF, 0 MSF, 0.05 MSF, 0.30 MSF, 0.77 MSF, Currently Under Construction 3 Bldgs 0.08 MSF, 3 Bldgs 2 Bldg 0.20 MSF, 2 Bldgs 0 Bldgs 0 MSF, 1 Bldg 2 Bldgs 0 MSF, 0 Bldgs 9 Bldgs 0 MSF, 0 Bldgs 25 Bldgs 0.30 MSF, 8 Bldgs *Roughly 4,900 square feet of flex space was completed as second quarter ended. This small amount of property rounds to zero when stated in millions of square feet. Source: CoStar Realty Information, Inc. MSF=Million Square Feet CoStar data show the direct vacancy rate for Metro Denver s flex market has slightly increased by two-tenths of a percentage point over-the-quarter to 12 percent but decreased 0.9 percentage points compared to the year-ago rate. The average lease rate increased slightly (0.7 percent) compared to the third quarter and was unchanged over-the-year. Current construction of flex space has declined when compared to the third quarter, dropping to 80,000 square feet from 200,000 square feet. About 130,000 square feet of flex space was completed throughout all of 2012, compared with no new buildings completed in Retail Market Similar to the industrial and office markets, the retail market posted a decreased direct vacancy rate, the lowest for the fourth quarter compared to past four years. Data from CoStar Realty Information Inc. show the vacancy rate declined to 6.6 percent, which was one-tenth of a percentage point lower than the third quarter and 0.3 percentage points lower than the same time last year. The average lease rate declined 0.5 percent from the third quarter, but increased 0.8 percent compared to the fourth quarter of Construction of small retail spaces continues. During 2012, there was 588,000 square feet of retail space completed in Metro Denver in 46 buildings, indicating an average building size of 12,800 square feet. Retail Market Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 10,934 10,895 10,873 10,842 10,807 10,701 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 6.6% 6.7% 6.9% 7.4% 7.9% 7.6% Vacancy Rate (with sublet) 6.9% 7.0% 7.2% 7.7% 8.2% 7.9% Avg. Lease Rate (direct, per square foot, NNN) $14.78 $14.86 $14.66 $14.97 $16.72 $17.65 New Construction Completed (year-to-date) 0.59 MSF, 0.25 MSF, 1.01 MSF, 0.41 MSF, 2.06 MSF, 3.55 MSF, Currently Under Construction 46 Bldgs 0.85 MSF, 27 Bldgs 22 Bldgs 0.65 MSF, 31 Bldgs 25 Bldgs 0.20 MSF, 14 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 22 Bldgs 0.57 MSF, 6 Bldgs 80 Bldgs 0.53 MSF, 12 Bldgs 99 Bldgs 2.05 MSF, 58 Bldgs Page 17

18 Indicator Nonfarm Employment Growth % Companies Hiring (Denver Area) Metro Denver Indicator Summary Monthly/Quarterly Direction Annual Direction Summary of Recent Changes Employment up 5,200 jobs Oct to Nov; YTD employment up 2.5% through Nov % of companies expect to add workers in Q and 66% expect no change. Unemployment Rate Metro rate 7.2% in Nov; YTD avg. rate of 7.7% down from 2011 YTD avg (8.2%) Initial Unemployment Insurance Claims Claims increased Oct to Nov; YTD claims down 9.7% through Nov Total Retail Sales Metro retail sales increased Aug to Sep; YTD sales up 7.9% through Sep Consumer Confidence Index Mountain Region Index down to 54.9 in Dec from 68.1 in Nov; index up 19.1% YTD thru Dec 12. Hotel Occupancy Hotel occupancy decreased Oct to Nov to 56.8%; occupancy up 1.8 % YTD. DIA Passengers Traffic increased Sep to Oct; YTD traffic up 0.5% through Oct Bloomberg Colorado Index Dow Jones Industrial Average Bloomberg Colorado up 0.5% from Nov to Dec; year-to-date return at 3.5%. DOW increased 0.6% Nov to Dec; year-to-date return at 7.3%. Home Sales (closed) Home sales decreased Oct to Nov; YTD sales up 18.4% through Nov. Median Home Price (Denver-Aurora MSA) Median price in Denver MSA down 0.2% Q2 12 to Q3 12; price up 8% YTD through Q3 12 Foreclosures Foreclosures decreased Oct to Nov; YTD down 7.7% through Nov Residential Building Permits (Total) Total permits increased Oct to Nov; YTD up 50.2% through Nov Apartment Vacancy Rate Vacancy fell to 4.3% in Q3; avg rental rate at $986 per month. Office Vacancy Rate (with Sublet) Industrial Vacancy Rate (with Sublet) Retail Space Vacancy Rate (with Sublet) Positive Changes 13 of of 18 Vacancy down to 12.4% in Q from 12.7% in Q3; avg lease rate up to $20.76/sq.ft. Vacancy down to 5.4% in Q from 6% in Q3; avg lease rate up to $4.67/sq. ft. (NNN) Vacancy down to 6.9% in Q4 2012; avg. lease rate down to $14.78/sq. ft. (NNN) Page 18

19 Economic and Demographic Research Industry Studies Fiscal and Economic Impact Analysis Real Estate Economics West Belleview Avenue Suite 100 Littleton, Colorado