Maintaining Equilibrium. Metro Denver 2017 Economic Forecast January 2017

Transcription

1 Maintaining Equilibrium Metro Denver 2017 Economic Forecast January 2017

2 Consumer Activity Income Wealth Prices Interest Rates Consumer Confidence Spend or Save? Retail Spending What & Where? Housing Options Retirement Planning

3 Metro Denver Annual Change in Population 75,000 65,000 55,000 45,000 35,000 25,000 15,000 5, Population = 3.13 Million Net Migration Natural Increase -5, Source: Colorado Division of Local Government, State Demography Office.

4 Millennials largest population group* (*end of Centennials not yet determined) 60,000 50,000 Centennials 775,230 Metro Denver Population 2016 = 3.13 million Millennials 754,790 Gen X 705,570 Baby Boomers 678,580 Silent Gen 197,170 40,000 30,000 20,000 Greatest Gen 22,490 10, Source: Colorado Division of Local Government, State Demography Office.

5 Can Consumers Continue the Pace? Additional 50,900 jobs per year ( ) Avg Annual Wage +2.1% per year ( ) DOW +13.4%; S&P % Total HH Debt: $12.3 Trillion (Q2 2016), +3.7% Trillions Q Q % Change Mortgage $8.4 $ % Home Equity $0.5 $ % Student Loans $1.3 $ % Auto Loans $1.1 $ % Credit Cards $0.7 $ % Other $0.4 $ % TOTAL $12.3 $ % Savings rate 5.8%, up from 20-year avg of 5%

6 Millennials not yet at income potential $1,000 Median Weekly Earnings by Age Group $900 $800 $700 $600 $500 $ to 34 years 35 to 44 years 45 to 54 years 55 to 64 years 65 years and over Source: U.S. Bureau of Labor Statistics, Current Population Survey.

7 Spending patterns differ by generational group (Top 3 categories = 70% Millennials; 62% Gen X & Boomers) Consumer Spending by Category by Age Housing Transportation Food Personal insurance & pensions Healthcare Entertainment Apparel & services Education & reading Age Group (Avg Ann Spending) 55 years+ ($49,260) yrs ($64,140) < 35 yrs ($44,510) All Other $0 $5,000 $10,000 $15,000 $20,000 $25,000 Source: U.S. Bureau of Labor Statistics, 2014 Consumer Expenditure Survey.

8 Metro Denver Real Retail Trade Sales Growth Rates 8% 6% 4% 2% 4.0% 4.3% 3.3% 3.1% 5.4% 2.4% 5.2% 4.4% 2.2% 2.4% 0% -2% -4% -6% -4.7% -8% -10% -12% -10.6% e 2017f Source: Colorado Department of Revenue. 2016e = DRP estimate; 2017f = DRP forecast

9 Home sales begin to slip, though remain at a reasonable level 60,000 55,000 Metro Denver Existing Home Sales Closed 53,676 54,073 56,062 55,634 53,965 50,000 45,000 50,244 49,789 47,837 42,070 45,210 40,000 38,818 38,106 35,000 30,000 25, f Sources: Metrolist ( ); Denver Metro Association of REALTORS ( ). 2017f = DRP forecast

10 Metro Denver ranked #16 and Boulder #7 for highest median home price in 3Q 2016 $550 $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 Median Home Prices (in thousands) $546 $515 $454 $366 $376 $404 $384 $391 $383 $360 $372 $346 $358 $353 $354 $310 $281 $250 $245 $252 $219 $220 $232 $231 $222 $218 $224 $234 $247 $197 $197 $209 $172 $173 $166 $177 United States Metro Denver Boulder e 2017f Source: National Association of REALTORS. 2016e = DRP estimate; 2017f = DRP forecast

11 Apartment Vacancy and Rental Rates 11% Metro Denver Vacancy Rate Metro Denver Rental Rate $1,500 $1,400 Vacancy Rate 9% 7% 5% $1,300 $1,200 $1,100 $1,000 $900 Monthly Rental Rate 3% e $800 Source: Denver Metro Apartment Vacancy & Rent Survey. 2016e = DRP estimate

12 Multi family represents 52% of new construction in 2016 (30+ year average = 28%) 25,000 20,000 Metro Denver Building Permits* Multi-Family (5+ units) Single-Family Attached (2-4 units) Single-Family Detached (1 unit) 15,000 10,000 5, e 2017f * The Census Bureau tracks building permits by the number of housing units in the structure. Source: U.S. Census Bureau, Building Permits. 2016e = DRP estimate; 2017f = DRP forecast

13 Business Activity Sales Expectations Materials Costs Wage Levels Tax Policy Regulatory Issues Interest Rates Healthcare Costs Political Climate Staffing Production Levels Equipment Investment Commercial Real Estate

14 Employment growth varies across the state Nonfarm Job Growth Rates by Metro Area, through 3Q 2016 U.S. 1.8% Colorado 2.8% Fort Collins 3.5% Metro Denver 3.1% Colorado Springs Pueblo 2.2% 2.4% Greeley 1.1% Grand Junction 0.6% 0.0% 1.0% 2.0% 3.0% 4.0% Source: U.S. Bureau of Labor Statistics, Current Employment Statistics.

15 Nonfarm Job Growth Rates 6% Metro Denver 2016 Employment = 1.6 million : 53K jobs added per year; 2016: 45K; 2017: 39K 4% 2% 0% 3.6% 3.7% 3.5% 2.9% 2.4% 1.6% 1.9% 2.1% 1.7% 1.6% e 2017f -2% -4% -6% United States Metro Denver Source: U.S. Bureau of Labor Statistics. 2016e = DRP estimate; 2017f = DRP forecast

16 Proprietors Are Another Significant Component Of Employment 900, ,000 Proprietors Employment 25% of Colorado s Total Employment (US avg = 22%) 849, , , , , , , , , , Source: U.S. Bureau of Economic Analysis.

17 Key Metro Denver and Northern Colorado Industry Clusters Aerospace Aviation Beverage Production Bioscience Medical Devices & Diagnostics Pharmaceuticals & Biotechnology Broadcasting & Telecommunications Energy Fossil Energy Cleantech Financial Services Banking & Finance Investments Insurance Healthcare & Wellness IT/Software

18 Metro Denver and Northern Colorado Industry Clusters, Source: Development Research Partners.

19 Metro Denver Commercial Real Estate Vacancy Rate (direct) Lease Rate 4Q Q Q Q 2015 Office 9.3% 9.6% $25.36 $24.65 Industrial 3.8% 3.1% $7.41 $7.03 Retail 4.5% 5.0% $16.55 $16.00 Construction Activity (YTD through 4Q 2016) Office: 1.4 MSF completed; 5.9 MSF under construction Industrial: 4.5 MSF completed: 2.3 MSF under construction Retail: 1.3 MSF completed; 1.2 MSF under construction Source: CoStar Group, Inc.

20 Maintaining Equilibrium. Challenges Global economic uncertainty Rising interest rates Rising inflation rate Seeking clarity on taxes, healthcare Infrastructure needs > funding options Affordable housing Opportunities More confident consumer Changes in who is buying what & where Strong job growth continues Active commercial real estate market Technology driving major changes

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