Notable Rankings. Denver Health Medical Center (seventh) Good Samaritan Medical Center (seventh) Presbyterian-St. Luke s Medical Center (10th)

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1 August2015

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 (the Denver 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 Forbes ranked Denver the nation s best place for business and careers, while Fort Collins ranked 10th. The Denver- Aurora-Lakewood metropolitan area ranked number one for the first time, rising from fourth place on the 2014 list. The company stated that the area is attractive for its diverse economy, highly educated labor force, and outdoor recreational opportunities. Raleigh, N.C. was ranked second followed by Portland, Ore., Provo, Utah, and Atlanta, Ga. According to the 2015 Life Science Outlook released by JLL, Denver was ranked the 11th best market for life sciences real estate. The ranking criteria included life sciences employment concentration, employment growth, funding, and patents. The report stated Denver has about 4 million square feet of rentable lab space, about a quarter of the space available in number one ranked Boston and the Bay Area. According to the 2015 National Green Building Adoption Index, Denver ranked sixth for green office space. The report stated that nearly half of all leasable office space in the Denver area is in energy-efficient, sustainable buildings, which is 10 percentage points higher than the national average. Minneapolis-St. Paul, Minn. ranked first followed by San Francisco, Calif., Chicago, Ill., Atlanta, Ga., and Houston, Texas. The Hackett Group evaluated midsized U.S. cities for the best alternatives for offshoring IT and other business services and Longmont was ranked among the top ten alternative cities. The group evaluated cities on 39 key indicators including labor and office-space costs, workforce quality, overall risk, and business environment quality. Other cities among the top ten included Syracuse, N.Y., Jacksonville, Fla., Richmond, Va., and Atlanta, Ga. Denver-based Sola Salon Studios was ranked as the country s best franchise to buy for large initial investment by Forbes magazine. Sola Salon Studios offers franchises for an entry cost of $500,000 or more. Forbes looked at data from 2009 to 2013 provided by FRANdata and ranked franchises based on their buy-in costs. Sola Salon Studios has a 5- year growth rate of 38 percent and a 100 percent 5-year franchisee continuity. U.S. News and World Report recently ranked Children s Hospital Colorado as the fifth-best children s hospital in America. Six of its specialty areas also placed in the top 10 in their respective categories: diabetes and endocrinology (fourth), gastroenterology/gi surgery (sixth), neonatology (sixth), pulmonology (seventh), orthopedics (seventh), and cancer (ninth). Considering the specialty program rankings and the overall ranking, the hospital was named to the U.S. News Honor Roll, which included only 12 other children s hospitals. U.S. News and World Report ranked the University of Colorado Hospital (UCH) as the top hospital in Colorado. Eleven of the hospital s specialties also ranked in the top 50 national programs in their respective areas. The hospital s affiliated pulmonology program at National Jewish Health was ranked second, the highest ranked program for UCH. The other nationally ranked programs at UCH were cancer (15th), nephrology (12th), orthopedics (25th), neurology and neurosurgery (26th), diabetes and endocrinology (30th), urology (30th), gynecology (31st), cardiology and heart surgery (40th), gastroenterology and GI surgery (42nd), and geriatrics (43rd). Craig Hospital of Englewood was ranked seventh nationally among rehabilitation hospitals. Other Metro Denver hospitals in the Colorado top ten consisted of: Porter Adventist Hospital of Denver (second) Sky Ridge Medical Center (fourth) Medical Center of the Rockies (seventh) Denver Health Medical Center (seventh) Good Samaritan Medical Center (seventh) Presbyterian-St. Luke s Medical Center (10th) Metro Denver Economic Development Corporation August 4, 2015 Page 1

3 Colorado s state school system was ranked second in the nation by WalletHub. The only state to rank above Colorado was Massachusetts. The company compiled the ranking based on 13 metrics including dropout rates, math test scores, average SAT score, and the youth incarceration rate per 100,000. Of the metric categories, Colorado ranked first for school system quality, but 47th for safety. The Annie E. Casey Foundation released the annual Kids Count report and ranked Colorado 21st overall for child wellbeing, up from 22nd in The report showed Colorado improved in economic measures, having fewer kids living in high-poverty areas, and in education, with more children going to preschool. Colorado ranked 44th in children s health, falling five spots from WalletHub ranked Colorado as the least expensive state in the country for energy prices. The company compared total monthly energy bills across all 50 states and graded them based on rates and prices for electricity, natural gas, motor fuel, and home heating oil. Colorado was reported as having a total energy cost of $244, with a monthly electricity cost of $93 and a monthly motor fuel cost of $107. Washington ranked second followed by Oregon, Arizona, and New Mexico. WalletHub ranked three Denver cities among the best in the country for first-time home buyers, and Centennial ranked third, Longmont ranked ninth, and Thornton ranked 10th. WalletHub reported that Centennial ranked high on the list because it was the second-best city for low crime of the 300 cities ranked. The other Colorado cities that ranked in the top 50 were Arvada (13th), Colorado Springs (15th), Westminster (19th), Greeley (21st), Fort Collins (30th), and Aurora (45th). HomeVestors of America Inc. ranked Denver as the top city for investing in residential rental properties. The ranking criteria analyzed markets where population is growing at above-average rates, with current job growth rates at or above 2 percent, and low unemployment. Dallas was ranked second followed by Houston, Texas, Austin, Texas, and Seattle, Wash. According to WalletHub, Denver is the 10th best city for recreation of the 100 most populated cities in the country. The company evaluated cities based on data in four key categories consisting of entertainment and recreation facilities, cost, quality of parks, and climate. Of the categories, Denver ranked 10th for entertainment facilities, 19th for quality of parks, 39th for cost, and 64th for climate. Cincinnati, Ohio was ranked first followed by Omaha, Neb., Scottsdale, Ariz., Tampa, Fla., and Boise, Idaho. Travel + Leisure magazine s World s Best Awards ranked many of Colorado s lodging facilities among the top rated on the many lists released by the company. The Little Nell tied for 27th in the world, the Sebastian Vail A Timbers Resort ranked 52nd in the world, and the Sonnenalp Hotel in Vail ranked 65th in the world on the top 100 hotels worldwide list. The Four Seasons Hotel Denver ranked 20th among the top 50 large-city hotels in the continental United States. Policy Watch National & International The Federal Reserve adopted a new rule that will require eight U.S. banks to hold additional capital to decrease the risk these banks pose to America s financial stability. The eight banks affected are of Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street, and Wells Fargo. The rule identifies the eight banks as global systematically important bank (GSIB) holding companies under the new rule s criteria. These GSIB companies will be required to calculate their risk-based capital surcharges under two methods and use the higher of the two results. Analysts expect that the surcharges will range from 1 percent to 4.5 percent on each bank s total risk-weighted assets based on the most recently available data. The surcharges will be phased in starting in The Southeast Light Rail Line extension to Ridgegate Parkway south of Denver was approved by the RTD governing board in July. The Board awarded the contract to Balfour Beatty Infrastructure Inc. The company that won the twophased contract to design and build the 2.3-mile extension will begin the design phase this fall and construction is expected to begin in spring The project has a total projected cost of $233.1 million and is expected to be Metro Denver Economic Development Corporation August 4, 2015 Page 1

4 completed by early The final project will include an end-of-the-line station at RidgeGate, with 1,300 parking spaces, and two more light rail stations, one at Sky Ridge Medical Center and one at the planned Lone Tree City Center. National Economic Overview The U.S. Bureau of Economic Analysis (BEA) released the advanced estimate of real gross domestic product (GDP) for the second quarter of The estimate showed that GDP increased at an annual rate of 2.3 percent through the second quarter, which was 1.7 percentage points above the revised first quarter rate of 0.6 percent. The advanced estimate represents incomplete source data that is subject to further revision in the coming months. The increase in GDP reflected positive contributions from personal consumption expenditures, exports, state and local government spending, and residential fixed investment. The second estimate of second quarter 2015 GDP will be released August 27. The July conference of the Federal Open Market Committee (FOMC) reported that economic activity continued to expand moderately. The committee reported that household spending was moderate and the housing sector recorded additional improvement, but business fixed investment and net exports stayed soft. They also reported that underutilization of labor resources had diminished since early this year, but inflation continued to run below the Committee s longer-run objective. To support continued progress toward maximum employment and price stability, the FOMC confirmed its view that the current 0 to 0.25 percent target range for the federal funds rate remains appropriate. The FOMC anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. The next committee meeting will be held on September 17. Economic Indexes & Notable Data Releases National & International The U.S. trade deficit rose to $41.9 billion in May, up from the April deficit of $40.7 billion (revised). Imports decreased to $230.5 billion, falling $0.3 billion between April and May, and exports fell $1.5 billion to $188.6 billion. The goods and services deficit increased $1.2 billion in May 2015 compared with May 2014, driven by a $6.8 billion decrease in exports and a $5.6 billion decrease in imports. The Conference Board Leading Economic Index for the U.S. increased in June to 123.6, rising 0.6 percent between May and June. Economists at the Conference Board reported that the upward trend in the U.S. index seems to be gaining more momentum, pointing to continued strength in the economic outlook for the remainder of the year. Further, housing permits and the interest rate spread drove the latest gain in the index, while labor market indicators such as average workweek and initial claims remained unchanged. The Institute for Supply Management s Purchasing Managers Index reached 53.5 percent in June, a 0.7 percentage point increase from the previous month s level. The June index level marked the 30th 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 Employment Index increased 3.8 percentage points over-the-month to 55.5 percent, while the Customers Inventories Index recorded a 3 percentage point increase during the same period. Survey respondents reported that business is mostly holding steady, but some industries are being influenced by other market forces. The food, beverage, and tobacco products industry reported that the avian flu has had a large impact on egg pricing and items manufactured with eggs. Transportation equipment manufacturers reported strong business in the U.S., but soft markets in Europe and a decline in Asia. The Institute for Supply Management s Non-Manufacturing Index increased 0.3 percentage points in June to 56 percent, compared with the May level of 55.7 percent. The June index marked the 65th consecutive month of growth, as measured by a value over 50. The index tracks 18 non-manufacturing industries and 15 industries reported growth between May and June. The Inventory Sentiment Index recorded the largest over-the-month increase, rising 6 percentage points to 65 percent. The Imports Index reported the largest over-the-month decline, falling 5.5 percentage Metro Denver Economic Development Corporation August 4, 2015 Page 2

5 Local points to 48 percent. Survey respondents reported that avian flu has affected business, but favorable weather is keeping transactions positive. The Leeds Business Confidence Index reported a declining outlook for the third quarter of The index value of 58.3 for the third quarter of 2015 was 3.4 points below the previous quarter. This decline marked the largest decrease in confidence since the second quarter of Of the index components, overall expectations for the state economy fell from 63.2 in the second quarter to 61.2 in the third quarter. Expectations for profits and sales decreased, with the profits index falling 2.2 points over-the-quarter to 58.5 and the sales index decreasing 4.5 points over-the-quarter to According to the report, the greatest optimism was in the state economy, which was also the source of the greatest decline in expectations compared with the previous year. Expectations for the national economy took the largest step back compared to last quarter due to weak first quarter real GDP growth. The Leeds Business School at the University of Colorado released the Leeds Midyear Economic Update and reported that the state s economy continued to expand in pace with projections despite the slump in oil prices. The economic update reported that the state is expected to gain 61,300 jobs in 2015 as the state s economic growth continues to outpace the nation s growth. The report expects every sector to expand except for information. Economists at the Leads Business School stated that the overall employment gains and health of individual sectors is on track with the school s Colorado Business Economic Outlook released in December The Mountain State Employers Council released the Annual Compensation Survey and reported Colorado employers are not planning significant pay hikes next year. The council surveyed 475 employers representing 40,662 workers and employers reported an expected average pay increase of 2.8 percent next year. Further, the wage increase planned for 2016 tracks with the increase estimated for 2015 and the average increase in The Colorado Secretary of State s office and the University of Colorado Business Research Division released their economic indicators report and stated that Colorado saw 26,085 new business filings during the second quarter of The report also stated that existing entity renewals fell 13.8 percent to 108,842 renewals during the second quarter and the number of entities in good standing rose to 577,452. Richard Wobbekind, executive director of CU- Boulder s Business Research Division, stated that the rate of job growth over the past four months was slower than the growth seen in prior months, but the business filings data coupled with other data metrics indicates Colorado remains on solid footing for future employment growth. According to the MoneyTree report released by PricewaterhouseCoopers and the National Venture Capital Association, there were 23 venture capital deals completed in Colorado during the second quarter of Colorado collected $330.2 million in venture capital during the quarter, up from $115 million during the first quarter of Greenwood Village-based Checkmarx, a software company that provides security solutions, reported the largest deal, securing $84 million in funding. AppExtremes in Broomfield raised $70 million and Layer3 TV Inc. raised $47.7 million. The money raised during the second quarter of 2015 was the best second quarter level for the state in 14 years, ranking the state fifth in the nation in terms of dollars and seventh in terms of deals. Labor Force and Employment Employment in Metro Denver rose 3.2 percent between June 2014 and 2015, or an additional 49,600 jobs during the period. The employment growth consisted of a 3.5 percent increase in the Denver-Aurora-Lakewood MSA, or an additional 46,700 jobs, and a 1.7 percent increase in the Boulder MSA, representing 2,900 jobs. The natural resources and construction supersector reported the largest percentage increase over-the-year in employment, rising 10.4 percent or adding 10,100 jobs. The education and health services supersector also reported a significant increase in employment, rising 5.5 percent over-the-year, representing 10,300 additional jobs. The leisure and hospitality supersector created 7,700 jobs during the period, representing a 4.4 percent increase. The information sector (-5.3 percent) recorded the only decline in employment over-the-year. Metro Denver Economic Development Corporation August 4, 2015 Page 3

6 Colorado employment rose 2.7 percent in June compared with the previous year s level, adding 67,100 new jobs over the same period. National employment levels increased 2.1 percent over-the-year, with the addition of over 2.9 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 Jun-15 May-15 Jun % Change Total 11-County Metro Denver* 1, , , , , % -0.5% 1.9% Denver-Aurora-Lakewood MSA 1, , , , , % -0.5% 1.9% Boulder MSA % -0.1% 1.5% Natural Resources & Construction % -9.0% 4.6% Manufacturing % -2.6% 0.6% Wholesale & Retail Trade % -0.6% 2.3% Transp., Warehousing & Utilities % -3.7% -0.5% Information % -2.5% -5.8% Financial Activities % -2.2% 1.5% Professional & Business Services % 0.2% 3.8% Education & Health Services % 3.0% 3.2% Leisure & Hospitality % 1.3% 3.0% Other Services % 0.0% 0.5% Government % 1.3% 0.7% Federal Gov't % 3.1% -1.4% State Gov't % 3.4% 0.9% Local Gov't % 0.0% 1.2% Colorado 2, , , , , % -1.0% 2.1% United States 142, , , , , % -0.7% 1.7% *Includes the Denver-Aurora-Lakewood MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties) and the Boulder MSA (Boulder County). Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary Metro Denver Industry Cluster Headlines Aerospace Lockheed Martin Space Systems Co. opened a national radio frequency communications research and development lab focused on satellites, which will bring dozens of experts to the Jefferson County headquarters. The Payload Center of Excellence opened in May, but is still in the process of expanding. The facility is intended to concentrate the expertise and new equipment used to create and test communications technologies for satellites and satellite components in one place to speed up production and innovation. The Colorado aerospace industry and the U.S. Air Force Space Command celebrated 20 years since the Global Positioning System (GPS) was declared at Full Operational Capability (FOC) on July 17, Lockheed Martin is designing and building the GPS III, the most powerful GPS satellite ever developed, at the company s advanced satellite manufacturing facility, while Raytheon is developing the command and control capabilities for the new GPS III satellites. Metro Denver Economic Development Corporation August 4, 2015 Page 4

7 Aviation FlightSafety International is the newest tenant at the Denver International Business Center. The flight training and simulator manufacturer plans to build a 108,000-square-foot facility that will include eight flight simulators. The company chose the location because of the proximity to its major clients, but there is no estimate on the number of jobs that will be created. Financial Services WorldRemit, a money transfer company, announced that it reduced its customer service staff in Denver. The company did not specify the number of employees that were laid-off, but they ensured that the office in Denver would continue to grow in line with the need of their U.S. business. Northwest Mutual Life Insurance Co. announced plans to expand to a new 32,000-square-foot facility in Denver. The company will lease three floors in the Centerra building and the expansion will allow the company to hire 40 additional employees. TransFirst LLC, one of the nation s largest secure-payment processors, plans to hire 100 employees at its Broomfield and Aurora locations. Healthcare and Wellness Kaiser Permanente announced plans to add 75 employees over the next year at a new facility for its National Claims Administration in Douglas County. The company said that the new facility could have 400 claims officials in the building by the end of Boulder Brands Inc., a Boulder-based natural consumer packaged food company, announced plans to cut its salaried staff by 15 percent. The company plans to use the money saved from the layoffs for enhanced marketing activities that are expected to help drive velocities of core products. The Colorado School of Public Health received a five-year, $8.1 million grant from the Center for Disease Control. The grant will support the Mountain and Plains Education and Research Center to educate students at the University of Colorado Anschutz Medical Campus and Colorado State University. The grant applies to master s and PhD-level programs in industrial hygiene, occupational ergonomics, occupational health physics, and occupational health psychology. The program is expected to help train over 100 students. IT-Software ZenPayroll, a cloud-based payroll processing start-up, announced plans to expand its operations and make Denver its main hub for customer service teams focused on providing memorable, delightful experiences to prospects and customers. The company recently received $60 million in funding led by Google Capital and the company currently processes billions of dollars in annual payroll for tens of thousands of small businesses across the country. ZenPayroll plans to open a new office in downtown Denver near Union Station and hire 100 full-time employees immediately and 1,000 people over the next few years. Businessolver, a company that specializes in benefits administration software and services, announced plans for an expansion in Denver. The company plans to add about 100 positions in Denver this year, which would more than double its existing workforce. California-based Intuit Inc., a financial-software publishing company, announced plans to lay off 59 employees and close its Douglas County call center. The company stated the layoffs were part of a companywide restructuring plan. Envysion Inc., a software firm in Louisville, announced plans to relocate to a larger facility in Superior and hire 30 additional employees in sales and technical positions. Metro Denver Economic Development Corporation August 4, 2015 Page 5

8 Other Industry Headlines A diverse group of ten local companies came together to form a collaborative organization called Innovators Colorado. The group includes companies such as Aspen Skiing Co., CableLabs technology consortium, DaVita Healthcare Partners Inc., and the Denver South Economic Development Partnership. The companies intend to use the organization as a way to come up with transformational ideas that create new businesses and establish new markets. The organization stated that discussions across industries would help cross-pollinate ideas and help companies grow. Denver was selected by Venture for America as a city in which they will begin offering services. The nonprofit program trains college graduates and sends them to work in startups. The company pairs the graduates with early-stage companies for two years to train as entrepreneurs where they can also gain job experience. Boulder-based Isonas Inc., a designer and manufacturer of security-control systems, relocated is headquarters and assembly plant to a larger facility. The company moved from a 2,000-square-foot space to a 5,000-square-foot space. The company employs 28 people and plans to hire four more by the end of the year. Employment Outlook The Manpower Employment Outlook Survey expects third quarter hiring in the Denver-Aurora MSA to rise compared with the previous quarter. The percentage of companies hiring increased 3 percentage points between the second and third quarters, with 26 percent of companies expanding their employment levels. The percentage of companies planning to decrease employment levels was unchanged from the second quarter, with only 1 percent of companies planning to reduce employment levels. The majority of companies intend to maintain staff levels through the third quarter of the year, with the level rising 2 percentage points over-the-quarter to 73 percent. The survey reported that sectors with the best job outlooks were construction, durable goods manufacturing, transportation and utilities, wholesale and retail trade, and professional and business services. Nondurable goods manufacturing and financial activities employment hiring is expected to remain unchanged. Employment Outlook Survey Quarter 3 Quarter 2 Quarter 3 YTD YTD Ann Avg Denver-Aurora-Broomfield MSA Percent of Companies Hiring 26% 23% 26% 23% 21% 13% Percent of Companies Laying Off 1% 1% 8% 3% 5% 10% Percent of Companies No Change 73% 71% 64% 72% 71% 73% Percent of Companies Unsure 0% 5% 2% 2% 2% 5% United States Percent of Companies Hiring 24% 22% 22% 22% 19% 15% Percent of Companies Laying Off 4% 4% 4% 5% 5% 10% Percent of Companies No Change 70% 72% 71% 72% 72% 72% Percent of Companies Unsure 2% 2% 3% 2% 3% 3% Source: Manpower Inc. Hiring expectations in the U.S. improved through the third quarter of 2015 compared with the prior quarter. The percentage of employers planning to increase employment levels rose 2 percentage points to 24 percent between the second and third quarters. The percentage of companies planning to reduce employment levels was unchanged from the prior quarter and from the previous year s level. The percentage of companies planning to maintain staffing levels (70 percent) was 1 percentage point lower than the prior year s level and 2 percentage points below the previous quarter s level. The survey analysts stated that they are seeing signs of a healthy labor market compared with They also stated that while there is some variance in optimism across sectors, employers are focused on growth and adding to their workforces at a controlled rate so as not to face the consequences of over-hiring. Metro Denver Economic Development Corporation August 4, 2015 Page 6

9 Unemployment The unemployment rate throughout the Metro Denver area rose through June, increasing 0.3 percentage points to 4.3 percent compared with May. However, the Metro Denver unemployment rate was 0.6 percentage points below the June 2014 level of 4.9 percent. Douglas and Boulder Counties continued to report the lowest unemployment rates of the sevencounty region, recording 3.7 percent and 3.8 percent, respectively. Adams County recorded the largest over-the-year decline, falling 0.8 percentage points to 5 percent. Colorado s unemployment rate fell 0.6 percentage points over-the-year to 4.5 percent during the month of June. The national unemployment rate of 5.5 percent in June was 0.2 percentage points above the prior month s level, but was 0.8 percentage points below the previous year. Labor Force Statistics (000s, not seasonally adjusted civilian labor force) June YTD AVG 2014 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, % 8.6% 5.1% Adams County % % % 10.0% 5.7% Arapahoe County % % % 8.5% 5.1% Boulder County % % % 6.8% 4.4% Broomfield County % % % 7.6% 4.8% Denver County % % % 9.7% 5.7% Douglas County % % % 6.9% 4.1% Jefferson County % % % 8.4% 4.9% Colorado 2, % 2, % 2, % 8.7% 5.0% United States 158, % 156, % 155, % 9.6% 5.1% Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary National unemployment insurance claims reached new lows in June, recording a significant decline in the number of applications submitted for unemployment benefits. Unemployment insurance claims fell 26,000 claims to 255,000 total claims, the lowest level since November At the peak of the recession, jobless claims reached a level of more than 600,000 claims per week. Analysts stated employers are maintaining staffing levels leading to fewer claims across the country. June unemployment insurance claims decreased in Metro Denver, falling 17.5 percent between May and June. The June level was also 5 percent lower than the year-ago level. Claims throughout Colorado also decreased over-the-month, falling 26.7 percent, and were 3.5 percent lower than 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 Ann Avg Jun-15 May-15 Jun % Change Metro Denver 1,137 1,379 1,197 1,302 1, % 2,095 1,214 Colorado 2,101 2,865 2,178 2,621 2, % 3,911 2,230 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. fell in July, reporting a level of 90.9 from the revised June level of 99.8, an 8.9 percent decline over-the-month. However, the national index for July 2015 was 0.7 percent above the July 2014 level. Metro Denver Economic Development Corporation August 4, 2015 Page 7

10 Analysts at The Conference Board stated that between June and July the Present Situation Index fell 2.6 percent to 107.4, while the Expectations Index fell 13.8 percent to They also reported that consumers continue to assess current conditions as favorable, but their short-term expectations deteriorated in July. Further, a less optimistic outlook for the labor market and possible uncertainty in financial markets may have shaken consumer confidence. Colorado is included in the Mountain Region Index and the area continued to report increases in consumer confidence. The index rose to in July from the June revised level of 115, increasing 1.1 percent over-the-month. The index was also up 27.4 percent over-the-year. For the Mountain Region Index, the Present Situation Index rose to in July from in June, while the Expectations Index fell to 96.9 from in June. Consumer Confidence Index Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Jul-15 (p) Jun-15 (r) Jul % Change Mountain % United States % Source: The Conference Board. (p) = preliminary (r) = revised National retail sales increased at a slower pace through June, with total retail sales rising 1.4 percent above the June 2014 total. Retail sales reached $442 billion in June, a decrease of 0.3 percent over May Motor vehicle sales rose 6.5 percent over-the-year, but fell 1.1 percent between May and June. The building materials sector reported a decrease of 1.4 percent between June 2014 and 2015 and fell 1.3 percent over-the-month. Gasoline sales fell 17.1 percent over-the-year, but rose 0.8 percent over-the-month. The over-the-year decline in gasoline sales in June marked the 13th consecutive month of over-the-year decline. Core retail sales, which excludes motor vehicle, building material, and gasoline sales, recorded a 0.1 percent decrease between May and June. Annual retail sales in Metro Denver increased 4 percent between 2013 and Retail sales for 2014 totaled over $109 billion, an absolute increase of nearly $4.2 billion over the 2013 total of $105 billion. All seven Metro Denver counties reported year-over-year growth. The City and County of Broomfield reported the largest increase in retail sales between 2013 and 2014, rising 6.5 percent to $2.4 billion. The City and County of Denver reported the largest absolute increase in retail sales over-the-year, generating an additional $1.2 billion. Arapahoe County also reported a significant absolute increase during the period, generating an additional $1 billion in sales. Douglas County recorded the smallest increase in retail sales between 2013 and 2014, rising 0.8 percent to nearly $8.4 billion. Retail sales in Colorado were 5.6 percent higher in 2014 than 2013, representing $9.6 billion in additional retail sales. Total Retail Sales ($000s) Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth Annual Growth Dec-14 Nov-14 Dec % Change Total Metro Denver 13,879,677 8,152,188 14,015, ,478, ,247, % -11.6% 7.4% Adams County 2,503,399 1,646,765 2,515,510 23,136,254 22,109, % -17.4% 11.7% Arapahoe County 2,732,556 1,623,458 2,562,312 21,203,770 20,447, % -8.2% 2.6% Boulder County 1,688, ,996 1,606,534 10,369,461 9,991, % -9.1% 2.1% Broomfield County 374, , ,396 2,380,737 2,235, % -8.3% 49.4% Denver County 3,592,627 2,058,075 3,833,486 27,397,062 26,207, % -13.5% 8.1% Douglas County 1,001, ,812 1,152,091 8,388,971 8,326, % -5.7% 16.9% Jefferson County 1,987,466 1,271,822 2,056,669 16,602,608 15,929, % -10.5% 3.8% Colorado 23,493,652 13,316,874 22,987, ,374, ,784, % -12.2% 7.8% Source: Colorado Department of Revenue. According to the U.S. Bureau of Labor Statistics, the U.S. Consumer Price Index (CPI) increased 0.4 percent between May and June. The index also rose 0.1 percent over-the-year. The core CPI which excludes food and energy costs increased 1.8 percent over-the-year and 0.1 percent over-the-month. The increase in the overall CPI between June 2014 and 2015 was Metro Denver Economic Development Corporation August 4, 2015 Page 8

11 attributed to a 2.5 percent increase in medical care and a 2 percent increase in housing. The transportation index declined 6.9 percent over-the-year, reflecting low motor fuel prices, but there was a 0.8 percent increase over-the-month. There was also a 1.7 percent increase over-the-year in both the food and beverage index and the other goods and services index. According to the AAA Daily Fuel Gauge Report, the national average fuel price for July decreased 3.7 percent from June to $2.67 per gallon. The July average fuel price was 24.2 percent lower than the prior year s level ($3.52 per gallon). Metro Denver reported a 5.5 percent increase in the average fuel price between June and July. The average fuel price of $2.77 per gallon for July in Metro Denver was $0.11 higher than the national average. The area reported average fuel prices that were 22.5 percent lower in July 2015 than the previous year s level. According to GasBuddy.com, gas prices in Denver and Colorado were above the national average at the end of July, due to continued production problems at a Texas refinery that pushed gas prices higher in Colorado. As Colorado has only one gasoline refinery, state gas stations depend on supply delivered by manufacturers in other states. Stock Market All four stock market indices reported rising trends between June and July. The NASDAQ reported the largest increase overthe-month, rising 2.8 percent to 5, The S&P 500 and the DJIA also reported increases between June and July, rising 2 percent and 0.4 percent, respectively. The Bloomberg Colorado index reported a significant increase, rising 2.8 percent over-the-month. The three national indices continued to recorded positive returns compared with July The NASDAQ reported an over-the-year increase of 17.4 percent, while the S&P 500 increased 9 percent and the DJIA rose 6.8 percent. The Bloomberg Colorado index reported negative returns over-the-year. Stock Market Indexes Month of Month of Month of YTD Return YTD Return Ann Avg Return Ann Avg Return Jul-15 Jun-15 Jul Bloomberg Colorado % 8.6% 45.3% 16.9% S&P 500 2, , , % 4.5% 12.8% 3.0% NASDAQ 5, , , % 4.6% 16.9% 1.4% DJIA (Dow Jones) 17, , , % -0.1% 11.0% -0.6% Travel & Tourism Sources: Bloomberg.com; Yahoo! Finance. The average hotel occupancy rate in Metro Denver rose 8.6 percentage points to 88.7 percent occupancy in June compared with the May level. The June level was also 2.3 percentage points higher than the previous year s level. The average room rate for June was $ per night, 2.4 percent higher than the May level and 7 percent higher over-the-year. Metro Denver Hotel Statistics Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Jun-15 May-15 Jun % Change Percent of Hotel Rooms Occupied 88.7% 80.1% 86.4% 75.4% 74.4% 1.3% 64.4% 64.1% Average Hotel Room Rate $ $ $ $ $ % $ $91.10 Source: Rocky Mountain Lodging Report. Spokespeople for DIA reported that over 4.5 million passengers passed through the airport in May, increasing 7.3 percent from the 4.2 million passengers in April. However, the May 2015 level was 0.7 percent lower than the May 2014 level, recording 31,165 fewer passengers through the airport. A report released by Cheapflights.com stated that DIA airfares are the 13th most affordable in the country, with an average airfare of $292. In 2014, DIA was ranked 20th and had an average airfare of $332, therefore airfare in Denver is getting cheaper. Metro Denver Economic Development Corporation August 4, 2015 Page 9

12 Number of Airline Passengers Denver International Airport Passengers Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual May-15 Apr-15 May % Change ,532,025 4,223,220 4,563,190 20,968,649 21,105, % 51,985,038 43,387,369 Source: Denver International Airport, Traffic Statistics. Residential Real Estate The Gables Cherry Creek project was expanded with the $10.25 million purchase of 1.3 acres at 351 S. Jackson St. This purchase will mark the third phase of the Gables Cherry Creek complex and bring the project to more than 650 units. The development will replace the former Colorado Private Reserve club and will be a single eight-story tower at its shortest and reach 12 stories at its tallest. Construction began on the 580-apartment building near Union Station that will be anchored by Whole Foods on the ground floor. The apartments will be split between three ten-story towers and include a fitness center, lounge room, theater, game rooms, and several conference rooms. The apartments are expected to be finished in April 2018 and the Whole Foods is expected in late Denver s Tavern Hospitality Group partnered with Nashville-based Southern Land Co. to build a new apartment building at the current Tavern Uptown location. The existing Tavern building will be torn down and rebuilt as part of the development. The completed eight-story project will include 315 apartments, 14,000 square feet of restaurant space for the Tavern, and a rooftop patio with high-speed elevator access. Construction on the development is expected to take 18 months. Lynd Co., a San Antonio-based developer, purchased a 1.8-acre site to build a 277-unit apartment complex in Denver s RiNo district. The building will include studios, one-bedroom, and two-bedroom apartments. The building will be spread across six floors atop a two-story parking garage. A 276-unit apartment complex was approved by the Longmont Planning and Zoning Commission. The Renaissance Village will be located at the southwest corner of Clover Basin Drive and Airport Road. The community will have 16 two- and three-story buildings, a clubhouse, 523 parking spaces, parks, a pet-washing station, and a bike-repair room. Mill Creek Residential Trust LLC, a Dallas-based residential real estate company, announced plans to build 275 luxury apartment units near the University of Denver. The project known as Modera Observatory Park will be located on two parcels within walking distance to the light rail. The company reported plans to develop a high-quality community with top-level finishes and a luxury pool deck. Construction on the buildings is expected to break ground in August 2015, with completion during the first quarter of Denver s Golden Triangle neighborhood is the location of a new 274-unit luxury high-rise apartment development called Eviva Cherokee. The project is being developed by The Integral Group, based in Atlanta, and Denver-based Charter Realty Group, and The Beck Group was selected as the general contractor. The development will include studios, one- and two-bedrooms, and several two-story walk-up townhomes. Riverpoint Partners broke ground on a 203-unit apartment complex in Denver s Jefferson Park neighborhood. The development will include underground parking, a second-floor outdoor deck and spa, pool and grills, a community room, interior courtyard, fitness center, dog wash, and business center. The building will have studios and one- and two-bedroom units, 11 of which will be two-story brownstone-style units. The completed project is expected during the third quarter of Macy Development Co. began construction on a 66,939-square-foot assisted living facility in Longmont called AltaVita Assisted Living. The 67-room facility will include 34 studios, 29 one-bedroom units, and four companion units. The facility will include two guest suites, a bistro, ice cream parlor, fitness center, spas, salon, and outdoor recreation features. Metro Denver Economic Development Corporation August 4, 2015 Page 10

13 Home Resales Apartment List surveyed nearly 6,000 adults aged 18 to 34, the millennial age group, who rented their apartments to determine their intentions and plans of owning homes in the future. The survey found that nearly three out of four respondents expected to purchase a home at some point, but only a quarter expected to purchase in the next two years and half expected to purchase a home in 2018 or beyond. The company believes that heavy student loan debt and the struggle to find stable employment and income made millennials less able to qualify for a mortgage. Further, millennials are marrying later, reducing the motivation to purchase a home, and they were turned off from home purchasing after watching family go through foreclosures. The company reported that 81 percent of millennial renters in Denver reported they wanted to buy a home at some point. The National Association of Realtors (NAR) released the June analysis of U.S. existing-home sales, reporting that sales rose 3.2 percent between May and June to 5.49 million homes sold annually. The existing home sales rate for June was 9.6 percent higher than the previous year s level, recording the highest sales pace since February The housing inventory in June rose 0.9 percent over-the-month, representing a 5.0-month supply, and was 0.4 percent higher over-the-year. NAR economists said that June s sales were likely propelled by the spring s initial phase of rising mortgage rates, which usually prods some prospective buyers to buy now rather than later. Further, the wave of demand for housing was fueled by a year-plus of steady job growth and an improving economy. Existing home sales in Metro Denver increased between May and June, rising 14.9 percent to 5,845 total homes sold during the month of June. June home sales were 2.7 percent above the previous year s level. Unsold homes on the market were 4.8 percent higher in June than May, but 26.2 percent lower than the previous year s inventory level. The average sales price for single-family homes rose 0.3 percent between May and June to $423,591 and was 12.2 percent higher than the previous year s price. The average sales price of condominiums ($259,237) decreased 0.8 percent over-the-month, but was 14.7 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 Jun-15 May-15 Jun % Change Home Sales (Closed) 5,845 5,085 5,689 25,326 24, % 38,818 53,106 Unsold Homes on Market 6,344 6,051 8,593 6,344 8, % 20,867 24,780 Average Sales Price-Single Family $423,591 $422,395 $377,422 $407,496 $360, % $282,080 $307,529 Average Sales Price-Condo $259,237 $261,327 $225,968 $254,712 $221, % $161,005 $189,035 Median Sales Price-Single Family $361,000 $359,000 $315,000 $235,000 $247,000 Median Sales Price-Condo $215,000 $215,900 $183,450 $136,000 $160,000 Source: REcolorado; Data for the seven Metro Denver counties compiled by Development Research Partners. Home Prices NAR data shows the June median existing-home sales price across the U.S. was $236,400, an over-the-year increase of 6.5 percent. Median housing prices increased over-the-year in each of the nation s four regions. The West reported the largest increase between June 2014 and 2015, rising 9.9 percent to a median home price of $328,900. The Midwest reported the lowest median home price ($190,000), which was 7.2 percent above the previous year s level. The South also recorded over-the-year growth, rising 7.2 percent to a median home price of $205,000. The Northeast reported an over-the-year increase of 3.9 percent to $281,100. Median Sales Price of Existing Single-Family Homes ($000s) Quarter 1 Quarter 4 Quarter 1 YTD Avg YTD Avg YTD Avg Median Median 2015 (p) 2014 (r) % Change Boulder MSA $442.2 $427.0 $418.7 $442.2 $ % $358.1 $348.4 Denver-Aurora MSA $338.1 $314.8 $288.4 $338.1 $ % $232.4 $247.1 United States $205.2 $208.4 $191.1 $205.2 $ % $173.1 $219.0 Source: National Association of REALTORS. (p) =preliminary (r) =revised Metro Denver Economic Development Corporation August 4, 2015 Page 11

14 A separate NAR report revealed that median home prices throughout the Metro Denver area increased between the fourth quarter of 2014 and the first quarter of The Boulder MSA reported a 3.6 percent increase ($442,200) in home prices during the first quarter of 2015 compared with the previous quarter. Further, Boulder home prices were 5.6 percent higher than the first quarter of The Denver-Aurora MSA reported growth in home prices, reporting a 7.4 percent increase in prices over-the-quarter to $338,100. Between the first quarters of 2014 and 2015, the Denver-Aurora MSA recorded a 17.2 percent increase in the median sales price. The national median sales price fell 1.5 percent over-the-quarter to $205,200, but was 7.4 percent higher than the previous year s level. Of the 178 MSAs included in the first quarter 2015 report, the Boulder MSA reported the seventh highest median price and the Denver-Aurora MSA median price was the 18th highest. The Denver-Aurora MSA also reported the seventh largest over-the-year increase in the median sales price. According to the S&P/Case-Shiller home price index, Denver housing prices increased in May. The Denver index was in May, an absolute increase of 1.8 points over-the-month. Each of the 20 cities tracked by the index reported increases both over-the-month and over-the-year. Denver s home prices in May 2015 were 10 percent higher than the prior year s level. San Francisco also recorded a 10 percent over-the-year increase, tied with Denver for the largest increase in price during the period. Washington, DC (+1.2 percent) reported the smallest over-the-year increase. The national home price index rose 4.4 percent between May 2014 and Analysts with the company stated that over the next two years or so, the rate of home price increases is more likely to slow than to accelerate and that prices are increasing about twice as fast as inflation or wages. Further, first time homebuyers are the weak spot in the market. They explained that first time buyers provide demand and liquidity that supports trading up by the current home owners. Without a boost in first time buyers, there is less housing market activity, fewer existing homes on the market, and more worry about inventory levels. Atlanta Federal Reserve Bank research argued that the absence of first time home buyers should not be blamed on millennials since the age distribution of first time buyers has not changed much since They said if anything, the median age of buyers has dropped slightly. Research from the New York Federal Reserve stated that the size of mortgage down payment is likely the key factor in housing purchases, more so than mortgage rates. Foreclosures Housing foreclosures throughout the Metro Denver area declined in six of the seven counties between June 2014 and Metro Denver recorded a 23 percent decrease in foreclosures in June compared with the previous year, but a 13.9 percent increase from the previous month, representing 42 additional foreclosures. The City and County of Broomfield reported the largest over-the-year decline in foreclosures, falling nearly 89 percent to one foreclosures in June. Douglas and Jefferson Counties also reported significant declines in foreclosures over-the-year, falling 55.6 percent and 40 percent, respectively. Arapahoe County reported the only increase in foreclosures over-the-year, rising 11.5 percent to 107 foreclosure filings. Foreclosure levels in Metro Denver have maintained historically low levels through These low levels are an additional indication of the continued strength of the Metro Denver residential real estate market. Metro Denver Economic Development Corporation August 4, 2015 Page 12

15 Real Estate Foreclosures Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total Jun-15 May-15 Jun % Change Total Metro Denver* ,848 3, % 23,393 14,335 Adams County % 4,891 3,281 Arapahoe County % 5,500 3,600 Boulder County % 1, Broomfield County % Denver County % 5,053 3,713 Douglas County % 2, Jefferson County % 3,849 2,120 *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 foreclosure report for the first half of 2015, stating the U.S. foreclosure rate decreased 13 percent from the same period the year prior. The total filings for the first six months (597,589 filings) were also 13 percent below the previous six-month s level. According to the report, foreclosure starts for the first half of the year were at their lowest level since the company started tracking the data in 2006, a 10-year low. Vice president of RealtyTrac Daren Blomquist stated that U.S. foreclosure starts have fallen well below the pre-crisis levels and are still searching for a floor. Further, loans originated in the last five years continue to perform better than historic norms, with tighter lending standards and more cautious borrower behavior acting as important guardrails for the real estate boom of the last three years. New Homes The Census Bureau report on new home sales after adjustment for seasonal trends stated that national home sales decreased in June to 482,000 annual sales from the revised May level of 517,000 annual sales. The June home sales level was 6.8 percent below May, but was 18.1 percent above the previous year s level. The Northeast reported the only over-the-month growth in sales, rising 28 percent to 32,000 sales. The West and Midwest reported significant declines overthe-month, falling 17 percent and 11.1 percent, respectively. The South reported the smallest overthe-month decline, falling 4.1 percent to 282,000 sales. All four regions recorded improvements between June 2014 and The South reported the largest over-the-year increase in sales, rising 23.7 percent, followed by the Northeast (+23.1 percent). The West recorded a 10.9 percent increase in sales between June 2014 and 2015, recording 112,000 total home sales. The Midwest reported the smallest overthe-year increase in home sales, rising 5.7 percent. The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index (HMI) rose 4 points to 53 in July, the first time the index was above 50 since January. NAHB spokespersons reported that the index level is an important sign that the market is strengthening as pent-up demand brings more buyers into the marketplace. They also said that the improving job market goes hand-in-hand with a rise in builder confidence because as employment increases and workers feel more secure about their own economic situations, they are likely to feel more comfortable about buying a house. According to the Census Bureau, the seasonally adjusted annual number of nationwide residential building permits rose 7 percent in June (1.34 million permits) from May and was 29.4 percent higher than June There was a 1.6 percent Metro Denver Economic Development Corporation August 4, 2015 Page 13

16 increase in single-family detached units over-the-month and a 14.2 percent rise in multi-family units. Permits in the singlefamily attached market were unchanged in June compared with May. Single-family detached permits rose over-the-year, increasing 6.8 percent, but single-family attached units decreased 10.5 percent during the same period. Multifamily permits recorded the largest increase, rising 76.1 percent between June 2014 and The Northeast (284,000 permits) reported the largest increase in permits over-the-year, rising 149 percent. The West (293,000 permits) and the South (586,000 permits) also reported over-the-year increases in permits, rising 29.6 percent and 18.6 percent, respectively. The Midwest reported the only over-the-year decline, falling 12.6 percent to 174,000 permits. Residential building permits for the Metro Denver area recorded significant growth in June compared with the prior year. Metro Denver reported a 30 percent increase in total permits issued between June 2014 and 2015, with 379 additional permits issued. Single-family attached permits rose 47.2 percent over-the-year and multi-family permits rose 27.9 percent. The majority of the permit increase was attributed to a rise in single-family detached permits, rising 30.3 percent and reporting 239 additional permits in June 2015 compared with June Compared with May 2015, permits through June in Metro Denver rose nearly 14 percent with 200 additional permits. The single-family attached market reported a 15.2 percent increase in permits over-the-month, while the multi-family market recorded a 24.5 percent increase. Residential Building Permits Month of Month of Month of YTD Total YTD Total YTD Total Total Total Jun-15 May-15 Jun % Change Single-Family Detached Units 1, ,935 4, % 3,791 17,888 Single-Family Attached Units % Multi-Family Units ,723 3, % 1,478 2,953 Total Units 1,644 1,444 1,265 8,948 8, % 5,554 21,312 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 second quarter of 2015 reported declining vacancy, recording further tightening of the apartment market. The Metro Denver apartment vacancy rate fell 0.4 percentage points to 4.5 percent from the first quarter level. The vacancy rate was also 0.2 percentage points below the prior year. Vacancy rates ranged from 3.4 percent in Jefferson and Douglas counties to 5 percent in Arapahoe County. Decreases in four of the six submarkets contributed to the over-the-quarter decline in Metro Denver. Jefferson and Arapahoe counties reported the only over-the-quarter increases, rising 0.2 percent and 0.1 percentage points, respectively. Apartment Statistics Quarter 2 Quarter 1 Quarter 2 YTD Average YTD Average YTD Average Annual Average Annual Average % Change Apartment Vacancy Rate 4.5% 4.9% 4.7% 4.7% 4.9% 5.9% 8.2% Average Monthly Rental Rate (all units) $1,265 $1,204 $1,117 $1,235 $1, % $909 $848 Source: Denver Metro Apartment Vacancy and Rent Survey. The average monthly rental rate of apartments in Metro Denver increased through the second quarter of 2015, marking the sixth consecutive quarter of over-the-quarter rental rate growth. The second quarter average rental rate in Metro Denver ($1,265) was 5.1 percent higher than the previous quarter s level. This rate was also 13.3 percent higher than the second quarter of 2014, representing an increase of $148 in average monthly rental rates over-the-year. All six submarkets reported average rental rates above $1,150 during the first quarter, with average rental rates ranging from $1,179 in Adams County to $1,488 in Douglas County. There are a few major contributors to the continued tightening of the Metro Denver apartment rental market. The area has had steady population and economic growth, leading to higher employment levels and more steady paychecks. As Metro Denver Economic Development Corporation August 4, 2015 Page 14

17 individuals relocate to Metro Denver and existing residents move out of their parents homes or no longer financially require roommates, the demand for apartments increase (pushing down vacancy rates) and the rental rates increase due to a limited supply of rental units. There is also a shortage of skilled construction labor and residential real estate developers have not been able to build new rental space at a pace that keeps up with the rising demand. Commercial Real Estate The Dry Creek Corporate Center announced plans for new renovations and developments at the existing location at Dry Creek Road and I-25. The development will include a new five-story, 212,000-square-foot Class A office building. The 57-acre project also plans for three additional multi-story office buildings and one office/flex building. The development will be renamed Inova Dry Creek and construction will begin in September. A mixed-use development is planned for 3.2 acres of land along the South Platte River near Sports Authority Field at Mile High. The joint effort between Denver s Urban Ventures and White Construction Group of Castle Rock, called Steam on the Platte, will revitalize the Sun Valley neighborhood at West 14th Avenue and Zuni Street. The $50 million project will include the renovation of a 65,000-square-foot warehouse into creative office space, which will open in the third quarter Another building in the area will be renovated into a restaurant and additional office space and residential units will be built in future phases. Mountain Man Fruit & Nut Co. plans to build a new $15 million production facility at Dove Valley Business Park near Centennial Airport. The company currently occupies 68,000 square feet and will upgrade to a 157,000-square-foot facility on 20 acres. The company currently produces between 10 million and 15 million pounds of snacks per year, but the new facility will allow them to increase their capacity to between 40 million and 60 million pounds. The University of Denver broke ground on an 110,000-square-foot expansion of their computer science and engineering school. The $60 million Daniel Felix Ritchie School of Engineering and Computer Science will be equipped with new engineering and manufacturing technologies, such as 3D printers. The addition will nearly double the existing computer science and engineering school s space. The completed expansion is expected in fall of Craig Hospital received $1,119,000 from The Daniels Fund to help the medical center expand and purchase new adaptive equipment. The hospital plans to use a large portion of the gift to fund part of its building and renovation project. The hospital is adding about 85,000 square feet and renovating portions of the existing facility. Boulder Community Health plans to build a new medical building in the Riverbend business park. The 75,000-squarefoot facility will be three to four stories tall and house the Boulder Community Foundation s behavior health and inpatient rehabilitation divisions and electroconvulsive therapy unit. SCL Health began construction on a 60,000-square-foot community hospital in Northglenn, which will serve as the city s first free-standing emergency room. The hospital is located at Grant St. and will have an emergency room, inpatient beds, laboratory and imaging services, and be fitted to perform surgical procedures. The project is expected to create 100 permanent jobs and about 150 construction jobs during the build. The completed facility is expected in fall of The Neenan Co. broke ground on a skilled nursing facility in Louisville for their Kansas-based client, Physicians Development Group. The Flatirons Health and Rehabilitation facility will be the first facility in Colorado for the group and will employ about 76 people. The 44,000-square-foot building will provide short-term skilled nursing and physical, occupational, and speech-therapy services. The completed facility will include 48 private patient rooms, lounges, two dining rooms, in-house therapy, a chapel, and an administration area. The completed $12 million project is expected in spring of Tharaldson Hospitality Management plans to break ground on a $16 million Residence Inn in Stapleton. The hotel will include 112 rooms in a four-story building. The company expects to open the hotel during the late summer or early fall of Metro Denver Economic Development Corporation August 4, 2015 Page 15

18 David Chaknova, a Boulder-based developer, plans to build a new hotel in Longmont. The Candlewood Suites will be four-stories and have 105 rooms. The new hotel will be located at the intersection of Clover Basin Drive and Dry Creek Drive. The Brown Palace Hotel & Spa completed three years of renovations to make the historic Denver hotel more appealing to younger, tech-savvy travelers and meeting planners. The $10.5 million project included upgrades to 200 of the 241 hotel rooms, $3 million in upgrades to the sandstone façade, and a new $2.5 million conference center will open in September. Office Market The second quarter analysis of the Metro Denver office market by Newmark Grubb Knight Frank (NGKF) reported that the market continued to record falling vacancy, rising average lease rates, and positive net absorption. The company stated that the vacancy rate is at the lowest level since 2000 and well below the 35-year average of 18.1 percent. The analysis showed that the market absorbed 593,500 square feet of space during the second quarter and that there were 14 office projects totaling 2.8 million square feet under construction. The NGKF report stated that this level of construction activity represents the largest development pipeline since The company expects the office market to continue to expand through According to the CoStar Group, the national office market recorded declining vacancy, increasing rental rates, and positive net absorption through the second quarter of The national office vacancy rate fell to 10.8 percent, while the average lease rate rose to $22.91 per square foot. The office market absorbed 30.5 million square feet of space during the second quarter of There were 249 buildings delivered spanning 16.9 million square feet and there was million square feet under construction. The Metro Denver office market continued to report declines in the vacancy rate and growth in the average lease rate through the second quarter of According to CoStar, the direct vacancy rate fell 1.1 percentage points over-the-year to 9.8 percent vacancy. The 2015 direct vacancy rate was the lowest second quarter vacancy rate since the second quarter of 2001 when the vacancy rate was 8.2 percent. The average lease rate rose 5 percent during the second quarter compared with the previous year s level. The average lease rate gained $1.12 per square foot between the second quarters of 2014 and Office property construction continued through the second quarter and projects completed to date were on par with prior years. There was over 300,000 square feet of space across seven buildings completed as of June Two of the largest office projects completed during the second quarter were The Nichols Building, spanning 81,300 square feet, and the AMG National Trust Bank Headquarters, spanning 45,000 square feet. There was 2.93 million square feet of space under construction during the second quarter of 2015, a 69.4 percent increase from the prior year. Of this space, 1.77 million square feet of space was under construction in the City and County of Denver, the largest amount of space of the seven counties at 60 percent of total Metro Denver construction. Metro Denver Economic Development Corporation August 4, 2015 Page 16

19 Office Market Statistics Quarter 2 Quarter 1 Quarter 2 Quarter 2 Quarter 2 Quarter Number of Buildings 5,996 5,987 5,973 5,951 5,935 5,923 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 9.8% 9.9% 10.9% 11.6% 12.0% 12.9% Vacancy Rate (with sublet) 10.4% 10.6% 11.3% 12.0% 12.4% 13.4% Avg. Lease Rate (direct, per sq. foot, full service) $23.56 $23.29 $22.44 $21.46 $20.17 $19.86 New Construction Completed (year-to-date) 0.30 MSF, 0.02 MSF, 0.31 MSF, 0.49 MSF, 0.35 MSF, 0.45 MSF, Currently Under Construction Industrial & Flex Market 7 Bldgs 2.93 MSF, 26 Bldgs 3 Bldgs 2.76 MSF, 24 Bldgs 12 Bldgs 1.73 MSF, 21 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 8 Bldgs 0.79 MSF, 10 Bldgs 4 Bldgs 1.30 MSF, 9 Bldgs 9 Bldgs 0.71 MSF, 8 Bldgs Newmark Grubb Knight Frank released the second quarter analysis of the Metro Denver industrial market and reported that the industrial market continued to grow at a rapid pace. The report stated the rapid pace was fueled by seemingly unending demand from both current tenants and those new to the Metro Denver market paired with new construction to try to meet their requirements. The report stated that the market posted the 14th consecutive quarter of positive net absorption, absorbing 909,560 square feet of space during the second quarter. Twelve buildings broke ground during the quarter, totaling nearly 1.4 million square feet of industrial space. The CoStar Group reported that the national industrial market recorded steady improvements between the first and second quarters of The national industrial vacancy rate fell to 6.8 percent and the average lease rate rose to $5.62 per square foot over-the-quarter. The market absorbed 309 buildings during the second quarter, totaling 47 million square feet, and there was nearly million square feet of industrial space under construction. The national flex market reported a vacancy rate of 9.4 percent and an average lease rate of $11.29 per square foot during the second quarter of CoStar Realty data revealed that the industrial market continued to tighten during the second quarter of The second quarter direct vacancy rate was 0.8 percentage points lower than the second quarter of The average lease rate rose 18.4 percent between the second quarters of 2015 and 2014, adding $1.03 per square foot to the average lease rate. There was also a 2.6 percent increase over-the-quarter in the average lease rate. There were three industrial buildings completed as of June 2015, ranging from 35,000 square feet in Douglas County to 466,500 in the Enterprise Business Center at Stapleton in the City and County of Denver. There were three buildings with 860,000 square feet of space under construction during the period. Metro Denver Economic Development Corporation August 4, 2015 Page 17

20 Industrial Market Statistics Quarter 2 Quarter 1 Quarter 2 Quarter 2 Quarter 2 Quarter Number of Buildings 6,932 6,929 6,920 6,898 6,888 6,878 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 2.9% 3.1% 3.7% 5.2% 6.1% 6.6% Vacancy Rate (with sublet) 3.2% 3.3% 4.0% 5.4% 6.6% 7.1% Avg. Lease Rate (direct, per square foot, NNN) $6.63 $6.46 $5.60 $4.82 $4.59 $4.63 New Construction Completed (year-to-date) 0.89 MSF, 0.39 MSF, 1.18 MSF, 0.88 MSF, 0.06 MSF, 0.08 MSF, Currently Under Construction 3 Bldgs 0.86 MSF, 3 Bldgs 1 Bldg 0.86 MSF, 4 Bldgs 13 Bldgs 1.31 MSF, 9 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 3 Bldgs 0.17 MSF, 4 Bldgs 3 Bldgs 0.50 MSF, 6 Bldgs 2 Bldgs 0.24 MSF, 4 Bldgs The Metro Denver flex market reported strong growth through the second quarter of the year. The direct vacancy rate for flex space fell 1.1 percentage points to 8.1 percent between the second quarters of 2014 and 2015, the lowest second quarter rate since the data has been collected. The average lease rate rose 1.2 percent over-the-quarter to $10.31 per square foot. The first quarter lease rate was also 5.5 percent higher than the prior year s level and added $0.54 per square foot. There was 320,000 square feet of new space completed through the second quarter of the year and the 69,000- square-foot Breckenridge Brewery facility in Littleton remains under construction. Flex Space Statistics Quarter 2 Quarter 1 Quarter 2 Quarter 2 Quarter 2 Quarter Number of Buildings 1,470 1,469 1,461 1,454 1,450 1,449 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 8.1% 8.1% 9.2% 12.4% 12.7% 13.5% Vacancy Rate (with sublet) 9.2% 9.3% 10.6% 13.7% 13.9% 14.8% Avg. Lease Rate (direct, per square foot, NNN) $10.31 $10.19 $9.77 $9.17 $8.87 $8.92 New Construction Completed (year-to-date) 0.32 MSF, 0.19 MSF, 0.36 MSF, 0.07 MSF, 0.00 MSF, 0 MSF, Currently Under Construction Retail Market 3 Bldgs 0.07 MSF, 1 Bldg 2 Bldgs 0.14 MSF, 1 Bldg 5 Bldgs 0.42 MSF, 6 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 2 Bldgs 0.10 MSF, 3 Bldgs 1 Bldg 0.20 MSF, 2 Bldgs 0 Bldgs 0 MSF, 1 Bldg According to analysis by Newmark Grubb Knight Frank, the Metro Denver retail market expansion slowed during the second quarter of They reported that the market finished flat at the end of the quarter due to the closure of eight metro-area Safeway grocery stores. Second quarter absorption totaled 4,590 square feet of retail space. However, the market delivered nine buildings, spanning 380,500 square feet, and there was 350,520 square feet of retail space under construction. The company stated that the retail market will return to expansion in the latter half of 2015, although there could be obstacles that would prevent quick backfilling of the Safeway sites. The CoStar Group released the second quarter analysis of the national retail market and stated that the market did not experience much change in market conditions. The vacancy rate fell 0.1 percentage points over-the-quarter to 5.9 percent and the average lease rate rose to $15.04 per square foot, adding $0.08 per square foot. The market absorbed 623 buildings, spanning nearly 15.1 million square feet, and there was 54 million square feet of retail space under construction during the second quarter. Metro Denver Economic Development Corporation August 4, 2015 Page 18

21 The retail market in Metro Denver continued to improve through the second quarter of The direct vacancy rate decreased 0.3 percentage points between the first and second quarters of 2015, and was 0.7 percentage points below the second quarter 2014 level. The second 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 increased over-the-quarter, rising 0.6 percent, and was 2 percent higher over-the-year, adding $0.31 per square foot. During the first half of the year, the Metro Denver retail market began to complete larger scale projects, but the majority of completed projects were still under 10,000 square feet. Of the 20 buildings completed through the first two quarters, 12 of them were smaller than 10,000 square feet, with an overall average size of 4,500 square feet. Arapahoe and Adams Counties continued to record the largest amounts of retail space completed through the second quarter of 2015, reporting 85,500 square feet and over 123,600 square feet of space completed, respectively. There were 32 buildings under construction at the end of the second quarter, totaling about 780,000 square feet. Over half of this space (419,200 square feet) is under construction at the Village at the Peaks in Longmont, which is the redevelopment of the former Twin Peaks Mall. Retail Market Statistics Quarter 2 Quarter 1 Quarter 2 Quarter 2 Quarter 2 Quarter Number of Buildings 11,637 11,591 11,549 11,479 11,398 11,358 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 5.0% 5.3% 5.7% 6.2% 6.6% 7.1% Vacancy Rate (with sublet) 5.2% 5.4% 5.8% 6.4% 6.9% 7.4% Avg. Lease Rate (direct, per square foot, NNN) $15.78 $15.68 $15.47 $15.18 $14.60 $14.70 New Construction Completed (year-to-date) 0.34 MSF, 0.19 MSF, 0.32 MSF, 0.69 MSF, 0.09 MSF, 0.51 MSF, Currently Under Construction 20 Bldgs 0.78 MSF, 32 Bldgs 12 Bldgs 0.71 MSF, 28 Bldgs 32 Bldgs 0.58 MSF, 23 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 39 Bldgs 0.35 MSF, 16 Bldgs 15 Bldgs 0.67 MSF, 27 Bldgs 8 Bldgs 0.44 MSF, 7 Bldgs Metro Denver Economic Development Corporation August 4, 2015 Page 19

22 Monthly/Quarterly Direction Annual Direction Positive Changes 16 of of 18 Nonfarm Employment +13, ,800 Growth Employment up 0.9% from May to June YTD employment up 3.3% through June 26% 23% % Companies Hiring Companies expecting to add workers YTD average up 2 percentage points (Denver Area) increased from 2Q 2015 to 3Q 2015 compared with % 4.2% Unemployment Rate Unemployment up 0.3 percentage points from May to June Down from 2014 YTD average of 5.4% -17.5% -8.8% Initial Unemployment YTD average claims decreased through June Insurance Claims Claims decreased from May to June 2015 Total Retail Sales 70.3% 4.0% Metro sales increased from Nov. to Dec. YTD sales up through Dec Mountain Region Consumer Confidence Index Index up 1.1% from June to July YTD average up 24.8% through July % 75.4% Hotel Occupancy Increased 8.6 percentage points from May to June YTD occupancy up 1.3 percentage points from last year 7.3% -0.7% DIA Passengers YTD passengers decreased through May Passengers increased from April to May 2015 Bloomberg Colorado Index % Index up 2.8% from June to July YTD return through July 2015 Dow Jones Industrial 17, % Average Index up 0.4% from June to July YTD return through July 2015 Home Sales (closed) 5,845 25,326 Sales up 14.9% from May to June YTD sales up 2.0% through June 2015 Median Home Price $338,100 $338,100 (Denver-Aurora MSA) Up 7.4% from 4Q 2014 to 1Q 2015 YTD price 17.2% higher through 1Q 2015 Foreclosures 344 1,848 Up 13.9% from May to June Down 38.8% YTD through June 2015 Residential Building Permits 1,644 8,948 (Total) Permits increased 13.9% from May to June YTD permits up 8.1% through June % 4.7% Apartment Vacancy Rate Vacancy decreased 0.4 percentage points from 1Q 2015 to 2Q 2015 YTD average down from 2Q % -0.9 percentage points Office Vacancy Rate (with Vacancy rate down 0.2 percentage points 2Q 2015 vacancy rate down from 11.3% one Sublet) from 1Q 2015 to 2Q 2015 year ago 3.2% -0.8 percentage points Industrial Vacancy Rate Vacancy rate down 0.1 percentage points 2Q 2015 vacancy rate down from 4.0% one (with Sublet) from 1Q 2015 to 2Q 2015 year ago Retail Space Vacancy Rate (with Sublet) 5.2% -0.6 percentage points Vacancy rate down 0.2 percentage points from 1Q 2015 to 2Q Q 2015 vacancy rate down from 5.8% one year ago Metro Denver Economic Development Corporation August 4, 2015 Page 20

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