MonthlyEconomicIndicators. January2016. Monthlyanalysis of18keyeconomic indicatorsin MetroDenver. EnergeticBodies.EnergeticMinds.

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1 MonthlyEconomicIndicators January2016 EnergeticBodies.EnergeticMinds. Monthlyanalysis of18keyeconomic indicatorsin MetroDenver

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 released a list of the easiest and hardest cities to find a job and Denver ranked as the third easiest city to find a job. The company used job-listing data from Indeed.com to rank the cities. The report stated that Denver has 96 jobs posted for every 1,000 residents. San Jose, Calif. was ranked the easiest city to find a job and Raleigh. N.C. ranked second, while Miami, Fla. and Los Angeles, Calif. were ranked the hardest cities to find a job. The Milken Institute s 2015 Best-Performing Cities Index was released, including four Colorado metropolitan statistical areas (MSA) among the top 20. The Denver-Aurora-Broomfield MSA ranked 16th, down four spots from last year, and the Boulder MSA ranked 22nd, down nine spots from last year. The index considered nine separate components including job growth and earnings. The Denver-Aurora-Broomfield MSA ranked 19th for the number of highly concentrated high-tech industries and 16th for five-year job growth. The Boulder MSA ranked third for high-tech job concentration and sixth for the number of highly concentrated high-tech industries. The Greeley MSA (ninth) and the Fort Collins MSA (14th) were also included on the list. Headlight released analysis of U.S. Bureau of Labor Statistics data and reported that six Colorado counties were among those with the lowest and most improved unemployment rates in the nation. The company analyzed unemployment statistics between 2005 and 2015 for 135 large counties, counties with populations larger than 500,000 people, and 292 midsized counties, counties with populations between 150,000 and 500,000 people. For the top ten large counties with the greatest improvement in unemployment, the City and County of Denver ranked second, Jefferson County ranked seventh, and Arapahoe County ranked eighth. Jefferson County (3 percent) had the second-lowest unemployment rate of the large counties, while Boulder County (third), Douglas County (fourth), and Larimer County (eighth) were among the lowest rates of mid-sized counties. The Tax Foundation released their annual State Business Tax Climate Index and Colorado ranked 18th, up two positions from The company ranked states on more than 100 variables that were designed to show how well states structure their tax systems. Colorado ranked 12th for property tax, 15th for corporate income tax, 16th for individual income tax, 33rd for unemployment insurance tax, and 44th for sales tax. Wyoming was ranked first followed by South Dakota, Alaska, and Florida. According to NerdWallet, Colorado was the fifth best state in the country for small business loan approval with a 5.21 percent acceptance rate. The company analyzed data from Lending Club, a peer-to-peer lending company that claims to have originated more than $11 billion in loans since Utah was ranked first, with a 6.41 percent acceptance rate, followed by Montana, Nevada, and Minnesota. According to the U.S. Census Bureau, Colorado s population increased by almost 101,000 people between July 2014 and July 2015, the second fastest growth rate in the country. North Dakota was the only other state with faster population growth. The state s population growth of 1.89 percent was more than double the national average of 0.79 percent. Colorado ranked seventh among all states for the absolute increase in population. The United Health Foundation ranked Colorado the eighth healthiest state in the country for the third year in a row. The state ranked high for its low obesity rate (21.3 percent) and high rate of physical activity, but ranked near the bottom for whooping cough (46th) and in health disparities (46th) among people based on their education levels. Vermont ranked first overall and Massachusetts ranked second. Metro Denver Economic Development Corporation January 5, 2016 Page 1

3 SmartAssets.com ranked Loveland the country s top boomtown for The personal finance website collected data on 575 of the country s largest cities and ranked each city based on criteria including gross domestic product growth, net migration, and unemployment. Denver International Airport (DEN) was ranked as the fifth best airport for healthy food options by the Physicians Committee for Responsible Medicine. The group s 2015 Airport Food Review was based on the foods offered at restaurants in the country s 30 busiest airports. The report stated that 80 percent of the food offered at DEN s restaurants is healthy. Los Angeles Airport was ranked first followed by Newark Liberty International Airport, San Francisco International Airport, and Philadelphia International Airport. Denver was ranked third in the nation for the lowest number of homes with negative equity by Zillow. The company stated that only 5.5 percent of homes in Denver had negative equity compared with the national average of 13.4 percent. San Jose (3 percent) and San Francisco (4.7 percent) were the top two cities on the list. The U.S. Department of Commerce released new data and reported that Colorado tied with Texas for the secondhighest growth in total personal consumption expenditures (PCE). The report analyzed PCE data between 1997 and 2014 and found that PCE increased 5.7 percent in Colorado during the period. The report stated that Coloradans spent a total of $210 billion in 2014 compared with $198 billion in 2013, with housing consumption expenditures in 2014 being the highest amount spent. Travel + Leisure released its Best Places to Travel in 2016 and ranked Denver 23rd. The company stated that Denver is not just for the skiers and snowboarders that want to visit the snowy peaks of the Rocky Mountains, but also for the arts and culture traveler. The city was recognized for its 165-room Art Hotel that opened next to the Denver Art Museum, The Children s Museum, and the Kirkland Museum of Fine & Decorative Art. Google Inc. released their latest ecity Awards and ranked Denver among the top 50 ecities for The cities included on the list were cities that have the strongest online communities with businesses using the web to find new customers, connect with existing customers, and fuel their local economies. Google stated that the City and County of Denver makes it easy and fast for its residents to get information about city services from their mobile device or desktop. Policy Watch National The federal government passed a spending bill that included multi-year extensions of solar and wind tax credits, plus one-year extensions for a range of other renewable energy technologies. Under the new legislation, the 30 percent Investment Tax Credit (ITC) for solar will be extended for three more years and then will decline incrementally through 2021, and remain at 10 percent permanently in A 2.3-cent Production Tax Credit (PTC) for wind will be extended through next year and projects that begin construction in 2017 will see a 20 percent reduction in the incentive. Geothermal, landfill gas, marine energy, and incremental hydro will get a one-year PTC extension and qualify for a 30 percent ITC. President Obama signed a bill that overhauls the No Child Left Behind program. The new law, called Every Student Succeeds Act, still requires that students be tested in math and reading, but state and local officials will have greater leeway in determining how to respond to underachieving schools. The law also ensures that states set higher standards in order to better prepare high school students for college and a career. The law establishes new resources to test promising practices and replicate strategies that will drive opportunity and better outcomes and provides more children access to high-quality preschools. During the Conference on Climate Change in Paris, 20 countries, including the United States, pledged to double their research and development budgets for new clean energy technologies over the next five years. The Mission Innovation Initiative is complemented by a private-sector effort called the Breakthrough Energy Coalition, which pledged to provide patient, early-stage capital to help companies bring innovative energy technologies to the market. Mission Metro Denver Economic Development Corporation January 5, 2016 Page 2

4 Local Innovation aims to provide affordable clean energy to consumers and create additional commercial opportunities in clean energy. The City and County of Denver released its Climate Action Plan 2015 report and announced plans to reduce its greenhouse gas emissions by 80 percent by The city plans to achieve its goals by making buildings more energy efficient, incorporating more renewable energy sources into Denver s energy portfolio, promoting alternative modes of transportation, examining the possibility of a community-wide RTD Eco-Pass system, and reducing the overall demand for new materials and goods. The River North neighborhood in Denver announced the area would impose new mill levies on property owners beginning in The neighborhood plans to use the additional revenue for infrastructure, marketing, and affordability initiatives. The mill levy change followed the approval of a business improvement district and a general improvement district during the November elections. Denver Water changed its rate structure in an attempt to smooth out the swings in revenue at the water utility that correlate with abnormally wet or dry years. The $387.5 million budget for 2016 includes multi-year projects such as replacing water pipes and failing underground storage tanks, upgrading water treatment facilities, and rehabilitating Antero Dam. The rate structure will take effect April 1, Similar to the old structure, the new policy has a fixed monthly service charge of $8.79 per month for residential customers, which is higher than the current charge of $6.74 per month. The new structure also features three tiers, with the base level customized by household. The base usage level will be the average, actual use for households during the winter months, January through March. National Economic Overview The U.S. Bureau of Economic Analysis (BEA) released the third estimate of real gross domestic product (GDP) for the third quarter of The estimate showed that GDP increased at an annual rate of 2 percent through the third quarter, which was 1.9 percentage points below the second quarter rate of 3.9 percent. The third estimate represents more complete source data than the available data for the second estimate. The increase in GDP reflected positive contributions from personal consumption expenditures, nonresidential fixed investment, state and local government spending, residential fixed investment, and exports. The advanced estimate of fourth quarter 2015 GDP will be released January 29. The December conference of the Federal Open Market Committee (FOMC) reported that economic activity expanded at a moderate pace. The committee reported that household spending and business fixed investment increased at solid rates over the last few months and the housing market improved further, but net exports were soft. Inflation has continued to run below the committee s longer-run objective of 2 percent, partly reflecting declines in energy prices and in prices of nonenergy imports. With this current economic outlook, the FOMC decided to raise the target range for the federal funds rate to 0.25 to 0.5 percent. This is the first increase in the federal funds rate since The committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate. The next committee meeting will be held on January 27. Economic Indexes & Notable Data Releases National & International The U.S. trade deficit rose to $43.9 billion in October, up from the September deficit of $42.5 billion (revised). Imports decreased to $228 billion, falling $1.3 billion between September and October, and exports fell $2.7 billion to $184.1 billion. The goods and services deficit increased $2.6 billion in October 2015 compared with October 2014, driven by an $11.7 billion decrease in exports and a $9.1 billion decrease in imports. The Conference Board Leading Economic Index for the U.S. increased in November to 124.6, rising 0.4 percent between October and November. Economists at the Conference Board reported that the increase in the index was driven by Metro Denver Economic Development Corporation January 5, 2016 Page 3

5 building permits, the interest rate spread, and stock prices. They also stated that although the six-month growth rate of the index moderated, the economic outlook for the final quarter of the year and into the new year remains positive. The Institute for Supply Management s Purchasing Managers Index contracted in November for the first time in 36 months. The index fell to 48.6 percent in November, a 1.5 percentage point decrease from the previous month s level. Of the 18 manufacturing industries tracked in the index, five industries reported growth. The Employment Index increased 3.7 percentage points over-the-month to 51.3 percent, while the Imports Index increased 2 percentage points during the same period. The New Orders and Production indices fell the furthest over-the-month, declining 4 percentage points and 3.7 percentage points, respectively. Survey respondents in the chemical products industry are seeing deflation in raw materials, while the machinery industry reports being negatively impacted by the downturn in the Chinese and European markets. Local The Institute for Supply Management s Non-Manufacturing Index decreased 3.2 percentage points in November to 55.9 percent, compared with the October level of 59.1 percent. The November index marked the 70th consecutive month of growth, as measured by a value over 50. The index tracks 18 non-manufacturing industries and 12 industries reported growth between October and November. The Inventories Index recorded the largest over-the-month increase, rising 2 percentage points to 54.5 percent. The New Export Index reported the largest over-the-month decline, falling 5 percentage points to 49.5 percent. Survey respondents in the finance and insurance industry reported that business conditions are holding steady, while the transportation and warehousing industry reported high expectations for the fourth quarter. The Leeds Business Confidence Index reported an improving outlook for the first quarter of The index value of 55.4 for the first quarter of 2016 was 1.9 points above the previous quarter. Of the index components, overall expectations for the state economy rose from 57.2 in the fourth quarter of 2015 to 59.3 in the first quarter of Expectations for profits and sales increased, with the profits index rising 1.6 points over-the-quarter to 55.3 and the sales index increasing 2.8 points over-the-quarter to According to the report, the index remains in positive territory (above 50) for all metrics. Business leaders stated their biggest concerns going into 2016 included interest rates and fed policy, availability of a talented workforce, global and domestic economic growth, election-year politics, and the cost of housing. The University of Colorado Boulder Leeds School of Business released their annual Colorado Business Economic Outlook and reported that employment in the state is expected to grow 2.6 percent in The report expects Colorado to remain one of the top growth states in the nation for The forecast expects employment will increase by about 65,000 workers and the average annual unemployment rate will be 3.8 percent in The report stated that while economic diversification, a strong talent pool, and robust population growth position Colorado for long-term growth, economists are concerned that the cost of real estate, modest wage growth, and gaps in workforce training could be problems the state will have to deal with to maintain a healthy economy. The latest Beige Book released by the U.S. Federal Reserve reported that business leaders in the Rocky Mountain region reported that the economy held steady and was on balance over the last several weeks. The report stated that while consumer spending in the region continued to decline slightly, spending remained above the previous year s level. While the overall regional economy was improved, there were mixed reports across sectors. Manufacturing firms reported flat activity, the energy sector reported continued declines in activity, and farm income weakened further. However, housing activity increased, professional and high-tech firms reported moderate increases, and bankers reported steady loan demand. Lastly, the Beige Book reported that while wage pressure was mostly contained, survey respondents in few industries continued to report labor shortages for skilled and entry-level positions. According to the Kauffman Foundation s new Main Street Entrepreneurship Index, 2.77 percent of individuals between the ages of 20 and 34 owned a business in 2014, down from 4.41 percent of the same age group in The index classifies Main Street businesses as established businesses that have been in existence for more than five years and employ fewer than 50 people. The index reported that two-thirds of established business owners are men and more Metro Denver Economic Development Corporation January 5, 2016 Page 4

6 than 60 percent are 45 years or older. Further, minorities accounted for 28 percent of Main Street business owners and more than 20 percent of business owners were immigrants. The Downtown Denver Partnership released their 2015 Commuter Survey and found that 29 percent of males and 20 percent of females under 30 walk or bike to work. The survey found that the average one-way commute into Downtown Denver is 13 miles, 5.6 percent of respondents walk to work, commuters under 30 have the shortest commute (8.8 miles), and 40.6 percent of respondents take transit to work. The report also stated that 76 percent of Downtown Denver commuters whose employer requires them to have a car at work drive alone. Denver was selected as one of 100 cities to partner with Bloomberg Philanthropies on a $42 million, three-year nationwide initiative. The What Works Cities program will bring new tools for data analysis and implementation to the city government, allowing the city to improve services and make more informed policymaking decisions. Selected cities will be visited by people from Results for America, the Center for Government Excellence at Johns Hopkins University, and Harvard University s Government Performance Lab. The visitors will remain in Denver for the first half of Xcel Energy released new electricity and natural gas rates for the beginning of 2016 in response to changing commodity prices. The company stated that the rates will result in significantly lower bills, particularly for natural gas customers during the second half of the winter season. Further, natural gas bills will be approximately 21 percent lower during the first quarter of 2016 compared with the first quarter of 2015, while electricity bills are expected to fall about 5 percent during the same period. Labor Force and Employment Employment in Metro Denver rose 1.9 percent between November 2014 and 2015, or an additional 28,700 jobs during the period. The employment growth consisted of a 2 percent increase in the Denver-Aurora-Lakewood MSA, or an additional 27,300 jobs, and a 0.8 percent increase in the Boulder MSA, representing 1,400 jobs. The natural resources and construction supersector reported the largest percentage increase over-the-year in employment, rising 8.6 percent or adding 8,500 jobs. The education and health services supersector created the second-most number of positions (6,700 jobs) during the period, rising 3.4 percent over-the-year. The government sector also recorded significant growth, rising 2.9 percent. The information sector (-3.8 percent) and the transportation, warehousing, and utilities supersector (-2.8 percent) both recorded declines in employment over-the-year. Colorado employment rose 1.7 percent in November compared with the previous year s level, adding 43,600 new jobs over the same period. National employment levels increased 1.9 percent over-the-year, with the addition of 2.65 million jobs. Quarterly Census of Employment and Wages data was released for the second quarter of 2015 and reported that Metro Denver added significantly more jobs than previously thought. The data showed that Metro Denver added 56,700 jobs over-the-year, a 3.8 percent growth rate compared with the Current Employment Statistics estimate of a 3.3 percent increase. While jobs have been lost in the mining sector and the oil and gas industry, these employees are being picked up by manufacturing and residential construction. Metro Denver Economic Development Corporation January 5, 2016 Page 5

7 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-15 Oct-15 Nov % 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 144, , , , , % -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 Energy - Cleantech Sunrun Inc., a San Francisco-based residential solar company, announced plans to open a corporate office in Denver and hire 800 employees over the next few years. The company will offer employment opportunities in operations, project planning, and design engineering. The company stated the strong in-state and federal solar policies influenced its decision to open an office in Denver. Microgrid Energy, a St. Louis-based solar energy developer and installer, opened a location at 1536 Wynkoop St. in Denver. The company plans to capitalize on the state s forthcoming Commercial Property Assessed Clean Energy program. Aurora-based Environmental Colorado Research & Policy Center released a report called Turning in the Wind and found that wind power generated in Colorado supplies enough energy to power more than 674,000 homes. The report also stated that since 2001, wind turbines across the state have produced enough energy to reduce carbon pollution from 1.1 million cars. Further, Colorado has the third highest number of wind-related jobs in the country, including 23 manufacturing facilities and more than 7,000 well-paid workers. Metro Denver Economic Development Corporation January 5, 2016 Page 6

8 Energy - Fossil Fuels Anadarko Petroleum Corp. built its Central Oil Stabilization Facility, which is a complex of steel pipes, storage tanks, and tall towers that span 69 acres. The facility went live in early December and has been under construction since February The facility will be capable of taking in 125,000 barrels per day of the mix of crude oil, natural gas, and natural gas liquids. Dozens of employees are needed to run the facility. Financial Services First National Denver is relocating its Denver headquarters to an office in lower downtown. The company will lease 7,800 square feet of space at 16th and Market streets, which is enough space for 43 employees. The new space will bring the Denver team together, rather than being spread out across various offices. IT-Software Seattle-based Apptio Inc. plans to open an engineering center in Denver. The new office will help the company recruit engineering talent to develop its IT planning products. Datavail Corp. received $47 million from investors that will allow the company to expand and the company believed they could triple the size of the business in five years. The company foresees 25 percent annual growth in its core business of managing client databases around the clock and expanding into client business intelligence, data analytics, and data warehousing. A new after-school enrichment program for middle- and high-school students, called the Silicon STEM Academy, will launch January 11 in Denver. The program provides kids with hands-on training and experience with a broad range of technology classes. The for-profit program will offer classes in computer programming, engineering, and digital media. The company is working with Metro Denver businesses to create apprenticeships and shape curriculum that first with the skills they may need to fill jobs in the future. Other Industry Headlines Redefy Real Estate expanded its Aurora location, adding 4,000 square feet of office space. The expansion will allow the company to hire 12 more employees. Breckenridge Brewery was sold to Anheuser-Busch for an undisclosed sum. Breckenridge Brewery will join The High End, Anheuser-Busch-InBev s unit that consists of craft beer brands. The deal includes the new brewery and Farm House restaurant in Littleton, and the original brewpub and innovation center in the town of Breckenridge. Lakewood-based Rare Earth Elements announced plans for significant staff reductions due to prolonged weak market conditions and delays with preparing environmental impact reports. The company also plans to consolidate facilities, sell non-essential equipment and assets, and delist its common shares from the Toronto Stock Exchange. The Colorado Office of Economic Development and International Trade awarded $4.35 million in Infrastructure Funding grants under the Advanced Industry Accelerator Grant Program. Manufacture s Edge received $2.5 million to build infrastructure that enables 3-D metals printing standardization and qualification for businesses of all sizes. Manufacture s Edge will facilitate a Colorado consortium between Ball Aerospace, Lockheed Martin, Faustson, and the Colorado School of Mines. An R&D center will be built at Mines, which will be dedicated to performing applied research and creating database infrastructure needed to qualify printers and their parts. The Catalyst Campus received $750,000 to help build IT infrastructure at the Catalyst Campus for Technology and Innovation for a state-of-the-art Cyber and Space Operations Center research lab. SolarTAC received $500,000 for the proposed Accelerator Project at the Solar Technology Acceleration Center, a 74-acre test site near Denver International Airport that will provide 5 acres of shared space and new infrastructure for validation and demonstration of advanced renewable energy components. Metro Denver Economic Development Corporation January 5, 2016 Page 7

9 Employment Outlook The Manpower Employment Outlook Survey expects first quarter of 2016 hiring in the Denver-Aurora MSA to rise compared with the previous quarter. The percentage of companies hiring increased 4 percentage points between the fourth quarter of 2015 and the first quarter of 2016, with 23 percent of companies expanding their employment levels. The percentage of companies planning to decrease employment levels rose 2 percentage points from the fourth quarter, with only 4 percent of companies planning to reduce employment levels. The majority of companies intend to maintain staff levels through the first quarter of the year, despite the level falling 6 percentage points over-the-quarter to 70 percent. The survey reported that sectors with the best job outlooks were construction, wholesale and retail trade, information, financial activities, educational and health services, leisure and hospitality, other services, and government. Employers in durable goods manufacturing and nondurable goods manufacturing plan to reduce staffing levels. Employment Outlook Survey Quarter 1 Quarter 4 Quarter 1 YTD YTD Ann Avg Denver-Aurora-Broomfield MSA Percent of Companies Hiring 23% 19% 20% 23% 20% 18% Percent of Companies Laying Off 4% 2% 6% 4% 6% 8% Percent of Companies No Change 70% 76% 72% 70% 72% 70% Percent of Companies Unsure 3% 3% 2% 3% 2% 5% United States Percent of Companies Hiring 20% 21% 19% 20% 19% 17% Percent of Companies Laying Off 6% 6% 6% 6% 6% 13% Percent of Companies No Change 72% 71% 73% 72% 73% 69% Percent of Companies Unsure 2% 2% 2% 2% 2% 4% Source: Manpower Inc. Hiring expectations in the U.S. fell slightly through the first quarter of 2016 compared with the prior quarter. The percentage of employers planning to increase employment levels fell 1 percentage point to 20 percent between the fourth quarter of 2015 and the first quarter of The percentage of companies planning to reduce employment levels was unchanged over-the-year and over-the-quarter, with 6 percent of companies planning to lay off employees. The percentage of companies planning to maintain staffing levels (72 percent) was 1 percentage point lower than the prior year s level, but 1 percentage point above the previous quarter s level. The survey analysts stated that the country saw strong job growth throughout 2015, along with declining unemployment and increasing wages, which brings continued optimism for the start of The company expects these broad trends to continue into They also said that as the unemployment rate continues to fall and the labor market tightens, employers will increasingly feel the impact of rising wages and the on-going skills mismatch. Unemployment The unemployment rate throughout the Metro Denver area increased to 3.2 percent through November, an increase of 0.1 percentage points compared with October. The Metro Denver unemployment rate was 0.7 percentage points below the November 2014 level of 3.9 percent. All seven Metro Denver counties continued to report unemployment rates below 4 percent in November, despite all counties recording over-the-month increases in the unemployment rate. Douglas (2.7 percent) and Boulder (2.8 percent) counties continued to report the lowest unemployment rates of the seven-county region. Adams and Arapahoe counties recorded the largest over-the-year declines, both falling 0.9 percentage points. Colorado s unemployment rate fell 0.6 percentage points over-the-year to 3.5 percent during the month of November. The national unemployment rate of 4.8 percent in November was unchanged from the prior month s level, but was 0.7 percentage points below the previous year. Metro Denver Economic Development Corporation January 5, 2016 Page 8

10 Labor Force Statistics (000s, not seasonally adjusted civilian labor force) November 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 157, % 157, % 155, % 9.6% 5.1% Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary November unemployment insurance claims increased in Metro Denver, rising 50.1 percent between October and November. The November level was 5.1 percent higher than the year-ago level. Claims throughout Colorado also increased over-the-month, rising 43.9 percent, and were 10 percent higher than the previous year s level. Unemployment claims typically increase during the fourth quarter of each year due to company restructuring prior to the first of the year. Weekly First-Time Unemployment Insurance Claims Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Nov-15 Oct-15 Nov % Change Metro Denver 1,992 1,327 1,896 1,319 1, % 2,095 1,214 Colorado 3,816 2,652 3,469 2,588 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. rose in December, reporting a level of 96.5 from the revised November level of 92.6, a 4.2 percent increase over-the-month. The national index for December 2015 was also 3.7 percent above the December 2014 level. Analysts at The Conference Board stated that between November and December the Present Situation Index rose 3.9 percent to and the Expectations Index rose 4.4 percent to They also reported as 2015 draws to a close, consumers assessment of the current state of the economy remains positive, particularly their assessment of the job market. Further, consumers are expecting little change in both business conditions and the labor market into Expectations regarding their financial outlook were mixed, but the optimists continued to outweigh the pessimists. Colorado is included in the Mountain Region Index and the area reported an increase in consumer confidence. The index rose to 112 in December from the November revised level of 98.2, increasing 14.1 percent over-the-month. The index also rose 12.3 percent over-the-year. For the Mountain Region, the Present Situation Index rose to in December from in November (revised), while the Expectations Index increased to 89.3 from 72.6 in November (revised). Metro Denver Economic Development Corporation January 5, 2016 Page 9

11 Consumer Confidence Index Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Dec-15 (p) Nov-15 (r) Dec % Change Mountain % United States % Source: The Conference Board. (p) = preliminary (r) = revised National retail sales increased through November, with total retail sales rising 1.4 percent above the November 2014 total. Retail sales reached over $448.1 billion in November, an increase of 0.2 percent over October Motor vehicle sales rose 4 percent over-the-year, but fell 0.4 percent between October and November. The building materials sector reported an increase of 2.2 percent between November 2014 and 2015, but fell 0.3 percent over-the-month. Gasoline sales fell 19.9 percent over-the-year and fell 0.8 percent over-the-month. The decline in gasoline sales in November marked the 18th consecutive month of over-the-year decline. Core retail sales, which excludes motor vehicle, building material, and gasoline sales, recorded a 0.6 percent increase between October and November. According to MasterCard Advisors, U.S. retail sales rose 7.9 percent between Black Friday and Christmas Eve, with women s apparel and furniture seeing the biggest increases. Sales were up 4.6 percent for all of November and December, which was slightly better than expected. Online sales rose 20 percent, with 70 percent of consumers doing more research online than in Retail sales in Metro Denver increased 0.9 percent between May 2014 and Retail sales for May 2015 totaled over $8.6 billion, an absolute increase of $73.8 million over the 2014 total of $8.5 billion. Six of the seven Metro Denver counties reported year-over-year growth, as Adams County (-13 percent) recorded the only decline in sales. Douglas County reported the largest increase in retail sales between May 2014 and 2015, rising 18.5 percent to $798 million, and the largest absolute increase in retail sales over-the-year, generating an additional $124.5 million. The City and County of Broomfield also reported a significant increase in sales during the period, rising 16.1 percent or an additional $30.5 million. Boulder County recorded the smallest increase in retail sales between May 2014 and 2015, rising 2 percent to $750 million. Retail sales in Colorado were 0.8 percent lower in May 2015 than May 2014, representing $108 million less in retail sales. Total Retail Sales ($000s) Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth Annual Growth May-15 Apr-15 May % Change Total Metro Denver 8,614,105 8,232,696 8,540,261 42,024,409 40,903, % 9.6% 7.8% Adams County 1,686,119 1,612,150 1,938,597 8,089,695 8,935, % 28.8% 16.6% Arapahoe County 1,711,878 1,689,507 1,656,978 8,454,549 7,909, % 6.1% 6.6% Boulder County 750, , ,762 3,852,065 3,658, % 5.9% 9.0% Broomfield County 219, , , , , % 14.2% -31.5% Denver County 2,119,428 2,094,695 2,062,738 10,677,526 10,082, % 5.2% 10.4% Douglas County 798, , ,994 3,392,487 3,177, % 7.3% 13.5% Jefferson County 1,328,588 1,286,851 1,283,232 6,626,011 6,257, % 4.7% 2.4% Colorado 13,836,935 13,442,819 13,945,070 69,684,865 67,937, % 8.0% 8.4% Source: Colorado Department of Revenue. According to the U.S. Bureau of Labor Statistics, the U.S. Consumer Price Index (CPI) increased 0.5 percent between November 2014 and 2015, but fell 0.2 percent over-the-month. The increase in the overall CPI between November 2014 and 2015 was attributed to a 2.9 percent increase in medical care and a 2.1 percent increase in housing. There were also increases over-the-year in both the education and communication index (+1.3 percent) and the other goods and services index (+2.1 percent). The transportation index declined 6 percent over-the-year, reflecting low motor fuel prices, and there was a 0.7 percent decrease over-the-month. The core CPI which excludes food and energy costs increased 2 percent over-the-year, but was largely unchanged over-the-month. Metro Denver Economic Development Corporation January 5, 2016 Page 10

12 According to the AAA Daily Fuel Gauge Report, the national average fuel price for December decreased 2.1 percent from November to $2.00 per gallon. The December average fuel price was 12.5 percent lower than the prior year s level ($2.29 per gallon). Metro Denver reported a 2 percent decrease in the average fuel price between November and December. The average fuel price of $1.83 per gallon for December in Metro Denver was $0.18 lower than the national average. The area reported average fuel prices that were 16.6 percent lower in December 2015 than the previous year s level. Stock Market All four stock market indices reported negative trends between November and December. Of the national indices, the NASDAQ reported the largest decrease over-the-month, falling 2percent to 5, The DJIA and the S&P 500 also reported decreases over-the-month, falling 1.7 percent and 1.8 percent, respectively. The Bloomberg Colorado index reported a significant decline, falling 10 percent over-the-month. The NASDAQ was the only national index to record positive returns between December 2014 and 2015, rising 5.9 percent during the period. The DJIA (-2.3 percent) and the S&P 500 (-0.7 percent) recorded negative returns over-the-year, while the Bloomberg Colorado index fell 17.3 percent during the same period. Stock Market Indexes Month of Month of Month of YTD Return YTD Return Ann Avg Return Ann Avg Return Dec-15 Nov-15 Dec Bloomberg Colorado % -1.6% 45.3% 16.9% S&P 500 2, , , % 11.4% 12.8% 3.0% NASDAQ 5, , , % 13.2% 16.9% 1.4% DJIA (Dow Jones) 17, , , % 7.6% 11.0% -0.6% Travel & Tourism Sources: Bloomberg.com; Yahoo! Finance. Colorado Parks and Wildlife (CPW) remained a leader in natural resource management and outdoor recreation through fiscal year According to CPW, Colorado wildlife and outdoor recreation accounted for an estimated $34.5 billion in total economic impact in 2014, with hunting, angling, wildlife viewing, and state park visitation contributing roughly $6.1 billion in economic impact. During the fiscal year, CPW reported $194.2 million in expenditure, awarding $13.4 million in grants and nearly $17.9 in capital improvements and equipment. In 2014, the state recorded nearly million non-motorized trail recreation visits, 37.3 million boating and water-based recreation visits, and 26.4 million fishing visits. Vail Resorts and Colorado Ski Country released an economic impact study, the first study in a decade to be released by the two organizations. The study found that the state s ski industry has a $4.8 billion annual economic impact. They also reported skiing and snowboarding in Colorado supports 46,000 year-round jobs in the recreation, lodging, retail, and food services industries, with workers earning $1.9 billion per year. The average hotel occupancy rate in Metro Denver fell 12.1 percentage points to 66.9 percent occupancy in November compared with the October level. The November level was 1.9 percentage points higher than the previous year s level. The average room rate for November was $ per night, 11.7 percent lower than the October level, but 5.8 percent higher over-the-year. Metro Denver Hotel Statistics Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Nov-15 Oct-15 Nov % Change Percent of Hotel Rooms Occupied 66.9% 79.0% 65.0% 77.8% 77.4% 0.5% 64.4% 64.1% Average Hotel Room Rate $ $ $ $ $ % $ $91.10 Source: Rocky Mountain Lodging Report. Metro Denver Economic Development Corporation January 5, 2016 Page 11

13 Spokespeople for Denver International Airport reported that over 4.8 million passengers passed through the airport in October, increasing 6.5 percent from the 4.5 million passengers in September. The October 2015 level was 4.6 percent higher than the October 2014 level, recording 211,470 additional passengers through the airport. The October passenger volume of over 4.8 million passengers made this the busiest October on record. Number of Airline Passengers Denver International Airport Passengers Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual Oct-15 Sep-15 Oct % Change ,828,076 4,533,397 4,616,603 45,050,171 45,045, % 51,985,038 43,387,369 Source: Denver International Airport, Traffic Statistics. Residential Real Estate Shea Homes Colorado acquired 1,270 acres of land in The Canyons development in Castle Pines and plans to add 2,000 single-family and multi-family homes to the site. The company plans to invest $75 million in the community over the next four years. In addition to the homes, the development will include 1,400 acres of open space and 2.1 million square feet of commercial space. Spanos Corp. purchased 11 acres of land in the Interlocken Advanced Technology Environment in Broomfield for $7 million. The company plans to build an apartment complex on the land called Eldorado Apartments. The 311-unit multifamily residential community will include 265-apartment units stacked above a two-story garage and 46 rental townhomes with individual garages attached to each unit. Amenities will include a swimming pool, fenced dog run, and common courtyards. The old Market Street Station in Lower Downtown Denver was sold to Continuum Partners for $14.5 million. The 2-acre parcel will feature a $150 million mixed-use development of office and retail space, and micro apartments along the 16th Street Mall. The plans currently call for 90,000 square feet of nontraditional, creative office space, 85,000 square feet of retail space, and 225 rental apartments. There will also be two levels of underground parking. Greystar plans to build a 142-unit apartment building near Union Station at 19th and Wewatta streets called Ascent Union Station. The plans call for a 14-story building spanning 267,000 square feet, with 4,000 square feet of retail space on the first floor and parking deck on the second floor. Most floors have 14 apartment units and the building will have four two-story penthouses and a rooftop pool deck. Intregral Group broke ground on Ashley Union Station, a $30 million, 107-unit affordable housing development. Located at 18th Street and Chestnut Place, the project will reserve 75 units for low- and moderate-income households. The building will be four stories and include covered parking and ground-level retail space. The completed project is expected in early Trammell Crow Residential submitted plans for Alexan LoHi, but the plans are still subject to change. The plans call for a five-story apartment complex at Dickinson Plaza at 32nd Avenue and Tejon Street. The development will include 106 apartments on top of 10,000 square feet of retail space. Home Resales Following the increase in short-term interest rates by the Federal Reserve, the average 30-year fixed mortgage fell from 3.97 percent to 3.96 percent. Freddie Mac stated that the decline is a reminder that the Federal Reserve only has an indirect effect on long-term mortgage rates, which more closely track the yield on the 10-year U.S. Treasury bonds. Further, the 30-year mortgage rate was up slightly in November from 3.83 percent a year ago. Existing home sales in Metro Denver decreased between September and October, falling 8.6 percent to 4,590 total homes sold during the month of October. October home sales were also 2.1 percent below the previous year s level. Unsold homes on the market were 8.3 percent lower in October than September and were 1.2 percent lower than the previous year s Metro Denver Economic Development Corporation January 5, 2016 Page 12

14 inventory level. The average sales price for single-family homes rose 1.1 percent between September and October to $404,500 and was 11.5 percent higher than the previous year s price. The average sales price of condominiums ($264,290) increased 4.3 percent over-the-month and was 12.2 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 Oct-15 Sep-15 Oct % Change Home Sales (Closed) 4,593 5,025 4,693 46,366 45, % 38,818 53,106 Unsold Homes on Market 7,286 7,942 7,372 7,286 7, % 20,867 24,780 Average Sales Price-Single Family $404,503 $400,159 $362,912 $407,714 $364, % $282,080 $307,529 Average Sales Price-Condo $264,290 $253,365 $235,541 $255,630 $222, % $161,005 $189,035 Median Sales Price-Single Family $346,000 $340,000 $306,000 $235,000 $247,000 Median Sales Price-Condo $214,500 $211,505 $185,000 $136,000 $160,000 Source: REcolorado; Data for the seven Metro Denver counties compiled by Development Research Partners. The National Association of Realtors (NAR) released the November analysis of U.S. existing-home sales, reporting that sales fell to the slowest pace in 19 months. Existing home sales fell 10.5 percent between October and November to 4.76 million homes sold annually. The existing home sales rate for November was 3.8 percent lower than the previous year s level, recording the first year-over-year decrease in sales since September The housing inventory in November fell 3.3 percent over-the-month, representing a 5.1-month supply, and was 1.9 percent lower over-the-year. NAR economists said that the decline in existing-home sales in November was likely due to an increase in closing timeframes that may have pushed some transactions into December. While inventory is sparse and affordability remains an issue, the industry is adjusting to the Know Before You Owe rule. Economists with the NAR stated that signed contracts remained mostly steady in recent months and properties sold faster in November; therefore, it is highly possible the sales decline was not because of sudden, withering demand. Home Prices Zillow reported that the conforming loan limit on mortgages in Denver increased from $424,350 in 2015 to $458,850 in 2016, making it just one of 39 areas to get an increase. The Federal Housing Finance Administration studies home prices in every county to determine whether an area should go above standard, which is $417,000, for federal backing on a mortgage. The ratio of homes in Denver that do not qualify for conventional mortgages will fall from 14 percent of the total to 1.1 percent. NAR data shows the November median existing-home sales price across the U.S. was $221,600, an over-the-year increase of 6.6 percent. Median housing prices increased over-the-year in each of the nation s four regions. The West reported the largest increase between November 2014 and 2015, rising 8.3 percent to a median home price of $319,700. The Midwest reported the lowest median home price ($169,300), which was 5.3 percent above the previous year s level. The South also recorded over-the-year growth, rising 6.3 percent to a median home price of $189,400. The Northeast reported an overthe-year increase of 3.2 percent to $254,800. Median Sales Price of Existing Single-Family Homes ($000s) Quarter 3 Quarter 2 Quarter 3 YTD Avg YTD Avg YTD Avg Median Median 2015 (p) 2015 (r) % Change Boulder MSA $449.0 $463.7 $422.0 $451.6 $ % $358.1 $348.4 Denver-Aurora MSA $353.0 $362.9 $315.5 $351.3 $ % $232.4 $247.1 United States $229.0 $229.5 $217.1 $221.1 $ % $173.1 $219.0 Source: National Association of REALTORS. (p) =preliminary (r) =revised A separate NAR report revealed that median home prices throughout the Metro Denver area decreased between the second and third quarters of The Boulder MSA reported a 3.2 percent decrease ($449,000) in home prices during the third quarter of 2015 compared with the previous quarter. However, Boulder home prices were 6.4 percent higher than the third quarter of The Denver-Aurora MSA also reported a decline in home prices, reporting a 2.7 percent decrease in Metro Denver Economic Development Corporation January 5, 2016 Page 13

15 prices over-the-quarter to $353,000. Between the third quarters of 2014 and 2015, the Denver-Aurora MSA recorded an 11.9 percent increase in the median sales price. The national median sales price fell 0.2 percent over-the-quarter to $229,000, but was 5.5 percent higher than the previous year s level. Of the 178 MSAs included in the third quarter 2015 report, the Boulder MSA reported the eighth highest median price and the Denver-Aurora MSA median price was the 18th highest. The Denver-Aurora MSA also reported the 16th 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 October. The Denver index was in October, an absolute increase of 0.76 points over-the-month. Prices in 11 of the 20 cities tracked by the index increased over-the-month and all 20 cities recorded increases over-the-year. Denver s home prices in October 2015 were 10.7 percent higher than the prior year s level, recording the third largest over-the-year increase of the 20 cities. San Francisco (+11.1 percent) and Portland (+10.9 percent) recorded the largest overthe-year increases, while Chicago (+1.2 percent) reported the smallest increase. The national home price index rose 5.1 percent between October 2014 and Analysts for the index reported that generally good economic conditions continue to support gains in home prices. They also stated that inventories of existing homes have averaged around a five-month supply for the past year, a level that suggests a fairly tight market with limited supplies. Further, sales of new single-family homes, despite the recent increase in construction, remain mixed to soft compared with the trend in existing home sales. Foreclosures Housing foreclosures throughout the Metro Denver area fell in six of the seven counties between November 2014 and Metro Denver recorded a 43.2 percent decrease in foreclosures in November compared with the previous year and a 25.3 percent decrease over the previous month, representing 68 fewer foreclosures. The City and County of Broomfield reported the largest over-the-year decline (-88.9 percent) in foreclosures, falling to one foreclosure in November 2015 from nine foreclosures in November Arapahoe and Douglas counties also reported significant declines in foreclosures overthe-year, falling 52.5 percent and 50 percent, respectively. The City and County of Denver (-32.8 percent) reported the smallest over-the-year decline. Boulder County recorded no change in foreclosures over-the-year, recording nine total foreclosures. Real Estate Foreclosures Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total Nov-15 Oct-15 Nov % Change Total Metro Denver* ,208 4, % 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. Metro Denver Economic Development Corporation January 5, 2016 Page 14

16 RealtyTrac released the foreclosure report for November 2015, stating the U.S. foreclosure rate decreased 7 percent from November The total filings for November 2015 (104,111 filings) were also 10 percent below the previous month s level. The report stated that the over-the-month decrease was attributed to a 15 percent monthly drop in foreclosure starts, with 41,208 properties starting the foreclosure process. According to the report, banks continue to work through the backlog of lingering foreclosures, pushing bank repossession numbers higher in the short term even as foreclosure starts drop to new lows. Further, the share of active foreclosures tied to bubble-era loans is shrinking, with 59 percent of all loans in foreclosure originated between 2004 and New Homes The Census Bureau report on new home sales after adjustment for seasonal trends stated that national home sales increased in November to 490,000 annual sales from the revised October level of 470,000 annual sales. The November home sales level was 4.3 percent above October and was 9.1 percent above the previous year s level. Two of the four regions reported over-the-month increases in home sales. The West reported the largest over-the-month increase in sales, rising 20.5 percent to 135,000 sales. The South also recorded an over-the-month increase in new home sales, rising 4.5 percent to 277,000 sales. The Northeast (-28.6 percent) and the Midwest (-8.6 percent) reported over-the-month declines in new home sales. The South reported the largest over-theyear increase in sales, rising 19.4 percent, followed by the West (+4.7 percent). The Northeast and the Midwest recorded over-the-year decreases, falling 13.8 percent and 10.2 percent, respectively. The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index (HMI) fell 1 point to 61 in December. NAHB spokespersons reported that builders were optimistic about the housing market overall, although they were reporting concerns with the high price of lots and labor. Further, builder confidence has averaged in the low 60s over the past seven months, which is in line with a gradual, consistent recovery. With job creation, economic growth, and growing household formations, the group anticipates the housing market to continue to pick up traction into According to the Census Bureau, the seasonally adjusted annual number of nationwide residential building permits rose 10.4 percent in November (1.28 million permits) from October and was 18.8 percent above November There was a 27.7 percent increase in multi-family units over-the-month, a 1.7 percent increase in single-family detached units, and a 14.7 percent decrease in single-family attached units. Single-family attached permits rose over-the-year, increasing 3.6 percent, and single-family detached units increased 9.7 percent during the same period. There was a 35.6 percent increase in multi-family permits between November 2014 and The Midwest (204,000 permits) reported the largest increase in permits over-the-year, rising 42.7 percent, followed by the South (+21.6 percent) and the West (+12.7 percent). The Northeast (129,000 permits) reported the only over-the-year decline in permits, falling 4.4 percent. Residential building permits for the Metro Denver area increased in November compared with the prior year. Metro Denver reported a percent increase in total permits issued between November 2014 and 2015, with 1,056 additional permits issued. The over-the-year increase in total permits was attributed to a percent increase in multi-family permits and a 59.2 percent increase in single-family detached permits. The single-family attached market recorded the only over-the-year decrease in permits, falling 5 percent and reporting one less permit in November 2015 compared with November Compared with October 2015, permits through November in Metro Denver rose 49.2 percent with 548 additional permits. The multi-family market reported the largest over-the-month increase, rising percent, followed by the single-family attached market ( percent), while the single-family detached market fell 11.5 percent over-the-month. Metro Denver Economic Development Corporation January 5, 2016 Page 15

17 Residential Building Permits Month of Month of Month of YTD Total YTD Total YTD Total Total Total Nov-15 Oct-15 Nov % Change Single-Family Detached Units ,072 7, % 3,791 17,888 Single-Family Attached Units % Multi-Family Units ,957 7, % 1,478 2,953 Total Units 1,662 1, ,456 15, % 5,554 21,312 Apartment Rental Market Source: U.S. Census Bureau. Harvard University s Joint Center for Housing Studies released a report stating that the majority of U.S. renters were older than 40 years of age, a fundamental shift over the last decade. The center stated that this shift reflected the lasting damage of the housing crash and an aging population. The report found that single-family dwellings were growing as a share of overall rentals. Further, affordability problems were rising as rents increased faster than wages, while apartment construction increasingly targeted tenants with six-figure incomes. Nearly 51 percent of renters were over 40, representing 22.4 million households. Over the past ten years, the country has added 9 million renters to the market, which includes younger millennials recently out of college. The Denver Metro Apartment Vacancy and Rent Survey for the third quarter of 2015 reported increasing vacancy, recording much needed loosening in the apartment market. The Metro Denver apartment vacancy rate rose 0.5 percentage points to 5 percent from the second quarter level. The vacancy rate was also 1.1 percentage points above the prior year. This was the highest vacancy rate for Metro Denver since the first quarter Vacancy rates ranged from 3.6 percent in the Boulder/Broomfield market area to 5.5 percent in Arapahoe County. Increases in five of the six submarkets contributed to the over-the-quarter increase in Metro Denver. Jefferson and Douglas counties reported the largest over-the-quarter increases, rising 1.7 percentage points and 1 percentage point, respectively. Apartment Statistics Quarter 3 Quarter 2 Quarter 3 YTD Average YTD Average YTD Average Annual Average Annual Average % Change Apartment Vacancy Rate 5.0% 4.5% 3.9% 4.8% 4.6% 5.9% 8.2% Average Monthly Rental Rate (all units) $1,292 $1,265 $1,145 $1,254 $1, % $909 $848 Source: Denver Metro Apartment Vacancy and Rent Survey. The average monthly rental rate of apartments in Metro Denver increased through the third quarter of 2015, marking the seventh consecutive quarter of over-the-quarter rental rate growth. The third quarter average rental rate in Metro Denver ($1,292) was 2.1 percent higher than the previous quarter s level. This rate was also 12.8 percent higher than the third quarter of 2014, representing an increase of $146 in average monthly rental rates over-the-year. All six submarkets reported average rental rates above $1,200 during the third quarter, with average rental rates ranging from $1,207 in Adams County to $1,504 in the Boulder/Broomfield market area. Commercial Real Estate CoBank celebrated the opening of its Greenwood Village headquarters. The 11-story, 245,000-square-foot building is Leadership in Energy and Environment Design (LEED) certified silver and makes use of sound technology to keep noise levels down. The new building provides a world-class working environment and employees helped to design the interior of the building, with focus on work space and co-working space. Etkin Johnson Real Estate Partners broke ground on a 120,581-square-foot speculative flex industrial building in the Colorado Technology Center (CTC). The building will have 24-foot ceilings, heavy power, loading docks, and an energyefficient design. The completed project is expected summer The company also plans to develop 12.2 acres at the Metro Denver Economic Development Corporation January 5, 2016 Page 16

18 southwest corner of CTC Boulevard and Boxelder Street, which will have a 152,992-square-foot office and flex industrial space. Aurora-based SolarTAC plans to break ground on a $1.5 million expansion of its existing outdoor laboratory at its 74- acre campus outside of Denver International Airport. The new SolarTac Accelerator aims to reduce costs for startup energy companies that want to test their products on a full-power grid. The company expects the new facility to open as early as fall Nassar Development LLC plans to build a new business community at the Erie Municipal Airport. The project is planned to be four buildings spanning 120,000 square feet on an 8.5-acre lot at 3000 Airport Drive. Two of the four buildings are on track to be completed in August. Silverwest Hotels LLC purchased the Inverness Hotel and Conference Center in Arapahoe County. A $1.3 million renovation of the hotel s lobby, entrance, food and beverage outlets, and event corridor was completed earlier this year. Silverwest plans additional renovations including upgrades to the guestrooms in Office Market The Metro Denver office market reported a decline in the vacancy rate and an increase in the average lease rate through the fourth quarter of According to CoStar, the direct vacancy rate fell 0.8 percentage points over-the-year to 9.4 percent vacancy. The 2015 direct vacancy rate was the lowest fourth quarter vacancy rate since the fourth quarter of 2000 when the vacancy rate was 6.8 percent. The average lease rate rose 5.1 percent during the fourth quarter compared with the previous year s level. The average lease rate gained $1.19 per square foot between the fourth quarters of 2014 and Office property construction and projects completed to date during the fourth quarter of 2015 were among the strongest levels since before the Great Recession. There was over 2.08 million square feet of space across 27 buildings completed in Some of the largest office buildings completed through 2015 included the 242,810-square-foot Triangle Building, the 274,287-square-foot CoBank Headquarter building, and the 187,500-square-foot Charles Schwab Three building. There was 3.18 million square feet of space under construction during the fourth quarter of 2015, an 11.6 percent increase from the prior year. Of this space, 2.13 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 67.2 percent of total Metro Denver construction. Office Market Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 6,037 6,028 6,010 5,982 5,965 5,952 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 9.4% 9.7% 10.2% 11.1% 12.1% 12.4% Vacancy Rate (with sublet) 10.0% 10.3% 10.8% 11.5% 12.4% 12.9% Avg. Lease Rate (direct, per sq. foot, full service) $24.42 $24.03 $23.23 $22.28 $20.91 $19.96 New Construction Completed (year-to-date) 2.08 MSF, 1.34 MSF, 1.16 MSF, 0.95 MSF, 0.87 MSF, 0.49 MSF, Currently Under Construction Industrial & Flex Market 27 Bldgs 3.18 MSF, 33 Bldgs 18 Bldgs 2.83 MSF, 29 Bldgs 23 Bldgs 2.85 MSF, 25 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 15 Bldgs 1.79 MSF, 23 Bldgs 8 Bldgs 0.90 MSF, 10 Bldgs 14 Bldgs 0.85 MSF, 7 Bldgs CoStar Realty data revealed that the industrial market loosened during the fourth quarter of The fourth quarter direct vacancy rate was 0.1 percentage points higher than the fourth quarter of The average lease rate rose 17.1 percent between the fourth quarters of 2014 and 2015, adding $1.03 per square foot to the average lease rate. There was also a 3.1 percent increase over-the-quarter in the average lease rate. There were seven industrial buildings completed in 2015, Metro Denver Economic Development Corporation January 5, 2016 Page 17

19 ranging from 4,000 square feet in the City and County of Denver to 466,540 square feet in the Enterprise Business Center at Stapleton, also in the City and County of Denver. There were 17 buildings with 2.97 million square feet of space under construction during the period. Industrial Market Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 6,922 6,919 6,915 6,890 6,881 6,869 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 3.2% 2.8% 3.1% 4.1% 5.2% 6.7% Vacancy Rate (with sublet) 3.5% 3.0% 3.3% 4.4% 5.7% 7.1% Avg. Lease Rate (direct, per square foot, NNN) $7.04 $6.83 $6.01 $5.09 $4.69 $4.56 New Construction Completed (year-to-date) 1.37 MSF, 1.24 MSF, 2.60 MSF, 0.93 MSF, 0.58 MSF, 0.32 MSF, Currently Under Construction 7 Bldgs 2.97 MSF, 17 Bldgs 4 Bldgs 1.57 MSF, 8 Bldgs 23 Bldgs 1.35 MSF, 6 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 5 Bldgs 2.01 MSF, 15 Bldgs 8 Bldgs 1.05 MSF, 7 Bldgs 5 Bldgs 0.05 MSF, 2 Bldgs The Metro Denver flex market continued to record improvements through the fourth quarter of the year. The direct vacancy rate for flex space fell 1.5 percentage points to 6.6 percent between the fourth quarters of 2014 and 2015, the lowest rate since the data has been collected. The average lease rate rose 2.9 percent over-the-quarter to $10.62 per square foot. The fourth quarter lease rate was also 8.6 percent higher than the prior year s level and added $0.84 per square foot. There was 501,000 square feet of new space completed in 2015, including the new 95,920-square-foot Avery Brewing Co. s brewery and restaurant in Boulder, the 67,200-square-foot Mikron Building in Englewood, and the 91,960- square-foot Enterprise Business Center in Denver. Flex Space Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 1,473 1,470 1,466 1,456 1,451 1,448 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 6.6% 7.4% 8.1% 10.1% 12.6% 13.3% Vacancy Rate (with sublet) 7.9% 8.6% 9.4% 11.6% 14.0% 14.5% Avg. Lease Rate (direct, per square foot, NNN) $10.62 $10.32 $9.78 $9.30 $8.74 $8.63 New Construction Completed (year-to-date) 0.50 MSF, 0.33 MSF, 0.57 MSF, 0.10 MSF, 0.13 MSF, 0 MSF, Currently Under Construction Retail Market 7 Bldgs 0.22 MSF, 4 Bldg 3 Bldgs 0 MSF, 0 Bldg 9 Bldgs 0.32 MSF, 3 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 3 Bldgs 0.23 MSF, 5 Bldgs 3 Bldgs 0.08 MSF, 3 Bldgs 0 Bldgs 0 MSF, 1 Bldg The retail market in Metro Denver improved through the fourth quarter of The direct vacancy rate decreased 0.2 percentage points between the fourth quarters of 2014 and 2015, but was 0.1 percentage points above the third quarter 2015 level. The fourth quarter direct vacancy rate was the lowest fourth quarter level since the fourth quarter of The average lease rate for retail space increased 1.7 percent both over-the-quarter and over-the-year, adding $0.26 per square foot over-the-year. Through the fourth quarter of the year, the Metro Denver retail market continued to complete larger scale projects, with nearly 40 percent of completed projects over 10,000 square feet. Of the 66 buildings completed in 2015, 40 of them were Metro Denver Economic Development Corporation January 5, 2016 Page 18

20 smaller than 10,000 square feet, with an overall average size of 5,234 square feet. Boulder County and the City and County of Denver recorded the largest amounts of retail space completed through 2015, reporting 312,640 square feet and 189,170 square feet of space completed, respectively. There were 43 buildings under construction at the end of 2015, totaling about 936,550 square feet. Twenty-three of the buildings under construction were larger than 10,000 square feet, spanning a total 804,800 square feet or 86 percent of total retail space under construction. Retail Market Statistics Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter Number of Buildings 11,758 11,730 11,692 11,623 11,537 11,480 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 5.0% 4.9% 5.2% 5.8% 6.3% 6.7% Vacancy Rate (with sublet) 5.1% 5.1% 5.4% 6.0% 6.5% 7.0% Avg. Lease Rate (direct, per square foot, NNN) $16.00 $15.74 $15.74 $15.41 $14.74 $14.61 New Construction Completed (year-to-date) 1.16 MSF, 0.54 MSF, 0.59 MSF, 1.15 MSF, 0.59 MSF, 1.02 MSF, Currently Under Construction 66 Bldgs 0.94 MSF, 43 Bldgs 32 Bldgs 0.99 MSF, 47 Bldgs 51 Bldgs 0.87 MSF, 37 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 69 Bldgs 0.42 MSF, 29 Bldgs 46 Bldgs 0.85 MSF, 27 Bldgs 25 Bldgs 0.20 MSF, 14 Bldgs Metro Denver Economic Development Corporation January 5, 2016 Page 19

21 Monthly/Quarterly Direction Annual Direction Positive Changes 8 of of 18 Nonfarm Employment +2, ,200 Growth Employment up 0.2% from Oct. to Nov. YTD employment up 2.8% through Nov. 23% 23% % Companies Hiring Companies expecting to add workers YTD average up 3 percentage points (Denver Area) increased from 4Q 2015 to 1Q 2016 compared with % 3.8% Unemployment Rate Unemployment up 0.1 percentage points from Oct. to Nov. Down from 2014 YTD average of 4.8% 50.1% -5.2% Initial Unemployment YTD average claims decreased through Nov. Insurance Claims Claims increased from Oct. to Nov Total Retail Sales 4.6% 2.7% Metro sales increased from April to May YTD sales up through May 2015 Mountain Region Consumer Confidence Index Index up 14.1% from Nov. to Dec. YTD average up 22.6% through Dec % 77.8% Hotel Occupancy Decreased 12.1 percentage points from Oct. to Nov. YTD occupancy up 0.5 percentage points from last year 6.5% 0.0% DIA Passengers YTD passengers unchanged through Oct. Passengers increased from Sept. to Oct Bloomberg Colorado Index % Index down 10% from Nov. to Dec. YTD return through Dec Dow Jones Industrial 17, % Average Index down 1.7% from Nov. to Dec. YTD return through Dec Home Sales (closed) 4,593 46,366 Sales down 8.6% from Sept. to Oct. YTD sales up 2.9% through Oct Median Home Price $353,000 $351,300 (Denver-Aurora MSA) Down 2.7% from 2Q 2015 to 3Q 2015 YTD price 14.5% higher through 3Q 2015 Foreclosures 201 3,208 Down 25.3% from Oct. to Nov. Down 34.5% YTD through Nov Residential Building Permits 1,662 16,456 (Total) Permits increased 49.2% from Oct. to Nov. YTD permits up 7.4% through Nov % 4.8% Apartment Vacancy Rate Vacancy increased 0.5 percentage points from 2Q 2015 to 3Q 2015 YTD average up 0.2 percentage points from last year 10.0% -0.8 percentage points Office Vacancy Rate (with Vacancy rate down 0.3 percentage points 4Q 2015 vacancy rate down from 10.8% one Sublet) from 3Q 2015 to 4Q 2015 year ago 3.5% +0.2 percentage points Industrial Vacancy Rate Vacancy rate up 0.5 percentage points from 4Q 2015 vacancy rate up from 3.3% one year (with Sublet) 3Q 2015 to 4Q 2015 ago Retail Space Vacancy Rate (with Sublet) 5.1% -0.3 percentage points Vacancy rate unchanged from 3Q 2015 to 4Q Q 2015 vacancy rate down from 5.4% one year ago Metro Denver Economic Development Corporation January 5, 2016 Page 20

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