14 th Annual. October 1, Tom Zwirlein, Ph.D. and Fred Crowley, Ph.D Southern Colorado Economic Forum University of Colorado at Colorado Springs

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D Southern Colorado Economic Forum University of

1 14 th Annual Southern Colorado o Economic o c Forum October 1, 2010 Tom Zwirlein, Ph.D. and Fred Crowley, Ph.D Southern Colorado Economic Forum University of Colorado at Colorado Springs College of Business and Administration

2 Overview Employment and Income Housing Commercial lreal lestate t Macro and Micro Perspectives The Local Forecast The Recovery Operation 6035 Cluster Development

3 Seasonally Adjusted Monthly Unemployment Rate Current 9.6% 8.9% 8.2% 6.0 Recession 4.0 U.S. Colorado 2.0 El Paso Jan-00 Aug-00 Mar-01 Oct-01 May-02 Dec-02 Jul-03 Feb-04 Sep-04 Apr-05 Nov-05 Jun-06 Jan-07 Aug-07 Mar-08 Oct-08 May-09 Dec-09 Jul-10 Source: BLS, Colorado LMI

4 Employment Trends (March 2001 = 100) Colorado El Paso County Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Source: BLS, Colorado LMI

5 120 Manufacturing Employment Trends (Dec 2000 = 100) Recession EPC 40 CO 20 US 0 Jan-90 Feb-91 Mar-92 Apr-93 May-94 Jun-95 Jul-96 Aug-97 Sep-98 Oct-99 Nov-00 Nov-01 Nov-02 Nov-03 Nov-04 Nov-05 Nov-06 Nov-07 Nov-08 Source: Federal Reserve Bank of St. Louis

6 Per Capita Personal Income 2008 U.S. Colorado El Paso Source: Bureau of Economic Analysis

7 Employment in Cluster Industries 25,000 20, ,000 10,000 5, Source: Colorado Quarterly Census of Employment and Wages

8 Wages in Cluster Industries $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30, $20,000 $10,000 $ Source: Colorado Quarterly Census of Employment and Wages

9 Military Employment Fort Carson Schriever Peterson USAFA Source: Colorado Springs Chamber of Commerce

10 Overview Employment and Income Housing Commercial lreal lestate t Macro and Micro Perspectives The Local Forecast The Recovery Operation 6035 Cluster Development

11 9 Key Interest Rates (%) Prime 4 Baa 3 30 yr Mtg 2 Fed Funds 1 0 Source: Federal Reserve Bank of St. Louis

12 Housing Affordability Index Jul 09 Sep 09 Nov 09 Jan 10 Mar 10 May 10 Jul 10 Source: National Association of REALTORS

13 Supply/Demand of Housing and Prices Equilibrium Actual Supply/Demand Price Index Listings Exceed Demand Recession Actual S/D Expected S/D Price Demand Increases Aug-96 Aug-97 Aug-98 Aug-99 Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Source: PPAR (RCS) and UCCS Forum

14 Average and Median Home Prices Average Price Median Price Thousandss 0 Source: PPAR (RSC) and UCCS Forum

15 Foreclosures in El Paso County ,470 4,602 4,700 4,000 3, ,275 2,273 2,554 1,954 1,596 1, Source: El Paso County Public Trustee and UCCS Forum

16 Home Sales , ,624 9,750 10,204 11,746 11,890 9,995 8,339 8,746 9, Source: PPAR (RSC) and UCCS Forum

17 Single Family Permits in El Paso County Previous 12 Months Current 12 Months 0 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Source: PPRBD and UCCS Forum

18 Single and Multi-Family Permits Where s The Multi- Family? Multi-Family Single Family Source: PPRBD and UCCS Forum

19 Multi-Family Rents and Vacancy Rates in El Paso County 16 Average Vacancy Rate (%) Average Rent ($) Jun-05 Oct-05 Feb-06 Jun-06 Oct-06 Feb-07 Jun-07 Oct-07 Feb-08 Jun-08 Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Source: Colorado Division of Housing

20 Overview Employment and Income Housing Commercial lreal lestate t Macro and Micro Perspectives The Local Forecast The Recovery Operation 6035 Cluster Development

21 Industrial, Shopping Center and Office Vacancy Rates Industrial Shopping Center Office Jun Source: Turner Report and UCCS Forum

22 Industrial, Shopping Center and Office Rents Industrial Shopping Center 4 Office Jun Source: Turner Report and UCCS Forum

23 NAI Comparative Vacancy Rates (%) Downtown Office Colorado Springs Manufacturing High Tech R&D Albuquerque Austin Boise Colorado Springs Denver Huntsville Kansas City Minneapolis Portland Salt Lake City Wichita Average Source: NAI Global Commercial Real Estate Services, Worldwide

24 $40 NAI Comparative Rents Colorado $35 Springs Albuquerque $30 Austin Boise $25 Colorado Springs $20 $15 $10 $5 $0 Downtown Office Manufacturing High Tech R&D Denver Huntsville Kansas City Minneapolis Portland Salt Lake City Wichita Average Source: NAI Global Commercial Real Estate Services, Worldwide

25 Overview Employment and Income Housing Commercial lreal lestate t Macro and Micro Perspectives The Local Forecast The Recovery Operation 6035 Cluster Development

26 Purchasing Managers Index 100 Recession Kansas City 50 Fed 40 Production Index SA US PMI SA 10 0 Aug-05 Dec-05 Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Source: Federal Reserve Bank of Kansas City, Institute of Supply Management, Forum

27 GDP, Gross State Product (GSP) and Gross Metro Product (GMP) GSP GDP GMP Source: Federal Reserve Bank of St. Louis

28 S&P500 Performance Over the Last Two Bear Markets Price Level S&P Aug 00 to 1000 May Oct 07 to Sept Months After Peak Price Level Source: Federal Reserve Bank of St. Louis

29 Consumer Price Index U. S. 2 1 Denver/ Boulder 0-1 Source: Bureau of Labor Statistics, Colorado LMI, Forum

30 Business Conditions Index and 3-Month Moving Average Feb-05 May-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06 Nov-06 Feb-07 May-07 Aug-07 Nov-07 Feb-08 May-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Recession BCI 3-Mnth MA

31 Colorado Springs Sales & Use Tax (Blue is in millions, Yellow is indexed to 2001=100) Nominal ($millions) 60 Per Capita 40 Real (indexed 2001=100) 20 0 Source: City of Colorado Springs and UCCS Forum

32 Overview Employment and Income Housing Commercial lreal lestate t Macro and Micro Perspectives The Local Forecast The Recovery Operation 6035 Cluster Development

33 Projections for El Paso County (%) Population Growth Unemployment Rate Non-Agricultural Employment Total Wages and Salaries Average Wages and Salaries

34 Projections for El Paso County (%) Personal Income Per Capita Personal Income Retail Trade Single Family Housing Permits Non-Residential Construction

35 Overview Employment and Income Housing Commercial lreal lestate t Macro and Micro Perspectives The Local Forecast The Recovery Operation 6035 Cluster Development

36 Personal Savings ($Billions) Aug-96 Aug-98 Aug-00 Aug-02 Aug-04 Aug-06 Aug-08 Source: Federal Reserve Bank of St. Louis

37 Net Percent of Loan Officers Reporting Higher Consumer Loan Demand Jul-96 Jul-98 Jul-00 Jul-02 Jul-04 Jul-06 Jul-08 Jul Source: Federal Reserve Bank of St. Louis

38 Net Percent of Loan Officers Willing to Make Consumer Loans Jul-96 Jul-98 Jul-00 Jul-02 Jul-04 Jul-06 Jul-08 Jul Source: Federal Reserve Bank of St. Louis

39 Net Percent of Bank Loan Officers Willing to Make Prime Residential Mortgage Loans Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 Apr-10 Source: Federal Reserve Bank of St. Louis

40 Net Percent of Loan Officers Reporting Higher Comm/Ind Loan Applications Jul-96 Jul-98 Jul-00 Jul-02 Jul-04 Jul-06 Jul-08 Jul Source: Federal Reserve Bank of St. Louis

41 Net Percent of Bank Loan Officers with Easier Loan Standards for Small Firms Jul-96 Jul-98 Jul-00 Jul-02 Jul-04 Jul-06 Jul-08 Jul Source: Federal Reserve Bank of St. Louis

42 Overview Employment and Income Housing Commercial lreal lestate t Macro and Micro Perspectives The Local Forecast The Recovery Operation 6035 Cluster Development

43 Operation 6035 Key Sectors Aerospace, defense and homeland security Software and information technology Renewable energy and energy efficiency Sports and related industries Emerging industries, i entrepreneurs

44 Measurement Issues Table 1: Operation 6035 Targeted Industry Employment and Wages in El Paso County in 2008 Aerospace, Defense and Homeland Security Software and Information Technology Renewable Energy and Energy Efficiencyi Sports and Sports Related Industries Emerging Industries/ Entrepreneurs Total Employment & Wages and Average Wages Source: Quarterly Census of Employment and Wages, Colorado Department of Labor Employment Total Wages Average Wage 4,696 $340,209,174, $72,454 12,029 $985,673,030 $81,941 8,996 $688,439,382, $76,527 5,599 $143,516,217 $25,631 2,766 $250,167,559 $90,430 34,087 $2,408,005,362 $70,643

45 Aerospace Firms in Colorado (2008) Source: Colorado QCEW, UCCS Forum

46 Software Firms in Colorado (2008) Source: Colorado QCEW, UCCS Forum

47 Renewable Energy Firms in Colorado (2008) Source: Colorado QCEW, UCCS Forum

48 Sports Firms in Colorado (2008) Source: Colorado QCEW

49 Education Common Threads Sciences/Engineering

50 Graduation Rates (%) Colorado El Paso County Source: Colorado Department of Education

51 ACT Scores 5 Column1 0 Colorado (20.8) Source: Colorado Department of Education

52 Engineering Firms in Colorado (2008) Source: Colorado QCEW, UCCS Forum

53 Ranking Operation 6035 Target Sectors Telecommunications Complex Electronics, Computer Assembly Publishing Utilities Membership Associations Data Processing/Hosting Services Amusements and Recreation

54 Table 2: Location Quotients; Employment, Income and Tax Multipliers for Select Operation 6035 Sectors Location Employ- ment Income Relative Tax Overall Operation 6035 Sectors Quotient Rank Multiplier Rank Multiplier Rank Effect Rank Rank 334 Computer & electronic mfg Publishing except internet Membership assoc and orgs Sporting goods, hobby...stores Professional and tech services Telecommunications Miscellaneous manufacturing Specialty trade contractors Amusements, and recreation Ambulatory health care Fabricated metal product mfg Performing arts/spectator sports Heavy/civil engineering cons Educational services Data processing, hosting & svcs Durable goods wholesalers Utilities Management of companies Electrical equipment mfg Machinery manufacturing Transportation equip mfg Source: Colorado Quarterly Census of Employment and Wages, Implan, UCCS Forum

55 Overview Employment and Income Housing Commercial lreal lestate t Macro and Micro Perspectives The Local Forecast The Recovery Operation 6035 Cluster Development

56 Cluster Development Telecommunications: Ranked 1 st from multiplier analysis Complex Electronics: Ranked 2 nd from multiplier analysis

57 Telecommunications Suppliers Share of Inputs (22%) Wire Manufacturing (5%) Monetary Institutions (4%) Internet Publishing (4%) Lessors of Non-Financial Intangibles (3%) Employment Services (3%) Petroleum Refineries (3%) Source: Implan

58 Telecomm Inputs in Colorado (2008) Source: Colorado QCEW, UCCS Forum

59 Telecommunications Buyers: Share of Output (60%) Telecommunications (40%) Securities Dealers (6%) Custom Programming (4%) Wholesale Trade (3%) Management of Companies (3%) Construction of Residential and Non- Residential Structures t (2%) Internet Providers (2%) Source: Implan

60 Telecomm Users in Colorado (2008) Source: Colorado QCEW, UCCS Forum

61 Complex Electronics Suppliers Share of Input (25%) Printed Circuit Boards (9%) Management of Companies and Enterprises (6%) Hardware Manufacturing (6%) Inorganic Chemical Manufacturing (5%) Source: Implan

62 Complex Electronics Suppliers in Colorado (2008) Source: Colorado QCEW, UCCS Forum

63 Complex Electronics Buyers Share of Output (60%) Computer Mfg (16%) Computer Storage (9%) Telecommunications (7%) Computer Peripherals (6%) Management of Cos. (5%) Telephone Mfg (5%) Nondeposit Credit Institutions(4%) GPS Equipment (3%) Miscellaneous Prof/Sci/Tech (3%) Electromedical l Manufacturing (2%) Source: Implan

64 Complex Electronics Users in Colorado (2008) Source: Colorado QCEW, UCCS Forum

65 Compared to the Current Economic Base Target industry employment should be growing faster Target industries should provide higher and faster growing incomes If incentives are appropriate, they should be a regional effort Regional incentives should be proportional to tax district benefits Target industries should capitalize on local labor skills Target industries should contribute to a more diversified and stable local economy

66 Conclusion El Paso County has a core component of Operation 6035 sectors Successful cluster development may require regional efforts Trade missions to neighboring communities in Colorado might prove useful to identify Cluster suppliers Cluster end users

68 CSAP 4 th Grade Reading Assessment Colorado El Paso County

69 CSAP 4 th Grade Writing Assessment Colorado El Paso County

70 Colorado Sales ($millions) 160, , , ,000 80,000 Food and Beverage 60,000 40,000 Retail Total 20, (Through May)

71 Average Asking Rents per sq ft. by Sector (December figures) nd Qtr Turner Commercial Research Metro CBD Metro Class A Medical

72 Industrial Asking Rents Turner Commercial Research

73 Shopping Center Asking Rates Excludes Regional Malls $16.00 $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $- Turner Commercial Research

74 El Paso County Sales ($millions) 16,000 14,000 12,000 10, ,000 6,000 4,000 Food and Beverage Retail Total 2, (Through May)

75 Office Vacancy Rates by Sector (December figures in percent) Metro CBD Class A Medical nd Qtr Turner Commercial Research

76 MSA Per Capita Personal Income 2008 Comparison City Data Percent Change in Personal Income Per Capita Personal Income as a Percent of the U.S. Average Household Size Average Earnings per Job Average Wage & Salary Albuquerque $35, % 88.20% $43,695 $40, Austin 37, % 93.0% ,503 47,227 Boise 35, % 88.7% ,368 38,045 Boulder 50, % 124.6% ,806 52,845 Colorado Springs 38, % 95.2% ,359 43,317 Denver 48, % 119.5% ,127 51,870 Huntsville 38, % 95.3% ,756 46,967 Kansas City 40, % 100.6% ,850 45,263 Minneapolis 47, % 118.6% ,758 50,630 Portland 39, % 99.4% ,425 45,891 Pueblo 30, % 76.1% ,632 35,137 Salt Lake City 38, % 95.2% ,173 42,195 Tucson 34, % 84.8% ,140 40,544 Wichita 39, % 97.6% ,728 40,940 Comparison City Avg 39, % 98.3% ,094 44,352

77 Industrial Vacancy Rates Turner Commercial Research

78 El Paso County Employment Aug-00 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Source: Colorado Department of Labor

79 Shopping Center Vacancy Rates Excludes Regional Malls Turner Commercial Research

Labor Force/Employment U.S. Non-Farm Job Openings

Labor Force/Employment U.S. Non-Farm Job Openings Jun7 Feb8 Oct8 Jun9 May6 May8 May1 May12 Number of People Feb1 Oct1 Jun11 Feb12 Jan8 Sep8 Jan1 Sep1 Jan12 Sep12 Jan14 Percentage Jan8 Sep8 Jan1 Sep1 Jan12 Sep12 Jan14 Job Openings ('s) The Big Picture