Policy Watch. National. Local

Transcription

1 October2015

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 According to The State of Obesity: Better Policies for a Healthier America report released by the Trust for America s Health and the Robert Wood Johnson Foundation, Colorado has the lowest adult obesity rate in the nation. The report showed that 21.3 percent of adult Coloradans were obese in The study was based on analysis of state-by-state data from the Centers for Disease Control and Prevention s Behavioral Risk Factors Surveillance Survey. Arkansas had the highest adult obesity rate with 35.9 percent. The U.S. Bureau of Economic Analysis released a report on economic growth across the country s metropolitan statistical areas (MSA) in The Denver-Aurora-Lakewood MSA ranked 18th out of the 381 metropolitan areas in terms of regional gross domestic product (GDP). Denver reported a 2014 GDP level of $187.1 billion, an increase of 6.5 percent compared with the previous year. This level of growth outpaced real GDP for U.S. metro areas, which was 2.3 percent in The Greeley MSA was ranked fourth in the nation for GDP growth (+9.9 percent). WalletHub ranked Denver as the second-best recession-recovered city. The company compared the 150 largest U.S. cities across 17 indicators in two categories including unemployment rates, inflow of college-educated workers, labor force participation rates, median home prices, and foreclosure rates. Of the two categories, Denver ranked first in employment and earning opportunities and 21st for economic environment. CBRE, a commercial real estate brokerage, ranked Metro Denver as the 19th fastest-growth cities for tech jobs nationwide. The company stated that tech jobs in Denver increased 10.7 percent between 2012 and The nationwide high-tech job growth rate was 5.7 percent during the same period. The U.S. Bureau of Labor Statistics (BLS) reported that Adams County had the second highest job growth for the first quarter of 2015, while Weld Country dropped from first to ninth. The BLS ranks the country s 342 largest counties for job growth each quarter. Adams County employment increased 5.8 percent between the first quarter of 2014 and Utah County, Utah had the highest employment growth, rising 6.7 percent during the period. The U.S. Census Bureau reported that Colorado saw the seventh-highest increase in population of all 50 states and Washington, DC. Colorado recorded a population increase of 1.7 percent between 2013 and 2014, while the national population increase was just 0.9 percent during the same period. Of the 814 counties ranked by the Census Bureau for population growth, Weld County (+2.9 percent) ranked 26th, Douglas County (+2.8 percent) ranked 31st, and Larimer County (+2.6 percent) ranked 47th. U.S. News & World Report released its annual ranking of the top national universities, with the Colorado School of Mines ranked the highest in Colorado at 75th. The University of Denver and the University of Colorado Boulder also made the top 100 colleges list, ranking 86th and 89th, respectively. Colorado State University ranked 127th and the University of Colorado Denver ranked 199th. A ranking of the top universities in the western region showed Regis University as 28th and the University of Colorado-Colorado Springs ranked 46th. WalletHub released the 2015 list of the best and worst community colleges in the country and seven Colorado community colleges made the list. Of the 670 community colleges analyzed, Aims Community College in Greeley was the highest ranked Colorado community college at 116th. The other six colleges included Colorado Mountain College (136), Pueblo Community College (191), Front Range Community College (428), Western Colorado Community College (506), Arapahoe Community College (614), and Pikes Peak Community College (641). Metro Denver Economic Development Corporation October 6, 2015 Page 1

3 WalletHub ranked Colorado the fourth happiest state in the country, falling behind Utah, Minnesota, and Hawaii. The company ranked all 50 states and the District of Columbia across three key categories consisting of emotional and physical well-being, work environment, and community, environment, and recreational activities. Colorado had the second highest adequate-sleep rate, the highest sports participation rate, and the highest job security rate. Greatist released a list of the 20 best cities for 20-somethings and Denver ranked 11th. The company ranked cities based on fitness, cost of living, public transportation, bars, dating scene, and job prospects. Greatist stated that Denver is the perfect place for outdoorsy types, with 80 miles of trails within the city, and has ample options for beverages, with more than 40 breweries in the city. Washington, DC ranked first followed by San Francisco, Calif., Minneapolis, Minn., and Boston, Mass. Niche, a website that offers rankings and statistics on every neighborhood and city in the U.S., ranked Denver the 11th best city for millennials in America. The company ranked cities based on the number of millennials, job opportunities, and access to bars, restaurants, and affordable housing. Denver earned top marks for an easy commute and high access to bars, restaurants, and coffee shops. Cambridge, Mass. ranked first followed by Manhattan, N.Y., Alexandria, Va., and San Francisco, Calif. The Environment Colorado Research & Policy Center ranked Colorado 10th nationwide for solar capacity per capita. The center reported that while Colorado gets a lot of sun, the main reason the state ranked so high was due to statewide policies that support renewable energy. The highest ranked state was Hawaii followed by Arizona, Nevada, and California. The report stated that Colorado s total solar capacity was 74 watts per person in Early Childhood Education Zone ranked the Children s Museum of Denver as the 11th best children s museum in the country and the WOW Children s Museum in Lafayette as the 12th best. The company ranked children s museums based on hands-on activities, cost and parking, memberships, educational options, and traveling exhibits. The Children s Museum of Denver was recognized for having over 350,000 visitors per year and its dedication to encouraging the youth of Denver to learn, explore, experience, and create. The WOW Children s Museum was recognized for its diverse range of programs and exhibits that inspire and challenge all kinds of minds through its hands-on programs. The Lloyd s City Risk Index , a report released by Lloyd s of London, is a tool designed to quantify the exposure to manmade and natural disasters such as the sub-prime mortgage crisis, Hurricane Katrina in the U.S., and the Tohoku earthquake in Japan. The index calculates the potential GDP at risk in 301 cities across the world. The report stated that Denver is the 19th most vulnerable city in the U.S., with $10.66 billion in GDP at risk between 2015 and New York City was ranked the most vulnerable, with $90.36 billion in GDP at risk. Denver s greatest threat is a market crash, which would put $3.28 billion in GDP at risk, representing percent of total GDP at risk during the 10-year period. Policy Watch National Local The General Services Administration (GSA) announced plans to make it easier for tech startups to bid on federal government contracts in the coming year. The federal GSA administrator reported that it is time for the government to open access to government contacts for tech firms that have been shut out of the bidding process because they are just starting out. The administrator reported that the GSA will look at changing the rules that require businesses to have a five-year track record, make it easier for tech companies to pitch ideas, and do a better job of marketing the contracting opportunities to small business. The Colorado Department of Education began accepting proposals from Colorado schools to be Pathways in Technology Early College High Schools (P-TECH), which are schools specifically designed to help students enter science, technology, engineering, and mathematics career fields. The state will have six P-TECH schools, which are six-year high schools focused on career and technical education programming that span grades nine to 14. The program is a Metro Denver Economic Development Corporation October 6, 2015 Page 2

4 partnership between school districts, Boards of Cooperative Educational Services, postsecondary institutions, and area employers. P-TECH students will simultaneously earn high school credit and a diploma while obtaining industryrecognized associate degrees. The Legislative Council released their September economic forecast and reported that even as the state is projecting a deficit of $220 million for fiscal year 2016, it will be required to refund $150 million or more under the Taxpayer Bill of Rights (TABOR). The state government will be asking Colorado voters to allow the government to keep the excess revenue, rather than refund it via TABOR. Although spending is expected to fall short for the current fiscal year, the Legislative Council is projecting it to pick up in the next two years, triggering two more refunds of $252 million and $352 million. A bill passed by the Colorado Legislature in 2013 required Governor Hickenlooper to develop an annual plan to address climate change impacts and create a position within the administration charged with assessing climate change issues in the state. The governor released the first Colorado Climate Plan that focuses on seven key sectors consisting of water, public health, energy, transportation, agriculture, tourism and recreation, and ecosystems. A few of the key recommendations include promoting and encouraging drought preparedness through a comprehensive drought plan, assure the timely and complete attainment of the state s 2020 renewable energy goals, and promote and encourage fuel-efficient vehicle technologies and programs to reduce vehicle emissions. Governor Hickenlooper announced a plan to spend more than $100 million over the next four years on bicycle infrastructure in Colorado. The governor stated that his goal is to make Colorado the best state for biking in the country. The development of the plan will be executed by several groups including the Colorado Department of Transportation, the Office of Economic Development, the Colorado Tourism Office, and the Colorado Pedals Project. The plan currently calls for $10 million for the Safe Routes to Schools program, $60 million to develop bike and pedestrian infrastructure from the federal Transportation Alternatives and Congestions mitigation and Air Quality Improvement programs, and $30 million for bicycle and pedestrian infrastructure from Great Outdoors Colorado. A federal appellate court ruled to reinstate the 2013 Department of Labor (DOL) regulations that state direct care workers employed by third parties, such as home health or hospice agencies, no longer qualify for exemptions from the minimum wage and overtime provisions of the federal Fair Labor Standards Act. The decision overturned a January 2015 ruling by a lower court and holds that the DOL has the authority to extend the minimum wage and overtime protections to third-party workers. Under the new regulations, employers will need to classify their direct care employees as non-exempt and employees must now be paid on an hourly basis, paid minimum wage, and paid overtime for all time over 40 hours per typical workweek. National Economic Overview The U.S. Bureau of Economic Analysis (BEA) released the third estimate of real gross domestic product (GDP) for the second quarter of The estimate showed that GDP increased at an annual rate of 3.9 percent through the second quarter, which was 0.2 percentage points above the second estimate. The third estimate represents more complete source data than the available data for the second estimate. The revised estimate in GDP reflected larger increases in personal consumption expenditures and nonresidential fixed investment than previously estimated. The advanced estimate of third quarter 2015 GDP will be released October 29. The September conference of the Federal Open Market Committee (FOMC) reported that economic activity expanded moderately. The committee reported that household spending increased and the housing sector reported improvement, but net exports stayed soft. They also reported that inflation continued to run below the Committee s longer-run objective, partially reflecting declines in energy prices and in prices of non-energy imports. Further, market-based measures of inflation compensation moved lower and survey-based measures of longer-term inflation expectations remained stable. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced, but it is monitoring developments abroad. 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 raise the target range for the federal funds rate when it sees further improvement in the labor Metro Denver Economic Development Corporation October 6, 2015 Page 3

5 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 October 27. Economic Indexes & Notable Data Releases National & International The U.S. trade deficit rose to $41.9 billion in July, down from the June deficit of $45.2 billion (revised). Imports decreased to $230.4 billion, falling $2.5 billion between June and July, and exports rose $0.8 billion to $188.5 billion. The goods and services deficit increased $1.3 billion in July 2015 compared with July 2014, driven by an $8.6 billion decrease in exports and a $7.3 billion decrease in imports. The Conference Board Leading Economic Index for the U.S. increased in August to 123.7, rising 0.1 percent between July and August. Economists at the Conference Board reported that the index suggests economic growth will remain moderate into the new year with little reason to expect growth to pick up substantially. Average working hours and new orders in manufacturing have been weak, which points to more slow growth in the industrial sector. Further, employment, personal income, and manufacturing and trade sales have all been rising, helping to offset the weakness in industrial production in recent months. The Institute for Supply Management s Purchasing Managers Index reached 51.1 percent in August, a 1.6 percentage point decrease from the previous month s level. The August index level marked the 32nd consecutive month of expansion, as measured by a value greater than 50. Of the 18 manufacturing industries tracked in the index, 10 industries reported growth. The Customers Inventories Index increased 9 percentage points over-the-month to 53 percent, while the Backlog of Orders Index recorded a 4 percentage point increase during the same period. Survey respondents reported that business was strong with modest growth, aided by falling crude oil prices, strong machinery investment by car manufacturers, and increased commercial construction. The Institute for Supply Management s Non-Manufacturing Index decreased 1.3 percentage points in August to 59 percent, compared with the July level of 60.3 percent. The August index marked the 67th consecutive month of growth, as measured by a value over 50. The index tracks 18 non-manufacturing industries and 15 industries reported growth between July and August. The Inventory Sentiment Index recorded the largest over-the-month increase, rising 5.5 percentage points to 69 percent. The New Export Orders Index reported the largest over-the-month decline, falling 4.5 percentage points to 52 percent. Survey respondents reported that business is strong and that overall business is increasing. Local According to the Global Entrepreneurship Monitor, the percentage of Americans involved in starting or running a new business rose to 14 percent last year. The report stated that 24 million Americans are engaged in startup business activity, while another 14 million are running established businesses. The survey also reported that 51 percent of Americans see good opportunities for starting a business, which was the most optimistic reading in the 16 years the annual report has been released. The lead author on the GEM report stated that the greater optimism in the U.S. signals high support for entrepreneurs and the increase in job ambitions clearly indicates the potential for entrepreneurship to make major contributions to the national economy. The Leeds Business Confidence Index reported a declining outlook for the fourth quarter of The index value of 53.5 for the fourth quarter of 2015 was 4.8 points below the previous quarter. Of the index components, overall expectations for the state economy fell from 61.2 in the third quarter to 57.2 in the fourth quarter. Expectations for profits and sales decreased, with the profits index falling 4.9 points over-the-quarter to 53.6 and the sales index decreasing 4.2 points over-the-quarter to According to the report, the index remains in positive territory (above 50) for all metrics except for the national index. The greatest optimism was in the state economy, but the state economy metric has recorded decreasing optimism over the last three quarters. The national index fell into negative territory for the first time since the first quarter of Metro Denver Economic Development Corporation October 6, 2015 Page 4

6 Visit Denver released a report on the economic impact of The Great American Beer Festival in Denver and reported that the event generated $21.5 million in economic impact for the city in The study showed that there was $12 million in direct spending and $9.5 million in indirect spending. The 2014 event attracted more than 49,000 people. The Boulder-based Brewers Association plans to add 90,000 square feet of space at the Colorado Convention Center for the 2015 event, an increase of 31 percent over the square footage used a year ago. The additional space will accommodate 11,000 more people. According to the latest Urban Mobility Scorecard released by the Texas A&M Transportation Institute, traffic congestion in the Denver area costs more than $2 billion per year. Denver commuters spent more than 91 million hours in morning and afternoon rush-hour traffic in 2014, and average of 49 hours per year per commuter, making it the 19th most congested city covered in the report. According to the Morgan Stanley Investor Pulse Poll, Denver s high net worth (HNW) investors see the U.S. as the strongest investment area and most do not plan to increase international investment. The biannual poll surveys 300 of Denver s high net worth investors who are classified as individuals between the ages of 25 and 75 with $100,000 or more in investable household financial assets. Sixty percent of Denver s HNW investors regard the U.S. as the only country for a good investment. Investors were also optimistic about the near future of their investment portfolios. The U.S. Census Bureau released new data estimates for the nation through the America Community Survey. According to the new data, median household income in Metro Denver increase by $3,000, or nearly 5 percent, and the poverty level fell by one-tenth over the year. The data also shows that the median household income and poverty levels at the national level were mostly unchanged. Colorado s poverty rate fell slightly and the state s strong economic performance attracted nearly 45,400 new residents from net migration. The Kaiser Family Foundation/Health Research & Education Trust reported that premiums for employer-sponsored health insurance rose an average of 4 percent this year. For companies with fewer than 25 employees, the premiums for single coverage went up nearly 11 percent in 2015 to $6,246, and the premiums for family coverage went up nearly 10 percent to $15,663. For all employers, the premium for single coverage this year was $6,251, with workers paying $1,071 of the total. Deductibles for single coverage averaged $1,318 this year. The Colorado Health Institute (CHI) and the Colorado Trust released the 2015 Colorado Health Access Survey and reported that the percentage of Coloradans without health insurance fell by more than half over the past two years. However, the decline in uninsured individuals is due almost entirely to a surge in Medicaid enrollment, as the number of people insured by small companies especially fell drastically over that period. CHI spokespersons stated that about 42,000 fewer workers received health insurance from businesses of 50 or fewer employees at the end of open-enrollment period than did two years earlier. The report also stated that the number of underinsured residents those who pay more than 10 percent of their annual household income to out-of-pocket health care costs increased by 149,000 people between 2013 and Of those underinsured individuals, about 116,000 were Medicaid recipients, but people with individual plans represented the highest rate of underinsurance at 24.7 percent. Labor Force and Employment Robert Half International released their most recent survey of chief financial officers and reported that only 16 percent of Denver CFO s expect to increase employment levels in the coming months. The company stated that the survey levels were down 1 percentage point from a few months ago and 3 percentage points from a year ago. The company stated that Denver remains one of the best cities in the country to find a job, due to low unemployment rates and new companies moving to the area. However, 58 percent of Denver CFO respondents stated it is somewhat or very challenging to find skilled candidates for professional-level positions and 94 percent stated they were somewhat or very confident in their company s prospects for growth in the next six months. The survey also covers topics on compensation and found that white-collar workers will get the biggest pay boost in eight years as employers compete for the best and brightest in America. The company reported that a 4.1 percent average advance for U.S. starting salaries across the five professional fields tracked would follow a 3.8 percent projected gain in Metro Denver Economic Development Corporation October 6, 2015 Page 5

7 Employment in Metro Denver rose 2.2 percent between August 2014 and 2015, or an additional 33,200 jobs during the period. The employment growth consisted of a 2.3 percent increase in the Denver-Aurora-Lakewood MSA, or an additional 31,400 jobs, and a 1 percent increase in the Boulder MSA, representing 1,800 jobs. The natural resources and construction supersector reported the largest percentage increase over-the-year in employment, rising 10.4 percent or adding 10,300 jobs. The education and health services supersector also reported a significant increase in employment, rising 4.4 percent over-the-year, representing 8,400 additional jobs. The government sector created the second-most number of positions (8,900 jobs) during the period, representing a 4.2 percent increase. The information sector (-6 percent), and the professional and business services supersector (-0.8 percent) both recorded declines in employment over-the-year. Colorado employment rose 1.7 percent in August compared with the previous year s level, adding 43,000 new jobs over the same period. National employment levels increased 2.1 percent over-the-year, with the addition of nearly 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 Aug-15 Jul-15 Aug % 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 announced plans to lay off 500 people in its Information Systems & Global Solutions (IS&GS) division. The company stated that the layoffs were in response to shifting government policies, changing industry dynamics, and efforts to improve IS&GS competitiveness. The impact of the layoffs on Colorado employees is unknown. Metro Denver Economic Development Corporation October 6, 2015 Page 6

8 Raytheon Company announced plans to hire 700 people in the Colorado Springs area due to a $700 million defense contract to monitor threats from air and space. The new hiring will be complete by the end of The new employees will add to the existing 100 employees already located in Colorado Springs. A U.S. Naval satellite that was built by Lockheed Martin was launched into orbit by United Launch Alliance (ULA) aboard the Atlas V rocket. The Navy s Mobile User Objective Systems (MUOS) satellite was the fourth advanced satellite built by Lockheed Martin Space Systems Co. to upgrade data and voice communications for the military. Once the satellite is in service, the system will provide 16 times the network capacity for more than 55,000 military communication terminals in use worldwide. Bioscience AstraZeneca, a European biotech firm, purchased Amgen Inc s LakeCentre production facility in Boulder. AstraZeneca reported that the company will begin staffing the facility immediately to refurbish and make infrastructure improvements. When the renovation is complete, the facility is expected to be operational and licensed for commercial production by late 2017, providing additional capacity within the company s biologics operations. The company plans to create 400 positions in the longer-term. Boulder-based PanTheryx Inc. plans to nearly triple its size over the next 12 months with the help of a new multicountry distribution deal with Dr. Reddy s Laboratories Ltd. The 16-worker company produces a nutritional powder aimed at treating infectious diarrhea. The company plans to hire 25 to 30 employees over the next year. Nuventra Pharma Sciences opened an office in Broomfield as part of the company s expansion into industry hotspots. The company provides consulting services for companies in the pharmacology, pharmacokinetic and pharmacometric spaces as they work their way through clinical trials. The company plans to start out with a team of five employees with the possibility of expansion in the future. Energy - Cleantech Xcel energy selected three companies to supply nearly 30 megawatts of renewable energy via its Solar Rewards Community programs. The program is designed to build community solar projects. The companies will build 16 projects that spread across nine Colorado counties including Adams, Arapahoe, Boulder, Douglas, and Jefferson counties. GTM Research and the Solar Energy Industries Association released their second quarter 2015 U.S. Solar Market Insight Report. The report stated that the U.S. installed 2.7 gigawatts of solar panels during the first half of 2015, and with significant growth expected during the second half of the year, the nation is on pace for a record breaking 7.7 gigawatts of new capacity this year. According to the report, Colorado was ninth nationwide in terms of overall solar power capacity, 13th nationwide in terms of the amount of solar capacity added in 2014, and 11th in terms of the amount of solar power added during the second quarter of Colorado installed 18.5 megawatts of solar power during the second quarter of 2015, up 38 percent from the prior quarter and up 68 percent from the prior year. Through the first half of 2015, Colorado had 430 megawatts of solar power, enough power to support the needs of 82,000 homes. Energy - Fossil Fuels Synergy Resources Corp. purchased oil wells and leases in the Wattenberg Field in northern Colorado for $78 million from K.P. Kauffman Company Inc. Synergy Resources Corp. plans to open a corporate office in Denver at 1625 Broadway. Halliburton Co. announced the company will make additional cuts to its workforce. The company did not disclose the number of people that will be laid off or the locations that will be affected. However, Colorado sources believe Halliburton employees in Colorado will be affected as they have been affected in previous rounds of layoffs. Metro Denver Economic Development Corporation October 6, 2015 Page 7

9 Financial Services OnDeck Capital Inc., a New York-based financial services company, leased 72,000 square feet of space in the Denver Post building. The company will occupy two floors, tripling the company s footprint in Denver. The company plans to add 400 high-paying jobs over the next eight years. FirstBank plans to add 127,000 square feet of space to its Jefferson County headquarters and add about 250 positions back to the main campus. When the addition to the headquarters is completed, there will be about 900 employees working out of the headquarters with another 70 employees in the next year. EOS CCA, a debt collection agency, will close its Denver location and lay off 60 employees as the company consolidates into fewer locations across the U.S. ECMC Group, a nonprofit corporation that provides support for the administration of The Federal Family Education Loan program, will lay off 137 employees at its Thornton location. IT-Software Ibotta, a startup company that created a mobile-shopping app, raised $40 million in funding to triple its office space and increase its workforce. The company plans to relocate and hire 200 to 300 people in three years. The company currently employs 100 people in Denver. ZenPayroll, a San Francisco-based startup, changed its name to Gusto and moved into the business of online health and workers compensation benefits. The company will immediately sell workers compensation insurance nationally, but will initially broker health coverage only in California. The company has about 25 employees in Denver, but is expected to reach as many as 1,750 in about a year. Boulder-based TapInfluence Inc. raised $1.5 million in funding this past summer and the company plans to increase the size of its workforce. The company will add three new executive positions and plans to double the size of its company, adding 40 jobs, over the next year. Micron Technology, an Idaho-based memory-chip producer, signed a 10-year lease extension at its current location in Longmont. The company plans to expand the facility to make room to accommodate growth. Camden Partners, a Baltimore-based private equity firm, completed a buyout of Proposal Software Inc., a Colorado software company. The company will move from its Boulder location to a new headquarters in Broomfield. San Diego-based Qualcomm will lay off 158 full-time workers at its Boulder offices. The company reported that the layoffs are part of a major company reorganization. Workers at the Boulder location primarily work on the development of chipsets and software for use in wireless devices. Telecomm Comcast Corp. announced plans to expand its downtown Denver presence in order to hire good software developers. The company plans to move 40 to 50 people to the newly leased space on the same block as the company s VIPER team at 1401 Wynkoop. Comcast also purchased a company called This Technology in August, which makes ad targeting and IP video manipulation software. Level 3 Communications Inc. announced plans to reduce its workforce by 500 to 700 people. The employment reduction will be worldwide, but a proportionate number of the layoffs will be local. Other Industry Headlines Xerox Corp. plans to hire 300 customer-care-center jobs at its Highlands Ranch location. These new jobs represent a 12.5 percent increase in the company s Colorado workforce. The full time jobs will be added to provide technical support on behalf of an unnamed wireless client. Metro Denver Economic Development Corporation October 6, 2015 Page 8

10 Seagate Technology plans to lay off 70 employees at its Longmont facility as part of a company-wide layoff of 1,050 employees. The company reported that the layoffs are to help the company realign its cost structure with the current macroeconomic business environment. Upslope Brewing Company announced plans to open a new brewpub in Boulder in fall The company will use the new facility for experimental brewing, barrel aging, and add a restaurant. The new brewpub will be located at the corner of 34th Street and Valmont Road. The brewpub is part of the $180 million, 680,000-square-foot S Park development. Grabbagreen, an Arizona-based restaurant chain, plans to open 25 restaurants in Colorado. One of the first new restaurants will be located in the Denver Tech Center. Employment Outlook The Manpower Employment Outlook Survey expects fourth quarter hiring in the Denver-Aurora MSA to fall compared with the previous quarter. The percentage of companies hiring decreased 7 percentage points between the third and fourth quarters, with 19 percent of companies expanding their employment levels. The percentage of companies planning to decrease employment levels rose 1 percentage point from the third quarter, with only 2 percent of companies planning to reduce employment levels. The majority of companies intend to maintain staff levels through the fourth quarter of the year, with the level rising 3 percentage points over-the-quarter to 76 percent. The survey reported that sectors with the best job outlooks were construction, nondurable goods manufacturing, wholesale and retail trade, information, professional and business services, and education and health services. Durable goods manufacturing, financial activities, and leisure and hospitality employment hiring is expected to remain unchanged. Employment Outlook Survey Quarter 4 Quarter 3 Quarter 4 YTD YTD Ann Avg Denver-Aurora-Broomfield MSA Percent of Companies Hiring 19% 26% 21% 22% 21% 13% Percent of Companies Laying Off 2% 1% 8% 3% 6% 10% Percent of Companies No Change 76% 73% 70% 73% 71% 73% Percent of Companies Unsure 3% 0% 1% 3% 2% 5% United States Percent of Companies Hiring 21% 24% 19% 22% 19% 15% Percent of Companies Laying Off 6% 4% 7% 5% 6% 10% Percent of Companies No Change 71% 70% 72% 72% 72% 72% Percent of Companies Unsure 2% 2% 2% 2% 3% 3% Source: Manpower Inc. Hiring expectations in the U.S. declined through the fourth quarter of 2015 compared with the prior quarter. The percentage of employers planning to increase employment levels fell 3 percentage points to 21 percent between the third and fourth quarters. The percentage of companies planning to reduce employment levels rose 2 percentage points between the third and fourth quarters, but was 1 percentage point below the previous year s level. The percentage of companies planning to maintain staffing levels (71 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 U.S. labor market continues to show broad-based, stable growth, with significant milestones over time such as hiring prospects at a seven-year high and jobless claims recently reaching a 40-year low. However, as the labor market tightens, employers are increasingly reporting difficulty finding skilled candidates. Unemployment The unemployment rate throughout the Metro Denver area continued to improve through August, decreasing 0.2 percentage points to 3.6 percent compared with July. The Metro Denver unemployment rate was also 0.8 percentage Metro Denver Economic Development Corporation October 6, 2015 Page 9

11 points below the August 2014 level of 4.4 percent. Six of the seven Metro Denver counties reported unemployment rates below 4 percent in August. Douglas and Boulder Counties continued to report the lowest unemployment rates of the sevencounty region, recording 3.1 percent and 3.2 percent, respectively. Adams County recorded the largest over-the-year decline, falling 1 percentage point to 4.2 percent. Colorado s unemployment rate fell 0.8 percentage points over-the-year to 3.8 percent during the month of August. The national unemployment rate of 5.2 percent in August was 0.4 percentage points below the prior month s level and was 1.1 percentage points below the previous year. Labor Force Statistics (000s, not seasonally adjusted civilian labor force) August 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 August unemployment insurance claims increased in Metro Denver, rising 2.4 percent between July and August. However, the August level was 4 percent lower than the year-ago level. Claims throughout Colorado increased over-the-month, rising 3.1 percent, but were 2.9 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 Aug-15 Jul-15 Aug % Change Metro Denver 1,170 1,143 1,219 1,266 1, % 2,095 1,214 Colorado 2,106 2,043 2,168 2,485 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 September, reporting a level of 103 from the revised August level of 101.3, a 1.7 percent increase over-the-month. The national index for September 2015 was also 15.7 percent above the September 2014 level. Analysts at The Conference Board stated that between August and September the Present Situation Index rose 4.6 percent to 121.1, while the Expectations Index fell 0.7 percent to 91. They also reported that consumers more positive assessment of current conditions fueled September s increase and drove the Present Situation Index to an 8- year high. However, consumer expectations for the short-term remained relatively flat, although there was a modest improvement in income expectations. Further, consumers view current economic conditions more favorably, but they do not foresee growth accelerating in the coming months. Colorado is included in the Mountain Region Index and the area reported a decrease in consumer confidence. The index fell to in September from the August revised level of 124.4, decreasing 6.8 percent over-the-month. However, the index Metro Denver Economic Development Corporation October 6, 2015 Page 10

12 was up 22.3 percent over-the-year. For the Mountain Region Index, the Present Situation Index fell to 135 in September from in August, while the Expectations Index increased to from in August. Consumer Confidence Index Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Sep-15 (p) Aug-15 (r) Sep % Change Mountain % United States % Source: The Conference Board. (p) = preliminary (r) = revised National retail sales increased through August, with total retail sales rising 2.2 percent above the August 2014 total. Retail sales reached $447.7 billion in August, an increase of 0.2 percent over July Motor vehicle sales rose 5.7 percent overthe-year and rose 0.7 percent between July and August. The building materials sector reported an increase of 0.9 percent between August 2014 and 2015, but fell 1.8 percent over-the-month. Gasoline sales fell 17.2 percent over-the-year and fell 1.8 percent over-the-month. The over-the-year decline in gasoline sales in June marked the 15th consecutive month of over-the-year decline. Core retail sales, which excludes motor vehicle, building material, and gasoline sales, recorded a 0.5 percent increase between July and August. Retail sales in Metro Denver increased 2.5 percent between April 2014 and Retail sales for April 2015 totaled over $8.2 billion, an absolute increase of nearly $200 million over the 2014 total of $8 billion. Six of the seven Metro Denver counties reported year-over-year growth, as Adams County (-6.5 percent) recorded the only decline in sales. Arapahoe County reported the largest increase in retail sales between April 2014 and 2015, rising 8.6 percent to nearly $1.7 billion, and the largest absolute increase in retail sales over-the-year, generating an additional $133.7 million. The City and County of Denver also reported a significant increase in sales during the period, rising 4.4 percent or an additional $88.6 million. The City and County of Broomfield recorded the smallest increase in retail sales between April 2014 and 2015, rising 0.3 percent to nearly $181.8 million. Retail sales in Colorado were 1.8 percent higher in April 2015 than April 2014, representing $242.1 million in additional retail sales. Total Retail Sales ($000s) Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth Annual Growth Apr-15 Mar-15 Apr % Change Total Metro Denver 8,232,694 9,747,247 8,032,361 33,371,501 32,363, % 9.6% 7.8% Adams County 1,612,150 1,821,974 1,723,645 6,399,424 6,997, % 28.8% 16.6% Arapahoe County 1,689,504 1,960,731 1,555,852 6,729,435 6,252, % 6.1% 6.6% Boulder County 722,833 1,002, ,944 3,100,275 2,922, % 5.9% 9.0% Broomfield County 181, , , , , % 14.2% -31.5% Denver County 2,094,694 2,489,095 2,006,048 8,555,291 8,019, % 5.2% 10.4% Douglas County 644, , ,341 2,593,231 2,503, % 7.3% 13.5% Jefferson County 1,286,855 1,523,273 1,245,341 5,281,266 4,974, % 4.7% 2.4% Colorado 13,442,819 16,419,416 13,200,755 55,792,064 53,991, % 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) decreased 0.1 percent between July and August. However, the index rose 0.2 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 August 2014 and 2015 was attributed to a 2.5 percent increase in medical care and a 2 percent increase in housing. The transportation index declined 6.8 percent over-the-year, reflecting low motor fuel prices, and there was a 1.9 percent decrease over-themonth. There were also increases over-the-year in both the food and beverage index (+1.5 percent) and the other goods and services index (+1.6 percent). Metro Denver Economic Development Corporation October 6, 2015 Page 11

13 According to the AAA Daily Fuel Gauge Report, the national average fuel price for September decreased 5.5 percent from August to $2.29 per gallon. The September average fuel price was 30.7 percent lower than the prior year s level ($3.31 per gallon). Metro Denver reported a 12.9 percent decrease in the average fuel price between August and September. The average fuel price of $2.36 per gallon for September in Metro Denver was $0.07 higher than the national average. The area reported average fuel prices that were 30.8 percent lower in September 2015 than the previous year s level. AAA released a report stating that American consumers are spending nearly $350 million less on gasoline per day compared with a year ago. Further, drivers continue to enjoy substantial savings at the pump, but even bigger savings could be in store. Barring any major supply disruptions, the national average could test the $2 per gallon benchmark before the end of the year for the first time since The company also reported that more than one in five U.S. gas stations (21 percent) are selling gas for less than $2 per gallon and five states have average gas prices below $2 per gallon. Further, average gas prices fell below $3 per gallon during the last week of September in every state for the first time since June Stock Market All four stock market indices reported declining trends between August and September. The NASDAQ reported the largest decrease over-the-month, falling 3.3 percent to 4, The S&P 500 and the DJIA also reported decreases between August and September, falling 2.6 percent and 1.5 percent, respectively. The Bloomberg Colorado index reported a decline, falling 3 percent over-the-month. Two of the three national indices recorded negative returns compared with September The NASDAQ (+2.8 percent) reported the only over-the-year increase, while the S&P 500 decreased 2.6 percent and the DJIA fell 4.4 percent. The Bloomberg Colorado index (-10.7 percent) also 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 Sep-15 Aug-15 Sep Bloomberg Colorado % 1.9% 45.3% 16.9% S&P 500 1, , , % 6.7% 12.8% 3.0% NASDAQ 4, , , % 7.6% 16.9% 1.4% DJIA (Dow Jones) 16, , , % 2.8% 11.0% -0.6% Travel & Tourism Sources: Bloomberg.com; Yahoo! Finance. The average hotel occupancy rate in Metro Denver fell 3.8 percentage points to 85.3 percent occupancy in August compared with the July level. The August level was unchanged from the previous year s level. The average room rate for August was $ per night, 0.1 percent higher than the July level, but 10 percent higher over-the-year. Metro Denver Hotel Statistics Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Aug-15 Jul-15 Aug % Change Percent of Hotel Rooms Occupied 85.3% 89.1% 85.3% 78.4% 77.7% 0.9% 64.4% 64.1% Average Hotel Room Rate $ $ $ $ $ % $ $91.10 Source: Rocky Mountain Lodging Report. Spokespeople for DIA reported that over 5 million passengers passed through the airport in July, increasing 4.5 percent from the 4.8 million passengers in June. However, the July 2015 level was 1 percent lower than the July 2014 level, recording 48,970 fewer passengers through the airport. According to data recently released by the Airports Council International, DIA ranked fifth among U.S. airports for total passenger traffic in 2014 and 17th worldwide. Metro Denver Economic Development Corporation October 6, 2015 Page 12

14 Number of Airline Passengers Denver International Airport Passengers Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual Jul-15 Jun-15 Jul % Change ,019,260 4,802,776 5,068,232 30,790,685 31,004, % 51,985,038 43,387,369 Source: Denver International Airport, Traffic Statistics. Residential Real Estate Tessler Developments began construction on a 250-unit apartment complex at Harvard Avenue and University Boulevard. The building will be five stories tall and have about 208,000 square feet of residential space and ground floor retail. Amenities in the building will include a pool, gym, rooftop deck, and an entertainment center. The former site of the Hensley Battery and Electric Supply in Jefferson Park will be redeveloped into a $30 million apartment complex. The site is located at 2031 Bryant Street and the Hensley family hired Denver-based Development Advisors to plan and carry out the project. The complex will include 130 apartments, mostly full one-bedroom units, will stand seven stories tall with five floors of apartments on top of a two-story concrete parking structure. Allante Properties purchased a 0.34-acre property at 39th Avenue and Tennyson Street to build an apartment complex. The development will include 81 units, spanning between 350 square feet and 770 square feet, and will offer studios and one-bedroom apartments. Allante Properties stated that 80 percent of apartments will rent for less than $1,600 per month. Amenities at the complex will include a ground-floor clubroom, mountain-view terraces, and a rooftop deck. Moonstar Investments cleared a half-acre lot at 18th Avenue and Gaylord Street to build a new residential housing development. The site, called Gaylord Station, includes nine townhomes with a projected cost of $4.5 million. The homes will range from 1,460 square feet to about 2,000 square feet and be a mix of two- and three-bedroom units. Home Resales Existing home sales in Metro Denver decreased between July and August, falling 11.6 percent to 5,211 total homes sold during the month of August. However, August home sales were 1.8 percent above the previous year s level. Unsold homes on the market were 0.4 percent lower in August than July and were 8.7 percent lower than the previous year s inventory level. The average sales price for single-family homes fell 0.5 percent between July and August to $411,960, but was 10.5 percent higher than the previous year s price. The average sales price of condominiums ($255,380) increased 0.2 percent over-the-month and 16.4 percent over-the-year. Previously-Owned Home Sales Activity Month of Month of Month of YTD Total YTD Total YTD Total Ann Total Ann Total Aug-15 Jul-15 Aug % Change Home Sales (Closed) 5,211 5,892 5,117 36,619 35, % 38,818 53,106 Unsold Homes on Market 7,852 7,886 8,602 7,852 8, % 20,867 24,780 Average Sales Price-Single Family $411,958 $414,234 $372,714 $409,276 $365, % $282,080 $307,529 Average Sales Price-Condo $255,384 $254,894 $219,339 $254,881 $221, % $161,005 $189,035 Median Sales Price-Single Family $348,000 $351,000 $313,000 $235,000 $247,000 Median Sales Price-Condo $215,000 $215,000 $182,400 $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 August analysis of U.S. existing-home sales, reporting that sales fell 4.8 percent between July and August to 5.31 million homes sold annually. The existing home sales rate for August was 6.2 percent higher than the previous year s level, recording the 11th consecutive month of year-over-year increases in sales. The housing inventory in August rose 1.3 percent over-the-month, representing a 5.2-month supply, and was 1.7 percent Metro Denver Economic Development Corporation October 6, 2015 Page 13

15 lower over-the-year. NAR economists said that with sales and overall demand higher than a year ago and supply mostly unchanged, low inventories will likely continue to limit options for those looking to buy this fall even with the overall pool of buyers shrinking because of seasonal factors. Further, sales activity was down in many parts of the country, but price appreciation the last two months started to moderate from the unhealthier rate of growth seen earlier this year. Home Prices NAR data shows the August median existing-home sales price across the U.S. was $228,700, an over-the-year increase of 4.7 percent. Median housing prices increased over-the-year in each of the nation s four regions. The West reported the largest increase between August 2014 and 2015, rising 7.1 percent to a median home price of $321,300. The Midwest reported the lowest median home price ($181,100), which was 4 percent above the previous year s level. The South also recorded over-the-year growth, rising 6 percent to a median home price of $196,300. The Northeast reported an over-theyear increase of 2.4 percent to $271,600. Median Sales Price of Existing Single-Family Homes ($000s) Quarter 2 Quarter 1 Quarter 2 YTD Avg YTD Avg YTD Avg Median Median 2015 (p) 2015 (r) % Change Boulder MSA $463.7 $442.2 $448.8 $453.0 $ % $358.1 $348.4 Denver-Aurora MSA $362.9 $338.1 $316.3 $350.5 $ % $232.4 $247.1 United States $229.4 $204.7 $212.0 $217.1 $ % $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 increased between the first and second quarters of The Boulder MSA reported a 4.9 percent increase ($463,700) in home prices during the second quarter of 2015 compared with the previous quarter. Further, Boulder home prices were 3.3 percent higher than the second quarter of The Denver-Aurora MSA also reported growth in home prices, reporting a 7.3 percent increase in prices over-the-quarter to $362,900. Between the second quarters of 2014 and 2015, the Denver-Aurora MSA recorded a 14.7 percent increase in the median sales price. The national median sales price rose 12.1 percent over-the-quarter to $229,400 and was 8.2 percent higher than the previous year s level. Of the 176 MSAs included in the second quarter 2015 report, the Boulder MSA reported the seventh highest median price and the Denver-Aurora MSA median price was the 17th highest. The Denver-Aurora MSA also reported the eighth largest over-the-year increase in the median sales price. According to the S&P/Case-Shiller home price index, Denver housing prices continued to increase in July. The Denver index was in July, an absolute increase of 1.2 points over-the-month. Prices in all 20 cities tracked by the index increased over-the-month and over-the-year. Denver s home prices in July 2015 were 10.3 percent higher than the prior year s level, the second largest over-the-year increase of the 20 cities. San Francisco (+10.6 percent) reported the largest over-the-year increase, while Washington, DC (+1.5 percent) reported the smallest increase. The national home price index rose 4.7 percent between July 2014 and In July, Boston joined Denver and Dallas as the third city to surpass its prerecession peak housing price in the index. Analysts for the index reported that the prices of existing homes and housing overall are seeing strong growth and contributing to recent growth for the economy. Further, positive indicators of current and expected future housing activity included gains in sales of new and existing housing and the National Association of Home Builders sentiment index. Metro Denver Economic Development Corporation October 6, 2015 Page 14

16 Foreclosures Housing foreclosures throughout the Metro Denver area declined in five of the seven counties between August 2014 and Metro Denver recorded a 13.5 percent decrease in foreclosures in August compared with the previous year and a 16.8 percent decrease from the previous month, representing 57 fewer foreclosures. The City and County of Broomfield reported the largest over-the-year decline (-80 percent) in foreclosures, falling to one foreclosure in August from five foreclosures in July. Jefferson County and the City and County of Denver also reported significant declines in foreclosures over-the-year, falling 32.8 percent and 30.7 percent, respectively. Douglas and Arapahoe reported the only increases in foreclosures over-the-year, rising 30.8 percent and 6.8 percent, respectively. Real Estate Foreclosures Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total Aug-15 Jul-15 Aug % Change Total Metro Denver* ,471 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 August 2015, stating the U.S. foreclosure rate decreased 6 percent from the same period the year prior. The total filings for August (109,561 filings) were also 12 percent below the previous month s level. According to the report, foreclosure starts in August continued to search for a new floor below even pre-recession levels, indicating the housing recovery of the past three years is built on a solid financing foundation. However, the continued risk in bank repossessions indicates more batches of bank-owned homes will be rippling through the housing market over the next three to 12 months as lenders list these properties for sale. New Homes The Associated General Contractors of America released a survey of 1,386 companies and found that more than 80 percent of construction companies are having a hard time finding qualified workers. The companies reported that carpenters, sheet metal installers, and concrete workers are in especially short supply, but they are also having difficulty filling salaried positions such as project managers, estimators, and engineers. Half of the construction company executives surveyed reported that their local pipeline for construction workers is below average or poor. The Census Bureau report on new home sales after adjustment for seasonal trends stated that national home sales increased in August to 552,000 annual sales from the revised July level of 522,000 annual sales. The August home sales level was 5.7 percent above July and was 21.6 percent above the previous year s level. The Midwest reported the only over-themonth decline in sales, falling 9.1 percent to 60,000 Metro Denver Economic Development Corporation October 6, 2015 Page 15

17 sales. The Northeast and South reported increases over-the-month, rising 24.1 percent and 7.4 percent, respectively. The West reported the smallest over-the-month increase, rising 5.4 percent to 137,000 sales. All four regions recorded improvements between August 2014 and The South reported the largest over-the-year increase in sales, rising 27.6 percent, followed by the Northeast (+24.1 percent). The Midwest and West also recorded over-the-year increases, rising 15.4 percent and 11.4 percent, respectively. The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index (HMI) rose 1 point to 62 in September, the highest reading since October NAHB spokespersons reported that the single-family housing market made solid progress, but NAHB members continue to be concerned about the availability of lots and labor. The NAHB is projecting about 1.1 million total housing starts for 2015 and the September report is consistent with the company s forecast. According to the Census Bureau, the seasonally adjusted annual number of nationwide residential building permits rose 2.7 percent in August (1.16 million permits) from July and 11.6 percent above August There was a 7.1 percent increase in single-family attached units over-the-month, a 2.8 percent increase in single-family detached units, and a 2.4 percent increase in multi-family units. Single-family detached permits rose over-the-year, increasing 8.7 percent, but single-family attached units decreased 14.3 percent during the same period. Multi-family permits recorded the largest increase, rising 19.3 percent between August 2014 and The West (290,000 permits) reported the largest increase in permits overthe-year, rising 33.6 percent, followed by the South (+9.3 percent) and the Midwest (+3.5 percent). The Northeast (109,000 permits) reported the only over-the-year decline in permits, falling 6.8 percent. Residential building permits for the Metro Denver area increased in August compared with the prior year. Metro Denver reported a 29.1 percent increase in total permits issued between August 2014 and 2015, with 350 additional permits issued. The over-the-year increase in total permits was attributed to a 39.6 percent increase in single-family detached permits and a 20.8 percent increase in multi-family permits. The single-family attached market recorded the only over-theyear decrease in permits, falling 50 percent and reporting 13 fewer permits in August 2015 compared with August Compared with July 2015, permits through August in Metro Denver rose 4.4 percent with 65 additional permits. Two of the three residential housing markets recorded over-the-month declines in permits. The single-family attached market reported a 53.6 percent decrease in permits over-the-month and single-family detached permits fell 1.8 percent over-the-month. Multi-family permits rose 17 percent during the same period. Residential Building Permits Month of Month of Month of YTD Total YTD Total YTD Total Total Total Aug-15 Jul-15 Aug % Change Single-Family Detached Units ,714 5, % 3,791 17,888 Single-Family Attached Units % Multi-Family Units ,881 5, % 1,478 2,953 Total Units 1,553 1,488 1,203 11,923 11, % 5,554 21,312 Apartment Rental Market Source: U.S. Census Bureau. 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 percentage points and 0.1 percentage points, respectively. Metro Denver Economic Development Corporation October 6, 2015 Page 16

18 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 second quarter, with average rental rates ranging from $1,179 in Adams County to $1,488 in Douglas County. Commercial Real Estate The Simon Property Group plans to build a $134 million shopping center in Thornton called Denver Premium Outlets. The outlet mall will be built on 94 acres at the northeast corner of 136th Avenue and Interstate 25. The first phase of construction includes 350,000 square feet of retail space and the second phase includes 50,000 square feet of retail space. The outlets are expected to generate about $100 million in revenue for the City of Thornton over its lifetime. Koelbel and Co. plans to build an office and retail development in Denver s River North District. The 300,000-squarefoot building will be the home of Catalyst Health-Tech Innovation (HTI). The office sizes in the building will range from a single desk to 30,000 square feet. The Denver Tech Center West will have a new 75,500-square-foot Class AA office building. One DTC West is estimated to be a $24 million project. Kentwood Real Estate CEO Peter Niederman and Frank Hutto, a Denver energy industry executive, will develop the new building and Kentwood Real Estate will occupy the top floor of the building. Greenwood Village-based Catalina Development Co. will break ground on a mixed-use, transit-oriented development across the street from the Anschutz Medical Campus. The Forum-Fitzsimons development will include 397 apartments and 28,000 square feet of retail space near a light rail station on the Regional Transportation District s R Line that is currently being built. Rubicon Development LLC plans to build a complex of mixed-use buildings on 10 acres of vacant land in Lafayette. The Lafayette City Center would include about 200 multi-family units and 18,800 square feet of commercial space. The plans submitted to the city show one parcel with four buildings varying in height from three to four stories and a second parcel with four, three-story apartment buildings. The project also includes a pocket park, clubhouse, outdoor pool, community garden, and outdoor patios. Colorado ski resorts continue to develop and expand; the following are some project updates for the resorts. Arapahoe Basin is set to complete a $500,000 renovation of the guest services building and construction of a stage for live music by opening day in October. Wolf Creek completed a new race hutch featuring $26,000 of interior renovations. Monarch Mountain Resort is scheduled to complete a yurt for snowcat skiers. Office Market The Metro Denver office market reported a decline in the vacancy rate and an increase in the average lease rate through the third quarter of According to CoStar, the direct vacancy rate fell 1 percentage point over-the-year to 9.6 percent vacancy. The 2015 direct vacancy rate was the lowest third quarter vacancy rate since the third quarter of 2001 when the vacancy rate was 8.6 percent. The average lease rate rose 4.4 percent during the third quarter compared with the previous year s level. The average lease rate gained $1.02 per square foot between the third quarters of 2014 and Metro Denver Economic Development Corporation October 6, 2015 Page 17

19 Office property construction and projects completed to date were stronger during the third quarter of 2015 compared with prior years. There was over 1.35 million square feet of space across 18 buildings completed as of September Two of the largest office projects completed during the third quarter were 1601 Wewatta, a 299,550-square-foot office building, and the Triangle Building at 1550 Wewatta, spanning 242,810 square feet. There was 2.83 million square feet of space under construction during the third quarter of 2015, a 56.4 percent increase from the prior year. Of this space, 1.37 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 48.2 percent of total Metro Denver construction. Office Market Statistics Quarter 3 Quarter 2 Quarter 3 Quarter 3 Quarter 3 Quarter Number of Buildings 6,030 6,022 6,007 5,981 5,964 5,952 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 9.6% 9.8% 10.6% 11.3% 12.4% 12.6% Vacancy Rate (with sublet) 10.3% 10.4% 11.1% 11.8% 12.7% 13.1% Avg. Lease Rate (direct, per sq. foot, full service) $24.07 $23.89 $23.05 $21.90 $20.61 $19.95 New Construction Completed (year-to-date) 1.35 MSF, 0.30 MSF, 0.98 MSF, 0.80 MSF, 0.83 MSF, 0.48 MSF, Currently Under Construction Industrial & Flex Market 18 Bldgs 2.83 MSF, 29 Bldgs 7 Bldgs 2.93 MSF, 26 Bldgs 18 Bldgs 1.81 MSF, 19 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 11 Bldgs 1.26 MSF, 17 Bldgs 7 Bldgs 0.95 MSF, 9 Bldgs 10 Bldgs 0.91 MSF, 9 Bldgs CoStar Realty data revealed that the industrial market tightened during the third quarter of The third quarter direct vacancy rate was 0.9 percentage points lower than the third quarter of The average lease rate rose 19.3 percent between the third quarters of 2014 and 2015, adding $1.10 per square foot to the average lease rate. There was also a 4 percent increase over-the-quarter in the average lease rate. There were four industrial buildings completed as of September 2015, ranging from 35,000 square feet in Douglas County to 466,540 square feet in the Enterprise Business Center at Stapleton in the City and County of Denver. There were eight buildings with 1.57 million square feet of space under construction during the period. Industrial Market Statistics Quarter 3 Quarter 2 Quarter 3 Quarter 3 Quarter 3 Quarter Number of Buildings 6,927 6,926 6,919 6,896 6,887 6,878 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 2.8% 2.9% 3.7% 4.5% 5.8% 6.5% Vacancy Rate (with sublet) 3.0% 3.1% 3.9% 4.8% 6.3% 6.9% Avg. Lease Rate (direct, per square foot, NNN) $6.81 $6.55 $5.71 $4.91 $4.64 $4.57 New Construction Completed (year-to-date) 1.24 MSF, 0.89 MSF, 2.13 MSF, 0.89 MSF, 0.27 MSF, 0.28 MSF, Currently Under Construction 4 Bldgs 1.57 MSF, 8 Bldgs 3 Bldgs 0.86 MSF, 3 Bldgs 19 Bldgs 1.77 MSF, 8 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 4 Bldgs 0.63 MSF, 7 Bldgs 6 Bldgs 0.60 MSF, 7 Bldgs 4 Bldgs 0.04 MSF, 2 Bldgs The Metro Denver flex market reported improvement through the third quarter of the year. The direct vacancy rate for flex space fell 0.7 percentage points to 7.6 percent between the third quarters of 2014 and 2015, the lowest rate since the data has been collected. The average lease rate rose 2 percent over-the-quarter to $10.39 per square foot. The third quarter Metro Denver Economic Development Corporation October 6, 2015 Page 18

20 lease rate was also 8 percent higher than the prior year s level and added $0.77 per square foot. There was 325,000 square feet of new space completed through the third quarter of the year, including the new 95,920-square-foot Avery Brewing Co. s brewery and restaurant in Boulder. Flex Space Statistics Quarter 3 Quarter 2 Quarter 3 Quarter 3 Quarter 3 Quarter Number of Buildings 1,468 1,468 1,461 1,454 1,449 1,447 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 7.6% 7.8% 8.3% 11.0% 12.2% 13.0% Vacancy Rate (with sublet) 8.8% 9.0% 9.7% 12.5% 13.5% 14.3% Avg. Lease Rate (direct, per square foot, NNN) $10.39 $10.19 $9.62 $9.26 $8.72 $8.78 New Construction Completed (year-to-date) 0.32 MSF, 0.32 MSF, 0.37 MSF, 0.10 MSF, 0.12 MSF, 0 MSF, Currently Under Construction Retail Market 3 Bldgs 0 MSF, 0 Bldg 3 Bldgs 0.07 MSF, 1 Bldg 6 Bldgs 0.53 MSF, 6 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 3 Bldgs 0.07 MSF, 2 Bldgs 2 Bldgs 0.20 MSF, 2 Bldgs 0 Bldgs 0 MSF, 1 Bldg The retail market in Metro Denver improved through the third quarter of The direct vacancy rate decreased 0.1 percentage points between the second and third quarters of 2015, and was 0.6 percentage points below the third quarter 2014 level. The third 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 decreased over-the-quarter, falling 1.4 percent, and was 0.1 percent lower over-the-year, losing $0.0.2 per square foot. Through the third quarter of the year, the Metro Denver retail market continued to complete larger scale projects, with 41 percent of completed projects over 10,000 square feet. Of the 32 buildings completed through the third quarter, 13 of them were larger than 10,000 square feet, with an overall average size of 34,309 square feet. Arapahoe and Adams Counties recorded the largest amounts of retail space completed through the third quarter of 2015, reporting 108,150 square feet and over 169,254 square feet of space completed, respectively. There were 47 buildings under construction at the end of the third quarter, totaling about 985,890 square feet. About 42 percent 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 3 Quarter 2 Quarter 3 Quarter 3 Quarter 3 Quarter Number of Buildings 11,710 11,702 11,662 11,589 11,500 11,455 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 5.0% 5.1% 5.6% 6.0% 6.5% 6.8% Vacancy Rate (with sublet) 5.1% 5.2% 5.7% 6.2% 6.7% 7.1% Avg. Lease Rate (direct, per square foot, NNN) $15.70 $15.92 $15.72 $15.35 $14.74 $14.66 New Construction Completed (year-to-date) 0.54 MSF, 0.34 MSF, 0.36 MSF, 0.98 MSF, 0.25 MSF, 0.93 MSF, Currently Under Construction 32 Bldgs 0.99 MSF, 47 Bldgs 20 Bldgs 0.78 MSF, 32 Bldgs 43 Bldgs 0.19 MSF, 16 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 53 Bldgs 0.42 MSF, 28 Bldgs 22 Bldgs 0.65 MSF, 31 Bldgs 11 Bldgs 0.16 MSF, 10 Bldgs Metro Denver Economic Development Corporation October 6, 2015 Page 19

21 Monthly/Quarterly Direction Annual Direction Positive Changes 10 of of 18 Nonfarm Employment +1, ,500 Growth Employment up 0.1% from July to Aug. YTD employment up 3.1% through Aug. 19% 22% % Companies Hiring Companies expecting to add workers YTD average up 1 percentage point (Denver Area) decreased from 3Q 2015 to 4Q 2015 compared with % 4.1% Unemployment Rate Unemployment down 0.2 percentage points from July to Aug. Down from 2014 YTD average of 5.2% 2.4% -8.5% Initial Unemployment YTD average claims decreased through Aug. Insurance Claims Claims increased from July to Aug Total Retail Sales -15.5% 3.1% Metro sales decreased from March to April YTD sales up through April 2015 Mountain Region Consumer Confidence Index Index down 6.8% from Aug. to Sept. YTD average up 26.1% through Sept % 78.4% Hotel Occupancy Decreased 3.8 percentage points from July to Aug. YTD occupancy up 0.7 percentage points from last year DIA Passengers 4.5% -0.7% Passengers increased from June to July YTD passengers decreased through July 2015 Bloomberg Colorado Index % Index down 3.0% from Aug. to Sept. YTD return through Sept Dow Jones Industrial 16, % Average Index down 1.5% from Aug. to Sept. YTD return through Sept Home Sales (closed) 5,211 36,619 Sales down 11.6% from July to Aug. YTD sales up 3.1% through Aug Median Home Price $362,900 $350,500 (Denver-Aurora MSA) Up 7.3% from 1Q 2015 to 2Q 2015 YTD price 15.9% higher through 2Q 2015 Foreclosures 283 2,471 Down 16.8% from July to Aug. Down 34.5% YTD through Aug Residential Building Permits 1,553 11,923 (Total) Permits increased 4.4% from July to Aug. YTD permits up 6.0% through Aug % 4.7% Apartment Vacancy Rate Vacancy decreased 0.4 percentage points from 1Q 2015 to 2Q 2015 YTD average down 0.2 percentage points from last year 10.3% -0.8 percentage points Office Vacancy Rate (with Vacancy rate down 0.1 percentage points 3Q 2015 vacancy rate down from 11.1% one Sublet) from 2Q 2015 to 3Q 2015 year ago 3.0% -0.9 percentage points Industrial Vacancy Rate Vacancy rate down 0.1 percentage points 3Q 2015 vacancy rate down from 3.9% one (with Sublet) from 2Q 2015 to 3Q 2015 year ago Retail Space Vacancy Rate (with Sublet) 5.1% -0.6 percentage points Vacancy rate down 0.1 percentage points from 2Q 2015 to 3Q Q 2015 vacancy rate down from 5.7% one year ago Metro Denver Economic Development Corporation October 6, 2015 Page 20

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