Monthly Economic Summary

Transcription

1 Monthly Economic Summary A Monthly Summary of Economic Conditions in Metro Denver (Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson Counties) West Belleview Avenue Suite 100 Littleton, Colorado Page 1

2 The Monthly Economic Summary 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-Broomfield MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties). This report presents recent data and longterm 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 In a ranking by Forbes, Denver placed second as the best city to launch a start-up business out of the 50 most populated cities. The list considered the number of small businesses as a percentage of total businesses, percentage of small businesses that accept credit cards, percentage of small business in high growth industries, percentage of businesses with websites, and online reviews. San Diego, Calif. ranked first. According to WalletHub.com, Denver is among the best cities in the nation to find a job. A report analyzing 60 U.S. cities ranks Denver in eighth based on job openings per capita, highest median starting salary, and the prevalence of employer-provided health benefits. WalletHub also states that Denver is in the top ten for best job market, ranking the city as having the fourth fastest-falling unemployment rate and the eighth highest median starting salary. TriNet, a cloud-based HR services company, analyzed the nation s seven major tech hubs and ranked them based on the highest effective annual salary. The tech workers in the Denver-Boulder area ranked third, with an average effective annual salary of $98,000 (cost-of-living adjusted). Austin, Texas topped the list with an average annual salary of $105,000 and New York, N.Y. placed last with a $56,000 average annual salary. Colorado reported the sixth fastest rate of increase in personal income of the 50 states in Personal income increased 3.4 percent in Colorado, which was significantly higher than the 2.6 percent national average increase. The higher personal income growth in Colorado reflects the state s faster population growth, as well as a 2.9 percent increase in payroll jobs. Per-capita personal income, which is adjusted for population, grew 3.3 percent last year to $46,610, the 16th highest of any state. The annual ranking of the best graduate schools by U.S. News & World Report considered two of the country s best law schools to be in Colorado. The University of Colorado Boulder ranked No. 43 (tied with Washington and Lee University) and the University of Denver ranked No. 68 (tied with University of Kansas). The ranking criteria included median LSAT score, placement after graduation, and the opinions of practicing attorneys and judges. U.S. News and World Report ranked the nation s best MBA programs and included the University of Colorado s Leeds Business School among them. The university ranked 80th in the top 100 programs. The survey was based on mean starting salary, employment rates of graduates, test scores, and GPA. Among a ranking for the best part-time MBA programs, Colorado State University ranked 31st, DU-Daniels ranked 77th, and the University of Colorado Denver placed 101st. According to GObankingrates.com, Denver ranked 60th among the best cities to grow your savings account. The survey considered at the average savings account rate, sales tax, unemployment rate, median household income, and median home price in their ranking methodology. Colorado Springs ranked 85th and Aurora ranked 95th in the top 100 list. The top city for savings was Atlanta, Ga. The U.S. Department of the Interior released a report showing the most visited national parks in the country through Ranked sixth, Rocky Mountain National Park had nearly 3 million visitors even though 2013 Page 2

3 saw 238,476 fewer visitors than in The government shutdown was cited as the reason behind the decline in park attendance, with 9.1 million fewer park visitors nationwide. Policy Watch National The Environmental Protection Agency (EPA) implemented new rules and regulations regarding reductions in sulfur in gasoline and tailpipe emissions. The regulations state that by 2017 refineries are required to reduce the level of sulfur in gasoline by two-thirds. The EPA reported that the cost to consumers should be less than one cent per gallon of gas and a projected $72 increase in the price of vehicles by Conversely, the American Petroleum Institute claims that the new rules would add between six and nine cents a gallon to refinery manufacturing costs. Local The Regional Transportation District (RTD) broke ground on the North Metro commuter rail line in March. The rail will extend 12.5 miles between Denver Union Station and 124th Avenue in Thornton and cost roughly $663.8 million to complete. Building the rail line is part of RTD s larger FasTracks project and is expected to be finished in The Brighton City Council suspended oil and gas drilling applications in order to give the council time to revise Brighton regulations on the industry. The revisions will address the changes in state regulations adopted over the past year along with regulations currently being considered. The city council will not accept, process, or approve any drilling applications until July 15. Based on an analysis conducted using a model customized for Colorado by Regional Economic Models Inc. (REMI), a new study from the University of Colorado Leeds School of Business estimated that a statewide ban on hydraulic fracturing would cause the loss of 93,000 jobs, $12 billion in gross domestic product, and an annual reduction of $985 million in tax revenue for local and state governments over 25 years. The study was completed on behalf of a partnership between the, Denver South Economic Development Partnership, and Commonsense Policy Roundtable. The annual Kids Count report by the Colorado Children s Campaign found that about 18 percent of the state s 1 million children lived below the poverty threshold in Despite an improving economy, the percentage of children living in poverty increased from 17 percent in 2007, prior to the recession. The report examines economic, education, health, and family data to rank the 25 largest counties in Colorado based on the wellbeing of children. Douglas County, with a child poverty rate of 4.9 percent, ranked the best for the third consecutive year. Tax figures indicated that Colorado received $3.5 million in taxes and fees in January from the sale of marijuana, consisting of $2.1 million from recreational marijuana and $1.4 million from medical marijuana. Analysts expect that future monthly tax collections may be lower as January numbers were likely skewed upwards by two factors: a small number of stores that were licensed and ready to do business in the first month of sales, and an initial surge of customers wanting to be among the first customers in the historic legal sales. In November, voters approved a 15 percent excise tax and a 10 percent special sales tax on the drug, which is charged on top of the ordinary state and local sales tax rate. General Economic Overview The Bureau of Economic Analysis (BEA) released the third and final estimate of real gross domestic product (GDP) for the fourth quarter of 2013, reporting an annual growth rate of 2.6 percent. The estimate is higher than the second estimate of 2.4 percent due to larger personal consumption expenditures than previously estimated, Page 3

4 while private investment was smaller. Analysts at the BEA stated that the decline in real GDP growth between the third and fourth quarters was attributed to decreases in private investment, federal government spending, and residential fixed investment. The declines in these sectors were offset by increases in personal consumption expenditures, exports, and nonresidential fixed investment. The advanced estimate for the first quarter of will be released April 30th. The March conference of the Federal Open Market Committee (FOMC) marked the first meeting with the recently confirmed Chairman Janet Yellen at the head of the leadership. The meeting revealed that the Federal Reserve intends to decrease the monthly bond purchases to $55 billion in April, a reduction of $10 billion. This change supports the central bank s previous policy of steadily withdrawing economic stimulus. The bank will continue to support a low, near-zero interest rate but the policymakers decided to discard the original benchmark of 6.5 percent unemployment for increasing the interest rate level. The new benchmark for raising interest rates will be dependent upon the view of the job market. According to central bank officials, this change in policy implies the Federal Reserve will embrace a new system that takes into account measures of labor market conditions, indicators of inflation pressures and expectations, and financial sector developments. The next FOMC meeting is scheduled for April 29th. Economic Indexes & Notable Data Releases National & International The U.S. trade deficit rose to $39.1 billion in January, up from the December deficit of $39 billion (revised). Exports increased to $192.5 billion, climbing $1.2 billion higher than December, and imports increased $1.3 billion to $231.6 billion. The rise in exports was due to increases in industrial supplies and materials ($1.2 billion), capital goods ($0.4 billion), and consumer goods ($0.2 billion). The import increases were a result of growth in industrial supplies and materials ($3.7 billion), capital goods ($0.3 billion), and foods, feeds, and beverages ($0.2 billion). The Conference Board Leading Economic Index for the U.S. recorded a 0.5 percent increase to 99.8 in February. The increase through February was larger than the 0.1 percent increase in January and the 0.1 percent decline in December. The recent index indicated further growth and recovery from the weather related economic impacts. The Conference Board economists expect that the weather effects will be short-term issues and that they will show continued growth throughout the year. The month s increase was attributed to vast growth in housing permits. The Institute for Supply Management s Purchasing Managers Index fell to 51.3 percent in January, losing 5.2 percentage points over December. Adverse weather conditions and weaker economic growth abroad slowed new orders and inventories. Despite the decrease, some survey respondents were optimistic and noted increasing volumes in early The Institute for Supply Management s Non-Manufacturing Index remained above 50 through the month of February, the 49th consecutive month of growth. The index ended the month at 51.6 percent, a 2.4 percentage point drop from January. Ten of the non-manufacturing sectors reported growth in February, with the Business Activity Index at 54.6 percent and the New Orders Index at 51.3 percent. Survey respondents attributed the slower rate of growth to cautiousness in business conditions and the economy. Local The Leeds Business Confidence Index increased for the first quarter of 2014, rising to 59.9 from 59.3 in the fourth quarter of Expectations for all metrics remained positive, including those regarding the national economy, state economy, industry profits, and hiring plans. The first quarter index marked the ninth consecutive quarter of positive expectations. Page 4

5 Labor Force and Employment 2013 Benchmark Employment Revision The annual benchmark revision of the Current Employment Statistics showed significant upward adjustments to annual employment for 2012 and 2013 in the Metro Denver area. The 2013 revision greatly affected the annual growth rate, shifting the previous estimate of 2.6 percent to the current benchmark of 3.5 percent. The Metro Denver growth rate of 3.5 percent is the highest recorded annual growth rate since 2000, when growth was 4.3 percent. The revision also pushed the absolute change in jobs upwards to 49,200 between 2012 and 2013, indicating 11,800 more jobs added than the unrevised estimate. Every sector reported strong employment growth in Most notable was the near 9 percent growth in the natural resources and construction supersector, which added almost 7,000 jobs. Transportation, warehousing and utilities, professional and business services, and education and health services all reported growth rates of 4 percent or more in Annual Benchmark Revision Nonfarm Wage & Salary Employment (000s, not seasonally adjusted) Annual Growth Total 11-County Metro Denver* 1, , % Denver-Aurora MSA 1, , % Boulder-Longmont MSA % Natural Resources & Construction % Manufacturing % Wholesale & Retail Trade % Transp., Warehousing & Utilities % Information % Financial Activities % Professional & Business Services % Education & Health Services % Leisure & Hospitality % Other Services % Government % Federal Gov't % State Gov't % Local Gov't % Colorado 2, , % United States 136, , % *Includes the Denver-Aurora MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties) and the Boulder-Longmont MSA (Boulder County). Source: Colorado Department of Labor and Employment, Labor Market Information; U.S. Bureau of Labor Statistics. Monthly Data Employment in the Metro Denver area grew 2.8 percent in January compared with the prior year. The preliminary January levels reported the region created an additional 40,400 jobs over-the-year. The information sector declined in employment (-0.2 percent) in January, but the federal government subsector reported the largest over-the-year decline (-1.7 percent), a loss of 500 jobs. All other supersectors reported increases in Page 5

6 Month of Month of Month of employment compared with the prior year. The largest percent increase in January was natural resources and construction, growing just over 6 percent and adding 4,700 jobs. Professional and business services led the supersectors in job creation adding 9,700 jobs over-the-year, an increase of 3.8 percent. Education and health services also reported strong growth in employment, increasing 4.3 percent or 7,600 jobs. Employment levels in Colorado continued to grow in January, increasing 3 percent (70,000 additional jobs) compared with January While at a slower rate than Colorado, national employment grew 1.8 percent overthe-year. Nonfarm Wage & Salary Employment (000s, not seasonally adjusted) Year-to- Date Average Year-to- Date Average Year-to- Date Average Annual Growth Rate Annual Growth Rate Jan-14 (p) Dec-13 Jan % Change Total 11-County Metro Denver* 1, , , , , % -4.3% 0.8% Denver-Aurora MSA 1, , , , , % -4.3% 0.8% Boulder-Longmont MSA % -4.7% 0.9% Natural Resources & Construction % -16.3% -0.7% Manufacturing % -10.2% -0.4% Wholesale & Retail Trade % -5.7% -0.1% Transp., Warehousing & Utilities % -6.2% 0.5% Information % -4.5% -5.4% Financial Activities % -4.4% -0.1% Professional & Business Services % -6.2% 3.5% Education & Health Services % 3.0% 3.2% Leisure & Hospitality % -3.4% 2.6% Other Services % -1.8% 1.7% Government % 1.5% -0.2% Federal Gov't % 0.6% -1.6% State Gov't % 4.0% 0.4% Local Gov't % 0.8% 0.0% Colorado 2, , , , , % 0.8% -1.4% United States 135, , , , , % -0.6% -0.3% *Includes the Denver-Aurora-Broomfield MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties) and the Boulder-Longmont MSA (Boulder County). Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary Metro Denver Industry Cluster Headlines Aerospace Centennial-based United Launch Alliance will likely see less rocket launches with the Air Force in 2015 due to changes in the Air Force proposed budget. The U.S. Air Force 2015 budget recommendations included reducing the number of rocket launches from five to three, purchasing one GPS III global positioning satellite instead of two, and decreasing spending on rockets and missiles by about $200 million. The Colorado companies the policy could impact include United Launch Alliance in Centennial, Raytheon Co. in Aurora, and the Jefferson County branch of Lockheed Martin Space Systems Co. Page 6

7 Aviation According to the Government Accountability Office (GAO), the nation s regional airlines are experiencing a shortage of airline pilots. Last year s target level for hiring entry-level pilots was not achieved by 11 of 12 regional airlines. It was suggested that the shortage might be due to low wage profiles for experienced pilots. The GAO claims that there are qualified pilots but they may not be willing to work for entry-level wages or they are employed abroad. In order to meet demand, the U.S. airline industry will have to hire 1,900 to 4,500 new pilots over the next ten years. Broadcasting and Telecommunications Avaya Inc. leased 116,000 square feet of space at Grant Street to relocate its lab operation from Westminster to Thornton. The services portion of the company will move to a Highlands Ranch location. The relocation to the Thornton building will fill a seven-year vacancy that prompted infrastructure upgrades along with parking lots and landscaping upgrades. The building improvements were included as an economic incentive from the City of Thornton. The upgrades are expected to attract additional tenants to the top four floors of the building. Cleantech Vestas Wind Systems reported plans to increase their workforce by 850 employees in four of its Colorado factories this year. The Brighton and Windsor blade factories will hire more than 600 workers and the Brighton nacelle factory will hire 150 additional employees. The company ranked number one in the world in 2013 for the installation of new wind turbines, capturing 13.2 percent of the world market s new installations. Vestas built turbines in 31 countries and sold them in 37 throughout Carbon Cycle Energy LLC, a cleantech startup, is gathering $1.5 million in funding to build facilities for biogas, a process of converting waste methane gas into usable natural gas. The company expects to begin building the first facility by the end of the year, with gas production starting in As the company raises funding, they intend to expand their employee base by the end of Fossil Fuels Anadarko Petroleum Corp, one of Colorado s largest oil and gas companies, reports that it will drill more than 360 wells in the Denver-Julesburg Basin in Significant growth throughout the company s Colorado operations is expected due to infrastructure expansion and a concentrated acreage position. Anadarko is investing in a new natural gas plant, expected in 2015, called the Lancaster Plant that can handle 300 million cubic feet of natural gas per day. Adams County commissioners approved construction of a new crude oil pipeline that will stretch from Colorado to Oklahoma. The new pipeline will run parallel to an existing pipeline, roughly 15 feet apart, and the two pipelines will transport about 150,000 barrels of oil each day. Construction of the White Cliffs Twin pipeline is in response to rising gas prices and the under capacity of the existing pipeline. The pipeline will pass through 23 miles in the northeast corner of the county. Industrial Systems, Inc. is utilizing a new process to reduce water usage during hydraulic fracturing. The technology allows for water used in the process to be cleaned and reused, saving millions of gallons of water each year. The system allows for 99 percent of all solids, bacteria and other chemicals, and oil to be removed from the water without the use of chemical cleaners. The company plans to purchase five more systems this year. Page 7

8 Healthcare and Wellness Centura Health will build three health and wellness centers throughout the northern Metro Denver area, set to open in the fall. Two of the buildings will be constructed from the ground up, with one located in Dacono and the other in Thornton. The new structures will be 10,800 square feet, while a 46,000-squarefoot building in Westminster will be renovated. The centers will provide primary care, specialty services, diagnostic imaging, and wellness services. Adventist Health Systems is funding the Westminster remodel ($15.7 million) and Catholic Health Initiatives funded the Dacono and Thornton locations ($7 million each). It-Software Google Inc. is granting Galvanize, the Denver tech coworking and startup center, $1 million and other assistance to increase female involvement in the technology community. The money is expected to raise the number of female entrepreneurs by 25 percent. Google stated that women-led tech companies attain 35 percent higher return on investment than male-owned tech companies. Galvanize is one of seven companies receiving funding from Google Inc. GoDaddy, a domain name registrar and small business web services provider, is closing its office in Greenwood Village. The 69 workers at the office have been encouraged to apply for roles in other GoDaddy locations, as the company is expanding in Arizona and other states. The Greenwood Village office opened in Other Business and Employment Headlines Cerberus Capital Management, owner of supermarket chain Albertsons, purchased Safeway for $7.64 billion in cash, though the price could be as high as $9 billion when the deal is completed. Colorado has 124 Safeway grocery stores throughout the state. The purchase is part of evolving supermarket consolidation in the industry, which faces great competition from big box retailers and specialty chains. The University of Colorado will expand educational opportunities to Douglas County by renovating more than 7,400 square feet of exhibit space in The Wildlife Experience museum. The renovation will also include 4,000 square feet of basement space for a simulation lab for nursing students. The programs to be offered include business, addiction counseling, computer forensics, nursing, and engineering. The programs are set to begin in the fall. NamJet LLC, a company that produces high-powered waterjets for workboats, spent $4 million on a 50,000-square-foot site in northeast Denver to relocate their manufacturing and operational headquarters. The company s move was prompted by a new contract with the U.S. Army to provide $259 million in military-grade watercraft. The relocation will add 63 new jobs to Denver and the company expects to open doors the beginning of May. Employment Outlook The Manpower Employment Outlook Survey expects second quarter hiring in the Denver-Aurora-Broomfield MSA to continue at a steady pace. There was an increase in the percentage of companies hiring to 20 percent in the second quarter, up from 18 percent in the previous quarter. Although there was growth from the previous quarter, the companies that were hiring fell 1 percentage point lower than the year-ago level. The percentage of companies cutting back employee levels increased to 5 percent from 3 percent in the previous quarter but remained 1 percentage point lower than second quarter Companies planning to maintain employment levels declined over-the-quarter by 6 percentage points to 72 percent, up 3 percentage points from the prior year. Page 8

9 Employment Outlook Survey Quarter 2 Quarter 1 Quarter 2 YTD YTD Ann Avg Denver-Aurora-Broomfield MSA Percent of Companies Hiring 20% 18% 21% 19% 22% 11% Percent of Companies Laying Off 5% 3% 6% 4% 7% 12% Percent of Companies No Change 72% 78% 69% 75% 68% 74% Percent of Companies Unsure 3% 1% 4% 2% 4% 3% U.S. Percent of Companies Hiring 19% 17% 18% 18% 18% 15% Percent of Companies Laying Off 4% 7% 5% 6% 7% 14% Percent of Companies No Change 73% 73% 73% 73% 73% 68% Percent of Companies Unsure 4% 3% 4% 4% 4% 5% Source: Manpower Inc. U.S. hiring expectations continued to grow throughout the second quarter of 2014, with companies reporting the lowest rate of reductions in workforce levels in roughly four decades. The percentage of employers planning to reduce staff levels decreased to 4 percent in the second quarter of 2014, a 3 percentage point decline from the previous quarter as well as 1 percentage point lower than the year-ago level. More companies plan to increase staffing levels, with 19 percent of companies planning to add employees, up from the previous quarter s level of 17 percent. The majority of companies nationwide plan to maintain staff levels, with 73 percent of respondents planning to sustain current employment levels. Unemployment 2013 Unemployment Benchmark Revision Despite revisions to the labor force estimates, 2013 revised unemployment rates throughout Metro Denver and Colorado remained mostly unchanged. The annual revision of the Local Area Unemployment Statistics series reported that Metro Denver unemployment reached 6.5 percent, unchanged from the preliminary rate. Similarly, Colorado s revised unemployment rate (6.8 percent) was also unchanged from the preliminary rate. Annual Benchmark Revision Labor Force Statistics (000s, not seasonally adjusted) Labor Force Unemployment Rate Labor Force Unemployment Rate Metro Denver 1,583, % 1,569, % Adams County 236, % 234, % Arapahoe County 327, % 324, % Boulder County 180, % 179, % Broomfield County 31, % 31, % Denver County 334, % 331, % Douglas County 166, % 163, % Jefferson County 306, % 303, % Colorado 2,754, % 2,746, % United States 155, % 154, % Note: data are subject to further revisions. Source: Colorado Department of Labor and Employment, Labor Market Information. Page 9

10 The consistency in unemployment rates was a result of minor increases in the labor force, meaning that the population was upwardly adjusted, and a minor decrease in the number of people unemployed. The 2012 unemployment rate for Metro Denver was adjusted downward from a 7.7 percent annual average to 7.6 percent due to downward revisions in data for each of the counties. Monthly Data Metro Denver unemployment continued to decline into the new year falling to 6.3 percent, a 1.3 percentage point drop from the previous year. While unemployment declined over the year, the January rate was 0.7 percentage points higher than December, which was a typical seasonal pattern as holiday help was released. All seven of the Metro Denver counties reported declines in unemployment over-the-year, showing further evidence of a strengthening economy. The largest decline in unemployment levels was in Adams County (-2 percentage points), falling from 9.4 percent to 7.4 over-the-year. Denver County also reported a significant decline falling 1.5 percentage points to 6.9 percent from the prior year. Statewide unemployment declined 1.3 percentage points to 6.6 percent, while the national level fell to 7 percent. Labor Force Statistics (000s, not seasonally adjusted civilian labor force) Jan 2014 (p) 2014 YTD Avg 2013 YTD Avg Ann Avg Ann Avg Labor Unemployment Labor Unemploy- Labor Unemploy- Unemploy- Unemploy- Force Rate Force ment Rate Force ment Rate ment Rate ment Rate Metro Denver 1, % 1, % 1, % 8.2% 5.8% Adams County % % % 9.4% 6.5% Arapahoe County % % % 8.1% 5.7% Boulder County % % % 6.8% 4.9% Broomfield County % % % 7.7% 5.8% Denver County % % % 9.0% 6.6% Douglas County % % % 6.9% 4.7% Jefferson County % % % 7.9% 5.4% Colorado 2, % 2, % 2, % 8.1% 5.6% United States 154, % 154, % 154, % 9.3% 5.5% Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary Metro Denver reported considerable improvements in unemployment insurance claims in February, declining nearly 16 percent from January. Colorado claims showed even greater improvement, falling 16.6 percent from January and 4.1 percent from the prior year. Weekly First-Time Unemployment Insurance Claims Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Feb-14 Jan-14 Feb % Change 2009 Metro Denver 1,508 1,793 1,525 1,651 1, % 2,541 Colorado 2,696 3,234 2,810 2,965 3, % 4,752 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. Page 10

11 Consumer Sector Sentiment & Spending The Conference Board reported that national consumer confidence for March rebounded from February s decline. The Consumer Confidence Index for the U.S. rose to 82.3 in March from 78.3 in February, an increase of 5 percent over-the-month. The national index was nearly 33 percent higher in March 2014 than the level of 61.9 in March The large increase was due to positive changes in the expectations index, showing that consumers were more optimistic about income growth. Colorado is included in the Mountain Region Index and the area reported significant changes in consumer confidence. The index grew to between February and March, an increase of 31.6 percent over-the-month. Compared with a year prior, the index grew over 123 percent. Consumer Confidence Index Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Mar-14 (p) Feb-14 Mar % Change Mountain % United States % Source: The Conference Board. (p) = preliminary February reports of U.S. retail sales showed improvements from January as well as a rebound from the weather impacts on the industry. Retail sales across the country increased 0.3 percent compared with January and grew 1.8 percent compared with February Motor vehicle sales showed a 0.3 percent increase in February, a large improvement compared with January s decline of 2.5 percent. There was also an increase in building material sales for the fourth month straight, growing 0.3 percent over-the-month. While gasoline sales were up 0.1 percent in February, the month s sales were 4.6 percent lower than the year-ago level. The National Retail Federation (NRF) released their February analysis of retail sales, which stated that the economy was primed for growth due to positive retail sales. Economists at the NRF reported that February s retail sales were above expectations and confirmed previous expectations of a temporary decline in retail sales due to weather. The economists stated that they will not have further information on the health of the economy in terms of retail until the spring brings more steady weather for consumers to travel and spend. Metro Denver retail sales continued to strengthen throughout the holiday shopping season, increasing 4.6 percent between December 2012 and Adams County recorded the largest over-the-year growth in retail sales, increasing 21.8 percent to $2.6 billion. The City and County of Denver and Arapahoe County reported positive over-the-year gains in retail sales, both increasing 4.7 percent during the period. Boulder County reported losses in retail sales in December 2013 compared with the prior year, declining 6.5 percent. Jefferson County and Broomfield County also reported declines in sales during the period, falling 1.9 percent and 0.6 percent, respectively. Retail sales across the state grew 8.7 percent over the year, for a 2013 total of $170.7 billion in total sales. Page 11

12 Total Retail Sales ($000s) Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth Annual Growth Dec-13 Nov-13 Dec % Change Total Metro Denver 13,612,261 7,881,542 13,011, ,020, ,136, % 2.1% 1.6% Adams County 2,578,680 1,705,878 2,117,928 22,327,733 20,784, % 11.5% 5.0% Arapahoe County 2,551,979 1,569,260 2,438,467 20,242,971 19,325, % -4.8% 1.7% Boulder County 1,491, ,981 1,595,119 9,788,713 9,660, % 0.5% 4.2% Broomfield County 282, , ,801 2,098,249 1,980, % -4.6% -6.0% Denver County 3,699,480 1,878,491 3,531,742 25,832,004 25,106, % 4.9% -1.5% Douglas County 1,095, ,509 1,094,091 8,187,894 8,293, % 0.0% 2.1% Jefferson County 1,913,175 1,176,967 1,950,283 15,542,713 14,985, % -0.5% 3.4% Colorado 22,141,387 12,772,566 20,360, ,708, ,709, % 2.6% 1.6% Source: Colorado Department of Revenue. The U.S. Bureau of Labor Statistics released data that reported a strengthening in the U.S. Consumer Price Index (CPI), with increases in the core which excludes food and energy costs and overall CPI measures. The overall index increased 1.1 percent and the core CPI rose 1.6 percent over the past 12 months. The increase in the core CPI is attributed to a 0.2 percent rise in the shelter index as well as growth in the medical care, airline fares, personal care, recreation, and new vehicle indexes. Over half of the growth in the overall CPI resulted from a 0.4 percent increase in the food index, though the energy index declined due to a large decrease in the gasoline index. The Denver-Boulder-Greeley CMSA consumer price index was up 2.8 percent the second half of 2013 compared to the second half of Similar to the U.S. consumer price increases, energy costs and household utilities were the largest contributing factors to the increase. Though gasoline costs went down in the area, the increases in energy costs, shelter costs, and medical-care costs allowed for inflationary gains. According to the AAA Daily Fuel Gauge Report, the national average fuel price for March increased 2.9 percent from February to $3.56 per gallon. Despite the month-to-month increase, March fuel prices were 2.2 percent lower than the previous year s level ($3.64 per gallon). Between February and March, Metro Denver reported an increase of 1.5 percent in fuel prices to $3.57 per gallon, slightly higher than the national level. Compared with year-ago averages, fuel prices for March 2014 were 0.2 percent higher than the previous year s level. Stock Market With political distress between Russia and Ukraine coinciding with uncertainty in the Federal Reserve policies under Janet Yellen, the stock market indexes were quite volatile throughout March. The stock market closed with low year-to-date returns and over-the-month declines due to vast swings between confidence in monetary policy and the unpredictability of international relations. The NASDAQ and the Bloomberg Colorado Index reported declines between February and March, falling 2.5 percent and 1.9 percent. The DJIA and the S&P 500 recorded slight increases over-the-month, growing 0.8 percent and 0.7 percent. While end of the month closings were low, three of the four indexes reported gains for the year. Page 12

13 Stock Market Indexes Month of Month of Month of YTD Return YTD Return Ann Avg Return Ann Avg Return Mar-14 Feb-14 Mar Bloomberg Colorado % 7.8% 46.2% 17.7% S&P 500 1, , , % 10.0% 23.5% 9.0% NASDAQ 4, , , % 8.2% 43.9% 8.6% DJIA (Dow Jones) 16, , , % 11.3% 18.8% 3.1% Travel & Tourism Sources: Bloomberg.com; Yahoo! Finance. The Metro Denver average hotel occupancy rate increased to 67.2 percent in February. The occupancy rates in February grew nearly 1 percent from January and jumped 7.7 percent from the prior year. The average room rate in February ($110.26) was 0.2 percent lower compared with the January level ($110.49) but 2.6 percent higher than the year-ago level. Metro Denver Hotel Statistics Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Feb-14 Jan-14 Feb % Change Percent of Hotel Rooms Occupied 67.2% 66.4% 62.4% 66.8% 60.2% 11.0% 59.0% 61.9% Average Hotel Room Rate $ $ $ $ $ % $ $84.42 Source: Rocky Mountain Lodging Report. Spokespeople for Denver International Airport (DIA) reported that 3.8 million passengers passed through the airport in February, falling 6.8 percent from January s passenger level of 4 million. The February 2014 level was 2.2 percent higher than the February 2013 level of 3.7 million passengers. For the first two months of 2014 DIA served 7.8 million people, an increase of 1.5 percent compared with the prior year. Denver International Airport Passengers Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual Feb-14 Jan-14 Feb % Change Number of Airline Passengers 3,779,715 4,056,858 3,697,097 7,836,573 7,721, % 50,167,485 42,275,913 Residential Real Estate Source: Denver International Airport, Traffic Statistics. Henry Walker Homes, a Utah-based development company, announced plans to build two new housing developments in Longmont. The 110-unit Silver Meadows Townhomes development, located on 9 acres in west Longmont, includes homes that range from 1,000 to 1,700 finished square feet. Each unit will contain a two-car garage as well as an unfinished basement, with sales prices ranging from $220,000 to $250,000. The second development is located in south Longmont at the southwest corner of S. Sherman St. and Kansas Ave. The Sienna Park development will include 41 single-family homes and 110 townhomes, ranging from 1,100 to 2,200 square feet (not including the unfinished basement). Home Resales The February report of U.S. existing home sales by the National Association of Realtors (NAR) stated that existing-home sales fell to 4.60 million, a decline of 0.4 percent over-the-month. The NAR economists reported Page 13

14 that erratic weather in the beginning of the year was still influencing housing sales but they expect improvements in the coming months. The median existing-home price in February was $189,000 across all housing types, an increase of 9.1 percent from the previous year. The median time on the market for all housing types was 62 days, while 28 percent of all purchases were made by first-time homebuyers. The Northeast and Midwest reported declines in sales, falling 11.3 percent and 3.8 percent over-the-month. Both the Northeast and Midwest levels for February were below the previous year s report, with the Northwest 12.7 percent lower and the Midwest 12.3 percent lower. Existing-home sales increased in the South (1.5 percent) and in the West (5.9 percent) over-themonth, though the West s sales level was 10.1 percent lower than the prior year. Metro Denver closed home sales grew over 10 percent from January to February, increasing to 2,770 sold homes for the month. Unsold homes declined 57 percent over-the-year and 6.5 percent over-the-month to 5,903 homes, showing a decline in existing-home inventories. Average sales prices for single-family homes showed mixed trends throughout the Metro Denver area in February. The average sales price for a single-family attached home rose nearly 6 percent to $215,117 between January and February. Single-Family detached homes reported a 2.3 percent decline in average sales price to $331,700, down from $339,639 in January. Previously-Owned Home Sales Activity Month of Month of Month of YTD Total YTD Total YTD Total Ann Total Feb-14 Jan-14 Feb % Change 2009 Home Sales (Closed) ,513 2,968 5,283 5, % 39,892 Unsold Homes on Market ,310 13,719 5,903 13, % 26,884 Average Sales Price (Single Family Attached) $215,117 $203,236 $177,536 $209,775 $175, % $160,199 Average Sales Price (Single Family Detached) $331,700 $339,639 $306,564 $335,550 $306, % $266,968 Median Sales Price (Single Family Attached) $170,000 $155,375 $144,950 $136,000 Median Sales Price (Single Family Detached) $282,676 $277,700 $259,950 $220,000 Home Prices Due to a transition in the Metrolist data system, data is preliminary and not comparable to previous reports. Source: Metrolist, Inc. NAR data show the national median price of existing homes was $189,000 in February and was up 9.1 percent over-the-year. Of the four U.S. regions, the West reported the largest over-the-year increase in February median home price (+18 percent) because of multiple bidding and tight inventories. The median in the South was up 8.3 percent over-the-year, the median in the Midwest was up 8.6 percent, and the median in the Northeast was up 1.5 percent from the February 2012 median. Median Sales Price of Existing Single-Family Homes ($000s) Quarter 4 Quarter 3 Quarter 4 YTD Avg YTD Avg YTD Avg Median Median 2013 (p) 2013 (r) % Change Boulder MSA $442.8 $410.9 $384.3 $414.4 $ % $359.6 $313.0 Denver-Aurora MSA $279.3 $286.9 $254.8 $280.6 $ % $219.3 $238.2 United States $196.9 $207.1 $178.9 $197.4 $ % $196.6 $180.2 Source: National Association of REALTORS. (p) =preliminary (r) =revised Median home prices increased throughout the Metro Denver area. The Denver-Aurora MSA showed an 11.2 percent increase in home prices through 2013 ($280,600) compared with 2012 ($252,400), and the Boulder MSA also reported an annual increase of 8 percent. From the third quarter to the fourth, the Denver-Aurora MSA experienced a 2.6 percent decline in median home prices to $279,300 while the Boulder MSA showed an increase of nearly 8 percent to $442,800. Both MSAs reported growth over-the-year with Boulder prices increasing 15.2 percent and Denver increasing 9.6 percent. The U.S. median price declined roughly five percent from third to Page 14

15 fourth quarter but did experience an annual increase of 11.4 percent. Of the 171 MSAs included in the Q report, the Boulder MSA reported the seventh highest annual median price and the Denver-Aurora MSA median price was 19th highest in According to the S&P/Case-Shiller home price index, Denver reported nearly no change in home prices for the month of January. The 0.03 percent decline, which the index considers no change, dropped the Denver index to , an absolute decrease of 0.05 for January. Thirteen additional metropolitan areas reported declines in January as well. The index s analysts reported that though over half of the cities reported declines, Denver and Dallas are less than 1 percent away from their recent all-time index highs. Denver posted a 9 percent increase in home prices compared with the previous year. Among the 20 cities in the index, Las Vegas, Nev. reported the largest month-over-month increase of 1.1 percent in January. The largest decline in January, occurring in both Cleveland, Ohio and Chicago, Ill., compared with December was 1.2 percent. Analysts expect moderate gains and small increases in home prices to continue throughout the year. Foreclosures RealtyTrac released the February foreclosure report for the U.S. and stated that foreclosures declined 10 percent from January. In addition to an over-the-month decline, the February level of 112,498 foreclosures was 27 percent lower than the February 2013 level. This was the lowest level of national foreclosures recorded since December 2006, a more than seven-year low. The report further stated that although the foreclosure rate is declining, there is concern over the upkeep of homes that have been vacated over the years and the affect they have on home prices in the surrounding neighborhoods. Real Estate Foreclosures Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total Jan-14 Dec-13 Jan % Change Total Metro Denver* % 26,509 9,427 Adams County % 5,646 1,899 Arapahoe County % 6,233 2,250 Boulder County % 1, Broomfield County % Denver County % 6,141 2,500 Douglas County % 2, Jefferson County % 4,027 1,532 *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 reported an increase in housing foreclosures through the month of January compared with last month. Foreclosures in the region were up 11.1 percent from December but down nearly 42 percent from the year- Page 15

16 ago level. The largest monthly increase from December to January was Jefferson County (70 percent) with Broomfield County closely behind (50 percent), though the latter reported a nearly 61 percent filing decrease compared with the year-ago level. Denver County and Adams County were the only two counties that reported declines in foreclosures over-the-month, but filings in all of the counties were lower than their January 2013 level. New Homes According to the Census Bureau, new home sales after adjustment for seasonal trends in the U.S. fell to 440,000 homes sold in February, a decline of 3.3 percent compared with January. Homes sales for the country were also 1.1 percent lower in February compared with the prior year, which could be a residual effect from the harsh winter weather. The Midwest was the only region to report an increase in homes sales over-the-month, increasing nearly 37 percent. Housing sales in the Midwest and the South were higher than their year-ago levels, with increases of 1.5 percent and 19.7 percent. The Northeast reported the largest decline in home sales between January and February (-32.4 percent) as well as the largest decline in over-the-year sales ( percent). Home sales in the West declined nearly 16 percent over-the-month and fell 27.5 percent in February compared with the prior year s level. Homebuilder confidence reported a slight increase in March, implying the beginning of a recovery from the erratic winter season. The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index rose one point to 47 in March, which is consistent with homebuilders working to recover from the harsh winter season. NAHB economists are concerned with meeting the demand for new homes in the spring due to shortages of buildable lots and skilled labor, low new housing inventory, and rising materials prices. The Census Bureau reports that nationwide residential building permits issued in February grew 7.3 percent from the January levels, suggesting the impact of the extreme weather is declining. Single-family unit permits across the country declined 1.7 percent over-the-month and were 2 percent lower than the prior year. Multi-family housing permits rebounded in February, growing 26 percent compared with January and 25 percent compared with February The Midwest was the only region to report an over-the-month decline, falling 13.8 percent, as well as being 11.5 percent lower than the previous year. The West reported a 21.4 percent increase in permits compared with January, the largest over-the-month growth. The Northeast and South also reported growth in residential permits, growing 6.3 percent and 8.3 percent between January and February. With the weather beginning to warm up, residential building permits in Metro Denver showed positive trends through February. The total number of permits issued increased 105 percent to 1,901 permits in February, up from the January level of 927 permits. Multi-Family units reported a surge of permit activity, growing 298 percent between January and February. The multi-family unit permits increased percent in February 2014 to 1,218 permits compared with the previous year s level of 114 permits. However, this surge in multi-family construction reflects a correction in the data as apartment permits in the City and County of Denver were not properly reported in Two family units reported an increase of 27.6 percent over-the-month and growth of 31.4 percent over-the-year. Single-family units reported the smallest growth of all permit categories, growing just 6.4 percent from January to February to 549 permits. Page 16

17 Residential Building Permits Month of Month of Month of YTD Total YTD Total YTD Total Total Total Feb-14 Jan-14 Feb % Change Single-Family Detached Units , % 2,397 14,260 Single-Family Attached Units % 601 4,843 Multi-Family Units 1, , % 438 2,681 Total Units 1, ,828 1, % 3,436 21,784 Apartment Rental Market Source: Home Builders Association of Metro Denver. The Denver Metro Apartment Vacancy and Rent Survey for the fourth quarter of 2013 showed a trend of increasing vacancy rates. The Metro Denver apartment vacancy rate increased 0.8 percentage points to 5.2 percent between the third and fourth quarters, due to increased vacancy rates in five of the six submarkets. The only submarket to report a decline in vacancy rates over-the-quarter was Adams County with 5.3 percent, which fell from the quarter three rate of 5.7 percent. Each Metro Denver submarket showed elevated vacancy rates in quarter four compared to year-ago data except for the Boulder/Broomfield area where vacancy declined. For the year, the 2013 annual average vacancy rate (4.6 percent) inn Metro Denver was 0.1 percentage points lower than the 2012 annual rate (4.7 percent). The average annual vacancy rate declined in Arapahoe County and the Boulder/Broomfield market in 2013, while the other four submarkets had increases compared to the 2012 annual rates. With minor increases in vacancy rates, the average rental rate of apartments in Metro Denver grew steadily with an over-the-year increase of 6.4 percent. The 2013 average annual rate ($1,026) was 5.3 percent higher than the 2012 average rate ($974) in Metro Denver. The Boulder/Broomfield submarket had the largest increase in rental rates for the year at 8.1 percent while the smallest increase was in Adams County with 3.5 percent. The average annual rental rates in the six submarkets ranged from $1,184 in Boulder/Broomfield to $939 in Adams County. Apartment Statistics Quarter 4 Quarter 3 Quarter 4 YTD Average YTD Average YTD Average Annual Average Annual Average % Change Apartment Vacancy Rate 5.2% 4.4% 4.9% 4.6% 4.7% 6.6% 12.0% Average Monthly Rental Rate (all units) $1,042 $1,049 $979 $1,026 $ % $882 $806 Source: Denver Metro Apartment Vacancy and Rent Survey. Commercial Real Estate As part of the Denver Union Station Project, Continuum Partners real estate development company committed to a mixed-use project priced at $98 million. The proposed plan includes a hotel, office building, and underground parking for 200 cars. The 12-story Kimpton Hotel will contain 200 rooms, 8,300 square feet of meeting space, multiple patios, two restaurants, as well as two front doors with one that connects directly to the Union Station commuter-train platform. The five-story office building will contain 12,300 square feet of space that allows tenants to rent entire floors of the building. Construction will begin in June and be completed around November The Denver Tech Center (DTC) will be the location of the new CoBank corporate headquarters, the state s largest headquartered bank. Shea Properties is building an 11-story building in DTC for CoBank to relocate. Page 17

18 The building will have 296,000 square feet of office space and ground retail, with ten of the eleven floors occupied by CoBank. Construction is expected to begin before summer 2014 and the company expects to move into the new facility by the fourth quarter of First Bank purchased the old Burger King location at 600 Broadway in Denver for $3 million to build a new branch. The new branch building will span 5,500 square feet and include an adjacent 3,000-square-foot building of retail space. The opening is set for the beginning of September. First Bank also began construction on a 15,000-square-foot office and retail building in Cherry Creek North, with a project budget of $60 million. The Commerce City Urban Renewal Authority selected Real Estate Generation, LLC (REGen) as the master developer of the vacant 65 acres Mile High Greyhound Park at 6200 Dahlia St. The master developer s proposal includes building a construction skills training campus and a manufacturing facility for producing solar, energy-efficient homes. The city expects the project to be finished in 7 to ten years. Office Market The office market in Metro Denver continued to improve through the first quarter of 2014, with a decline in the vacancy rate and rising average lease rates. According to CoStar, the average vacancy rate fell to 10.8 percent in the first quarter compared with the fourth quarter level of 10.9 percent. The average lease rate increased 0.4 percent over-the-quarter to $22.01 per square foot, the highest rate since the second quarter of Compared with the first quarter of 2013, the average vacancy rate was down 0.9 percentage points and the average lease rate increased 4.5 percent. Office property construction during the fourth quarter improved to keep up with growing demand for business space. There was 2 million square feet of space under construction throughout the first quarter, an 11.7 percent increase from the prior quarter. Over three quarters of the office space under construction is located in the City and County of Denver. There was 380,000 square feet of office space completed during the first quarter, which was nearly five times more than one year ago. Office Market Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 5,920 5,911 5,896 5,886 5,871 5,852 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 10.8% 10.9% 11.7% 12.4% 12.9% 13.1% Vacancy Rate (with sublet) 11.2% 11.4% 12.1% 12.8% 13.5% 14.0% Avg. Lease Rate (direct, per sq. ft, full service) $22.01 $21.92 $21.07 $19.94 $19.91 $20.18 New Construction Completed (year-to-date) 0.38 MSF, 0.95 MSF, 0.08 MSF, 0.29 MSF, 0.37 MSF, 0.01 MSF, Currently Under Construction Industrial & Flex Market 6 Bldgs 2.00 MSF, 21 Bldgs 15 Bldgs 1.79 MSF, 23 Bldgs 1 Bldgs 1.19 MSF, 15 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 3 Bldgs 0.70 MSF, 6 Bldgs 5 Bldgs 0.61 MSF, 10 Bldgs 1 Bldg 1.16 MSF, 7 Bldgs CoStar Realty data showed that the industrial market improved in the first quarter of The vacancy rate continued to decline, falling 0.5 percentage points to 3.5 percent vacancy compared with the fourth quarter of Declining vacancy rates were accompanied by increasing average lease rates, raising 11.7 percent to $5.26 per square foot compared with the same time a year ago. There was just over 100,000 square feet of new industrial space completed in the first quarter, with 55,000 square feet located in Boulder County and the Page 18

19 remainder in Arapahoe County. New projects under construction increased 10.4 percent to 2.22 million square feet compared with the fourth quarter level of 2.01 million square feet. Of this space, 1.2 million of it is in the City and County of Denver and 710,000 is in Adams County. Industrial Market Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 6,900 6,887 6,880 6,873 6,862 6,857 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 3.5% 4.0% 5.4% 6.5% 6.3% 6.8% Vacancy Rate (with sublet) 3.8% 4.2% 5.8% 6.8% 6.8% 7.4% Avg. Lease Rate (direct, per square foot, NNN) $5.26 $5.07 $4.71 $4.56 $4.69 $4.76 New Construction Completed (year-to-date) 0.10 MSF, 0.93 MSF, 0.08 MSF, 0.01 MSF, 0 MSF, 0.01 MSF, Currently Under Construction 4 Bldgs 2.22 MSF, 17 Bldgs 5 Bldgs 2.01 MSF, 15 Bldgs 1 Bldgs 1.15 MSF, 9 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 1 Bldg 0.17 MSF, 4 Bldgs 0 Bldgs 0.13 MSF, 4 Bldgs 1 Bldg 0.02 MSF, 1 Bldg The Metro Denver flex market showed continued improvements during the fourth quarter. The flex space vacancy rate fell 0.8 percentage points over-the-quarter and 2.4 percentage points over-the-year. The average lease rate rose for the third straight quarter, increasing 1.7 percent to $9.53 per square foot compared with fourth quarter of The rate was also 4.3 percent higher than the year-ago level of $9.14 per square foot. As the demand for flex space continued to increase, new flex space construction reached new levels. There was a 95.7 percent increase in new construction between the fourth quarter and the first quarter, growing to 450,000 square feet under construction. The largest buildings under construction included buildings 1 and 2 in the Enterprise Business Center in Stapleton. Nearly 74,000 square feet of flex space was completed in the first quarter of Flex Space Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 1,449 1,446 1,444 1,440 1,440 1,436 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 9.9% 10.7% 12.3% 13.0% 13.8% 14.1% Vacancy Rate (with sublet) 11.3% 12.1% 13.6% 14.4% 15.2% 15.7% Avg. Lease Rate (direct, per square foot, NNN) $9.53 $9.37 $9.14 $8.84 $8.95 $9.33 New Construction Completed (year-to-date) 0.07 MSF, 0.10 MSF, 0.05 MSF, 0 MSF, 0 MSF, 0 MSF, Currently Under Construction Retail Market 2 Bldgs 0.45 MSF, 7 Bldgs 3 Bldgs 0.23 MSF, 5 Bldgs 1 Bldgs 0.06 MSF, 3 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 0 Bldgs 0.20 MSF, 3 Bldgs 0 Bldgs 0 MSF, 0 Bldgs 0 Bldgs 0 MSF, 0 Bldgs The retail market in Metro Denver reported improvements in the first quarter that are consistent with prior quarters. The direct vacancy rate fell 0.4 percentage points to 5.7 percent over-the-quarter and was 0.8 percentage points lower than the prior year s level. The average lease rate rose from $15.22 in the fourth quarter to $15.34 in the first quarter, an increase of 0.8 percent. The lease rate was up 1.8 percent over-the-year. Page 19

20 Construction in the retail markets slowed down during the first quarter of 2014 compared with the first quarter of Newly completed construction was 35 percent lower in the first quarter of 2014 compared with the prior year, falling to 130,000 square feet of completed space. The amount of space currently under construction declined over-the-year, decreasing 33.3 percent to 600,000 square feet. Current construction and completed construction is widely dispersed throughout Metro Denver. Retail Market Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 11,264 11,218 11,170 11,108 11,067 11,030 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 5.7% 6.1% 6.5% 7.2% 7.4% 8.1% Vacancy Rate (with sublet) 6.0% 6.4% 6.7% 7.5% 7.7% 8.4% Avg. Lease Rate (direct, per square foot, NNN) $15.34 $15.22 $15.07 $14.65 $14.68 $16.66 New Construction Completed (year-to-date) 0.13 MSF, 1.15 MSF, 0.20 MSF, 0.04 MSF, 0.14 MSF, 0.03 MSF, Currently Under Construction 20 Bldgs 0.60 MSF, 19 Bldgs 69 Bldgs 0.42 MSF, 29 Bldgs 20 Bldgs 0.90 MSF, 22 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 8 Bldgs 0.37 MSF, 15 Bldgs 2 Bldgs 0.59 MSF, 8 Bldgs 3 Bldgs 0.43 MSF, 10 Bldgs Page 20

21 Indicator Nonfarm Employment Growth % Companies Hiring (Denver Area) Metro Denver Indicator Summary Monthly/Quarterly Direction Annual Direction Summary of Recent Changes Employment down by 31,500 jobs Dec to Jan; YTD employment up 2.8% through Jan % of companies expect to add workers in Q and 72% expect no change. Unemployment Rate Metro rate 6.3% in Jan; YTD avg. rate of 6.3% down from 2013 YTD avg (7.6%). Initial Unemployment Insurance Claims Claims decreased Jan to Feb; YTD claims decreased 12.6% through Feb Total Retail Sales Metro retail sales increased Nov to Dec; YTD sales up 3.9% through Dec Consumer Confidence Index Mountain Region Index up 32.6% Feb to March; index up 53% YTD through Feb Hotel Occupancy Hotel occupancy increased Jan to Feb to 67.2%; occupancy up 11% YTD. DIA Passengers Traffic decreased 6% from Jan to Feb; YTD traffic up 1.5% through Feb Bloomberg Colorado Index Dow Jones Industrial Average Bloomberg Colorado down 1.9% from Feb to Mar; year-to-date return at +1.0% DOW increased 0.8% Feb to Mar; year-to-date return down 0.7%. Home Sales (closed) Home sales increased Jan to Feb; YTD sales down 5.6% through Feb. Median Home Price (Denver-Aurora MSA) Median price in Denver MSA down 2.6% Q3 13 to Q4 13; price up 11.2% YTD through Q4 13. Foreclosures Foreclosures increased Dec to Jan; YTD down 41.9% through Jan Residential Building Permits (Total) Total permits increased 105% Jan to Feb; YTD up 82.7% through Feb Apartment Vacancy Rate Vacancy up to 5.2% in Q4; avg rental rate at $1,042 per month. Office Vacancy Rate (with Sublet) Industrial Vacancy Rate (with Sublet) Retail Space Vacancy Rate (with Sublet) Positive Changes 11 of of 18 Vacancy down to 11.2% in Q from 11.4% in Q4; avg lease rate up to $22.01/sq. ft. Vacancy down to 3.8% in Q from 4.2% in Q4; avg lease rate up to $5.26/sq. ft. (NNN) Vacancy down to 6.0% in Q1 2014; avg. lease rate up to $15.34/sq. ft. (NNN) Page 21

22 Economic and Demographic Research Industry Studies Fiscal and Economic Impact Analysis Real Estate Economics West Belleview Avenue Suite 100 Littleton, Colorado