MonthlyEconomicIndicators. November2018. Monthlyanalysis of18keyeconomic indicatorsin MetroDenver. EnergeticBodies.EnergeticMinds.

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1 MonthlyEconomicIndicators November2018 EnergeticBodies.EnergeticMinds. Monthlyanalysis of18keyeconomic indicatorsin MetroDenver ResearchSponsor

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 main data sections: labor force and employment, the consumer sector, residential real estate, and commercial real estate. Notable Rankings Bloomberg reported the 2018 Brain Concentration Index, recognizing Boulder and Denver in the top 10. The index ranks metro areas with a population of 90,000 or more, based on a high concentration of STEM workforce, advanced degree or science and engineering undergraduate degree holders, as well as a strong net business formation. Boulder scored highest with a score of and Denver ranked No. 10. Denver was named to the list of the top 25 tech cities in the U.S. and Canada for 2018 by Cushman & Wakefield. The Tech Cities 2.0 report used factors such as employment, occupations, and venture capital investments. Cities were grouped in three tiers: the first tier included cities where tech is a critical component; the second, where tech is a key driver; and the third, where tech is important to the local economy. In Denver, tech jobs make up 6.9 percent of total employment, ranking the city in the second tier. First tier cities reported tech jobs of over 8 percent of total employment and third tier cities reported tech employment of under 6 percent. CompTIA s new report, Top 20 Tech Towns, ranks the Denver-Aurora-Lakewood area as eighth-best in the country for tech workers based on salaries, job availability, growth, and cost of living. Boulder also made the list, ranked No. 19. The report found that employers in the Denver MSA posted 50,897 IT jobs between August 2017 and July 2018 with a median salary of $90,958. In addition, the number of jobs is expected to grow another 11 percent over the next five years. In Boulder, employers posted 5,821 IT jobs between August 2017 and July 2018 with a median salary of $88,899 and an expected five-year growth rate of 5 percent. According to Forbes magazine, Denver ranked No. 4 on a list of the top 10 rising cities for startups. The magazine compared the 30 largest metro areas on factors related to living and business costs, educational levels, college presence, entrepreneurship rates, working age population growth, and venture capital investments. Ten metro areas were not included in the rankings, as they captured the most venture capital in the past three years, including areas such as San Francisco, New York, and Boston. The PwC MoneyTree Report for 3Q 2018 ranks Colorado No. 4 on the list of Top 10 U.S. states for venture capitalbacked deals during the quarter. The report said that Colorado had 48 VC deals close during the July-September period, totaling $419 million. California had by far the highest number of deals in 3Q with 477. Denver ranked No. 8 of 79 metropolitan statistical areas in the Emerging Trends in Real Estate 2019 report, released by PricewaterhouseCoopers and the Urban Land Institute. Major strengths for Denver included the growth of Denver International Airport, a growing tourism and convention market that has fueled the hospitality industry, and the availability of key parcels, including infill sites in the city. The report also noted that the 2019 population growth rate is projected to be well above the national average in the Mountain Region, including Denver. The 12th annual report from the American Council for an Energy-Efficient Economy (ACEEE) included Colorado at No. 14. The state earned 25.5 points out of a possible 50, 2.5 points more than it earned in Colorado s utility-led energy efficiency program continues to post electricity and gas savings higher than those of most states, with programs poised to expand following recent approval of significantly higher energy savings goals for Xcel Energy. The state can improve its ranking by pursuing sustainable transportation policies, encouraging investment in combined heat and power, and working with local communities to adopt up-to-date building energy codes. Metro Denver Economic Development Corporation November 6, 2018 Page 1

3 The state of Colorado is home to some of the best global universities, according to the 2019 U.S. News & World Report Best Global Universities list. University of Colorado Boulder ranked No. 43, followed by Colorado State University at No. 270, University of Colorado Denver, No. 333, Colorado School of Mines, No. 475, and University of Denver, No The ranking evaluated 750 schools in 75 countries around the world. All told, 227 U.S. schools made the global list, which was the most of any country. China was next with 130 institutions ranked, followed by the UK (78), Japan (67), and Germany (62). National Economic Overview Gross Domestic Product The U.S. Bureau of Economic Analysis (BEA) released the first estimate of real gross domestic product (GDP) for the third quarter of The estimate showed that GDP increased at an annual rate of 3.5 percent through the third quarter, which was 0.7 percentage points below the second quarter rate of 4.2 percent. Although growth slowed from the second quarter, the economy still posted its best back-to-back quarters in four years. Strong consumer and government spending boosted growth in the July-to-September period. A buildup in goods inventories also helped, suggesting potential weakness ahead if companies lower production while selling off any backlog. Interest Rates For the third time this year, the Federal Open Market Committee (FOMC) of the Federal Reserve voted to raise the benchmark federal funds rate, increasing the rate to a range of 2 percent to 2.25 percent. The FOMC also projects one more increase before the end of the year and three in Fed officials collectively estimate gross domestic product to rise 3.1 percent in 2018, an updated revision from the 2.8 percent projection in June. The forecast for 2019 also moved higher by 0.1 percentage points to 2.5 percent. The Fed also indicated that it is likely the federal funds rate would remain for two years above what they term the longterm neutral rate that is neither restrictive not simulative. Committee members expect the economy to slow in The next FOMC meeting is on November 7-8. Policy Watch National The Trump administration will put tariffs on the rest of the country s imports from China if Presidents Donald Trump and Xi Jinping don t make substantial progress in easing the trade dispute next month. The impact on the stock market has been significant. Technology and internet companies, industrials, and retailers took steep losses. The S&P 500 index dropped 6.9 percent from September to October, its worst monthly loss since May The effects of higher tariffs could be especially severe for technology companies, which make many of their products in China, and for industrial companies, which are already paying higher prices for metals. Local The Denver City Council voted unanimously to repeal and replace the green roof requirement that voters had established a year earlier. The original law would have required rooftop vegetation for large buildings, but the council decided to give developers more options for achieving environmental goals. Under the new law, the city will require cool roofs on new and re-roofed buildings of more than 25,000 square feet. Such light-colored, reflective roofs Metro Denver Economic Development Corporation November 6, 2018 Page 2

4 already are popular in Denver. In large numbers, they can lower urban temperatures by several degrees. City research found that the original green roof law could have added $193,000, or about 2.8 percent, to the cost of a five-story office building. The revision could cut that increase in half and the savings were significantly steeper for some buildings. Economic Indexes & Notable Data Releases National & International The U.S. reached a deal with Canada and Mexico to remain in a free trade pact. The newly named United States- Mexico-Canada Agreement, or USMCA, will replace the previous agreement, NAFTA. After more than a year of tense talks and strained relations between President Donald Trump and Canadian Prime Minister Justin Trudeau, negotiators from both sides came to a resolution just before a midnight deadline set by the White House. Lawmakers have said they do not expect Congress to vote on the deal until early next year. The U.S. goods and services trade deficit was $53.2 billion in August, up $3.2 billion from $50 billion in July, revised. August exports were $209.4 billion, $1.7 billion less than July exports. August imports were $262.7 billion, $1.5 billion more than July imports. The latest figures were the highest in six months and suggest that retaliatory tariffs imposed by China continued to impact American farmers. The numbers also reflect reports that businesses have rushed to import goods before tariffs are implemented, including products needed in stores for the holiday shopping season. The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.5 percent in September to (2016=100), following a 0.4 percent increase in August, and a 0.7 percent increase in July. The September results suggest the U.S. business cycle remains on a strong growth trajectory heading into However, the LEI s growth has slowed somewhat in recent months, suggesting the economy may be facing capacity constraints and increasingly tight labor markets. Economic growth could exceed 3.5 percent in the second half of 2018, but, unless the momentum in housing, orders, and stock prices accelerates, that pace is unlikely to be sustained in The Institute for Supply Management s Manufacturing Index registered 59.8 percent, a decrease of 1.5 percentage points from the August reading of 61.3 percent. Export orders expanded, but four major industries are no longer contributing. Price pressure continues, but the index softened for the fourth straight month and dropped below 70 for the first time since December Demand remains robust, but employment resources and supply chains continue to struggle, but to a lesser degree. Respondents are again overwhelmingly concerned about tariff-related activity, including how reciprocal tariffs will impact company revenue and current manufacturing locations. The manufacturing sector grew for the 25th consecutive month. The Institute for Supply Management s Non-Manufacturing Index (NMI) registered 61.6 percent for September, which was 3.1 percentage points higher than the August reading of 58.5 percent. This represented continued growth at a faster rate and was an all-time high for the NMI since the inception of the composite index in Overall, respondents remained positive about business conditions and the current and future economy. Concerns remain about capacity, logistics, and the uncertainty with global trade. The non-manufacturing sector grew for the 104th consecutive month. Local The University of Colorado Boulder Leeds School of Business released its fourth quarter 2018 Leeds Business Confidence Index. The overall index decreased to 56.5, as business confidence reported a relatively large drop ahead of 4Q 2018 and fell further looking ahead to 1Q All six individual components of the LBCI remain in positive territory (above 50), but national economy expectations fell below 50 in 1Q Panelists appear to be most concerned about the national economy as it recorded the lowest confidence. Hiring requirements remain about the same for the majority of employers, but some are accepting employees with fewer years of experience and years of education, or fewer skills. According to the regional Beige Book by the Kansas City Federal Reserve, economic activity in the Tenth District, which includes Colorado, increased at a moderate pace in September and early October. Consumer spending rose Metro Denver Economic Development Corporation November 6, 2018 Page 3

5 moderately, with contacts in the retail, auto, and tourism sectors noting higher sales than the previous survey period. District employment was mixed across industries since the previous survey, but contacts from most sectors reported rising employee hours. Wage growth accelerated, and strong wage growth was anticipated in the coming months. According to a study from Paychex, Denver reported the third-fastest wage growth in the nation. The metro area s average hourly earnings rose by 3.94 percent to $30.04, and average weekly earnings went up by 4.13 percent to $ Paychex analyzed hourly wage growth among the 20 largest metro areas at small businesses between September 2017 and September Across the nation, the top three industries seeing the fastest increase in hourly earnings are as follows: leisure and hospitality at 3.94 percent; construction at 2.96 percent; and trade, transportation and utilities at 2.81 percent. The Colorado Division of Insurance reported that individual insurance plan increases will average 5.6 percent and small group plans will increase an average of 7.28 percent in Nationally, health insurance premiums are expected to increase 3.6 to 4.1 percent in Next year, the individual mandate, which requires all Americans to have health insurance, has been repealed as part of the federal tax law changes. Still, most insurance companies expect little impact on the number of people who buy insurance. The number of new businesses filing initial paperwork with the Colorado Secretary of State s office continued an upward trend in the third quarter of 2018, according to a report from the Business Research Division of the University of Colorado Boulder Leeds School of Business. The report found that quarterly new business filings were up 9.3 percent year-over-year. Business renewals were up 6.7 percent, which suggests that continued growth is likely. In total, 30,000 new entities filed with the state in the third quarter of The U.S. Small Business Administration approved 1,766 loans worth $884.9 million in Colorado during the federal fiscal year that ended Sept. 30. The number of loans went up slightly, but the dollar volume fell from the prior year, when 1,758 loans were approved worth a record $902 million. The lower dollar volume was attributed to the ability of more small businesses to obtain conventional financing without the guarantees the SBA steps in to provide when lenders are hesitant. Labor Force and Employment Employment in Metro Denver increased 2.5 percent between September 2017 and September 2018, adding an additional 42,300 jobs over-the-year. The Denver-Aurora-Lakewood MSA added 39,000 jobs, an increase of 2.7 percent, while the Boulder MSA (+1.7 percent) added 3,300 jobs. Ten of the 11 supersectors recorded growth over-the-year. The information supersector and the natural resources and construction supersector reported the highest rates of growth over-the-year, rising 6.4 percent and 5.3 percent, respectively. Professional and business services added the most jobs between September 2018 and the previous year, adding 6,500 workers. The other services supersector reported the only decline during the period, falling 2.2 percent or by 1,400 jobs. Employment in Colorado rose 2.9 percent between September 2018 and the same time last year, adding 77,300 jobs. National employment levels increased during the same period, adding almost 2.6 million jobs, an increase of 1.7 percent. Metro Denver Economic Development Corporation November 6, 2018 Page 4

6 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 Sep-18 Aug-18 Sep-17 YTD 2018 YTD 2017 % Change Total 11-County Metro Denver* 1, , , , , % 3.6% 1.0% Denver-Aurora-Lakewood MSA 1, , , , , % 3.7% 1.0% Boulder MSA % 2.3% 0.9% Natural Resources & Construction % 9.7% -1.5% Manufacturing % 1.6% -2.3% Wholesale & Retail Trade % 2.6% 0.1% Transp., Warehousing & Utilities % 5.1% 0.3% Information % 1.6% -1.7% Financial Activities % 3.6% -2.2% Professional & Business Services % 4.3% 2.1% Education & Health Services % 4.2% 4.3% Leisure & Hospitality % 3.9% 1.4% Other Services % 2.1% 2.7% Government % 1.9% 2.6% Federal Gov't % -1.2% -0.7% State Gov't % 2.7% 3.7% Local Gov't % 2.2% 3.0% Colorado 2, , , , , % 3.0% 0.8% United States 149, , , , , % 1.6% -0.5% *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 (r) =revised Metro Denver Industry Cluster Headlines Bioscience Front Range Biosciences, an agricultural biotech company located in Lafayette, closed a $10 million Series A funding round. The funds will go to building out its production capacity, expand the team, and to pursue additional market share in different crops. AngelMD, a fintech platform for medical startups, is moving its headquarters to Denver from Seattle. The startup is moving in to the Catalyst HTI building, with plans to be completely moved in by mid-november. AngelMD is a privatelyheld online investment platform that matches medical startups with a network of investors who are also physicians. Energy Cleantech Vestas Nacelles America Inc., located in Brighton, will add 200 new production workers over the next four months. Positions available include both logistics and production on day or night shifts. Starting pay ranges from $16 to $18 per hour. The company currently employs roughly 3,500 Coloradans and operates four manufacturing facilities across the state. Metro Denver Economic Development Corporation November 6, 2018 Page 5

7 Financial Services Banking and Finance At least 167 BOK Financial employees in Colorado have been laid off after the company finalized its acquisition of CoBiz Financial. The decision to adjust CoBiz Financial banking centers and eliminate job-function redundancies came after thorough research and was part of an overall strategy to optimize efficiencies from the CoBiz acquisition, according to a company spokesperson. Healthcare & Wellness Pennsylvania-based Crothall Healthcare Inc. is laying off 65 workers in its patient transport department servicing the University of Colorado Hospital in Aurora. The hospital is moving the patient transport department in-house and a majority of the soon-to-be former Crothall Healthcare employees have received employment offers from the hospital. Of the employees that will be laid off, three are dispatchers, one is a lead patient transporter, one is a manager of patient flow, and 60 are patient transporters. UCHealth University of Colorado hospital is the fifth institution in the state and the fourth in the Metro Denver area to be certified as a Level I trauma center. It marks the first newly certified Level I trauma hospital since the state relaxed its high-risk patient volume requirement in 2012 following the Aurora theater shooting. The current traumadesignation system ranks hospitals in levels one through five and sets parameters for the maximum complexity of injuries that can be treated at each level. IT-Software A new Tech Census from Powderkeg, a Web-based connections engine for tech entrepreneurs and professionals, has analyzed Boulder s tech community. Seventy-three percent of respondents agreed with the statement that there is enough junior talent in Boulder, while 63 percent agreed there is significant technical talent and 44 percent said there was senior talent. As to future growth, 35 percent said they saw potential in artificial intelligence and machine learning, 13 percent said they saw growth in blockchain and cryptocurrency. Other growth potential lies in analytics and big data, energy, IT, and cybersecurity. New York-based Greenhouse, which makes recruiting software for companies such as Airbnb and Pinterest, has opened a six-person office in Union Station s WeWork. Greenhouse s operations in Denver will consist mainly of customersupport employees. The startup plans to bring up to 30 employees from other departments by the end of next year. Littleton-based Bristlecone Construction Corporation has been acquired by California startup firm Katerra. Bristlecone, which employs about 150, will operate under the Katerra name and expects to double its staff over the next year. Katerra, which uses technology to make the building process more efficient, has raised more than $1.2 billion over five rounds of funding. Software company Cherwell, based in Colorado Springs, is expanding its Denver office. The company employs nearly 500 people globally, with about 70 people working in Denver. The company has been expanding its product offerings beyond its core IT service management software. Over the past 12 months, it has been developing enterprise service management software that allows teams to keep track of their employees and tasks. Sumo Logic, a Silicon Valley tech company, is growing its Denver office. The data analytics software maker opened its Denver office in 2015 with three people and has since expanded to 35 employees in an office at 17th and Arapahoe. The company plans to grow to at least 50 employees in the next two years. Assignar, an Australian-based software startup focused on helping contractors and subcontractors run their business, is moving its headquarters to Denver. The company plans to have between 30 and 40 employees by the end of next year. Assignar executives noted that Denver was a great ecosystem for amazing tech talent, while also offering a high quality of life. Quizlet, the user-generated digital flashcard app that helps students study, is expanding in Denver. The company recently hired a director of engineering and a full-stack developer for the Denver office and anticipates hiring up to 25 Metro Denver Economic Development Corporation November 6, 2018 Page 6

8 employees by this time next year. The company expects employee headcount to grow to between 200 and 300 people in the next eight years, based on the availability of tech talent in the Denver area. The jobs will pay an average annual wage of $156,567. Other Industry Headlines Amazon, which has recently added more than 2,000 workers at fulfillment centers in Colorado, is raising its lowest pay rate to $15 an hour. The online retailer said that the higher minimum wage would apply to all workers, full-time, parttime, and temporary, including employees of its Whole Foods Market subsidiary. Colorado s current minimum wage is $10.20 an hour. HomeAdvisor, the Golden-based digital marketplace, has finalized a lease for 150,000 square feet in the Hub, up from the 70,000 square feet the firm originally committed to. The company will take the top three floors and accommodate up to 1,200 employees in the building. Evolve Vacation Rental Network, a Denver-based vacation rental management company, is shifting into its second phase after raising $80 million in funding. The funding allows the company to attract more property owners, invest in its tech platform, and grow its team. Evolve recently announced plans to expand to a third floor in its downtown Denver headquarters to accommodate up to 550 employees. It employs more than 300 in Denver today. Advanced Energy Industries Inc., a global leader in highly engineered, precision power conversion, is increasing its presence and activities along Colorado s Front Range. The company has signed a lease to inhabit the top two floors of the EPA Region 8 building downtown where it plans to house more than 100 of its corporate and management employees over the next two years. Employment Outlook Denver-Aurora MSA employers expect to hire at a hopeful pace during the fourth quarter of 2018, according to the Manpower Employment Outlook Survey. Among employers surveyed, 25 percent plan to hire more employees from October to December, an increase of 5 percentage points from the same period last year. This number is offset by the 7 percent that plan to reduce payrolls, a 2-percentage point decrease, while 68 percent of employers expect to maintain current staff levels, the same as last year. For the coming quarter, job prospects appear best in Construction, Durable Goods Manufacturing, Nondurable Goods Manufacturing, Transportation & Utilities, Wholesale & Retail Trade, Information, Financial Activities, Professional & Business Services, Leisure & Hospitality, and Other Services. In contrast, employers in Government plan to reduce staffing levels. Hiring is expected to remain unchanged in Education & Health Services. Metro Denver Economic Development Corporation November 6, 2018 Page 7

9 Employment Outlook Survey Quarter 4 Quarter 3 Quarter 4 YTD YTD Ann Avg Denver-Aurora-Broomfield MSA Percent of Companies Hiring 25% 29% 20% 27% 26% 21% Percent of Companies Laying Off 7% 4% 9% 4% 6% 7% Percent of Companies No Change 68% 65% 68% 67% 66% 71% Percent of Companies Unsure 0% 2% 3% 2% 2% 3% Unemployment United States Percent of Companies Hiring 22% 24% 21% 23% 22% 19% Percent of Companies Laying Off 5% 3% 6% 4% 5% 7% Percent of Companies No Change 71% 71% 71% 72% 72% 72% Percent of Companies Unsure 2% 2% 2% 2% 2% 3% Metro Denver s not seasonally adjusted unemployment rate fell between August and September, decreasing 0.3 percentage points to 3 percent. Over-the-year, the rate increased 0.4 percentage points from 2.6 percent in September Source: Manpower Inc. Between August and September, all seven counties in the Metro Denver area reported decreasing unemployment rates. Boulder County reported a decrease of 0.4 percentage points while the remaining six counties decreased 0.3 percentage points. Over-the-year, all seven counties posted increases, ranging from 0.3 percentage points in Arapahoe and Broomfield Counties to 0.4 percentage points in all other counties. Labor Force Statistics (000s, not seasonally adjusted civilian labor force) September 2018 (p) 2018 YTD AVG 2017 YTD AVG Ann Avg Ann Avg Labor Unemployment Total Labor Unemploy- Total Labor Unemploy- Unemploy- Unemploy- Force Rate Force ment Rate Force ment Rate ment Rate ment Rate Metro Denver 1, % 1, % 1, % 6.5% 4.9% Adams County % % % 8.1% 5.4% Arapahoe County % % % 6.6% 4.9% Boulder County % % % 5.5% 4.1% Broomfield County % % % 5.8% 4.5% Denver County % % % 6.6% 5.4% Douglas County % % % 5.3% 4.2% Jefferson County % % % 6.3% 4.7% Colorado 3, % 3, % 2, % 6.9% 4.8% United States 161, % 161, % 160, % 7.4% 5.8% Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary Metro Denver Economic Development Corporation November 6, 2018 Page 8

10 Metro Denver added 31,743 people either employed or looking for work between September 2017 and September The labor force rose across all seven counties over-the-year, from 1.5 percent in the City and County of Broomfield to 1.9 percent in Adams and Jefferson Counties. Colorado reported an unemployment rate of 3.1 percent, rising 0.4 percentage points from September During that time, the labor force in Colorado increased, rising 2.6 percent or adding 77,939 people either employed or looking for work. The national unemployment rate decreased 0.5 percentage points over-the-year to 3.6 percent. Between August and September, initial unemployment insurance claims decreased in Metro Denver, falling 7.4 percent. Additionally, the September level was 9.4 percent lower than the same month last year. The average number of monthly claims year-to-date (958 claims) is the lowest September since the beginning of the dataset in Claims throughout Colorado increased slightly over-the-month, rising 0.1 percent. Between September 2017 and September 2018, claims fell 2.4 percent to 1,586 total claims in Colorado. The year-to-date average monthly claims for Colorado was also lower than any previous September since the beginning of the dataset. Weekly First-Time Unemployment Insurance Claims Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Sep-18 Aug-18 Sep % Change Metro Denver , % 1,625 1,738 Colorado 1,586 1,585 1,625 1,842 1, % 3,166 3,112 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. increased again in October, following a modest improvement in September. The index now stands at (1985=100), up from in September. The Present Situation Index, based on consumers assessment of current business and labor market conditions, improved from to The Expectations Index, based on consumers short-term outlook for income, business, and labor market conditions, increased from to this month. Analysts at The Conference Board stated that consumers optimism about the short-term future increased further in October. However, consumers outlook for the labor market was somewhat mixed. The proportion expecting more jobs in the months ahead decreased from 22.1 percent to 21.9 percent, but those anticipating fewer jobs also decreased, from 11.4 percent to 10.5 percent. Colorado is included in the Mountain Region Index and the area reported a decrease in consumer confidence between September and October. The index fell from in September (revised) to in October, a decrease of 11.6 percent. The Mountain Region Index was also 7.2 percent lower over-the-year. The Present Situation Index fell 7.5 percent over-the-month to 179 in October, and the Expectations Index fell 15.9 percent to Metro Denver Economic Development Corporation November 6, 2018 Page 9

11 Consumer Confidence Index Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Oct-18 Sep-18 Oct % Change Mountain % United States % Source: The Conference Board. (p) = preliminary (r) = revised Seasonal hiring has begun, both nationally and in Colorado. FedEx announced it will be hiring 55,000 seasonal positions nationwide, including 1,500 at FedEx Ground in Denver. The company is also adding an additional 75 permanent positions in Denver. JCPenney also announced its seasonal hiring, with plans to fill 39,000 posts across the country, including 700 in Colorado. In addition, Amazon said it would need to hire more than 2,000 workers in Colorado to help fill and deliver holiday orders at the online retail giant s fulfillment centers in Aurora and Thornton and at delivery facilities around the metro area. National retail sales increased between July and August, with total retail sales rising 3.3 percent above the month-ago level. Twelve of the 13 sectors reported increases over-the-month, with the largest gains in sporting goods, hobby, book, and music stores (+17.6 percent) and electronic and appliance stores (+6.1 percent). Building materials, garden equipment, and supplies stores reported the only decrease between July and August, falling 0.7 percent. Between August 2017 and August 2018, 12 of the 13 retail sectors reported growth. Gasoline stations (+19 percent), food service and drinking places (+10.8 percent), and non-store retailers (+8.8 percent) reported the largest growth over-the-year. During the same period, sporting goods, hobby, book, and music stores, the only sector to report a contraction, decreased 6.6 percent. National Retail Sales ($millions) Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth Annual Growth Aug. 2018(p) Jul Aug % Change Total Retail Sales 525, , ,618 3,954,289 3,744, % 3.6% -1.1% Motor Vehicles 110, , , , , % 8.2% -13.7% Furniture and Home 10,624 10,113 10,086 78,838 73, % 4.2% -11.2% Electronics & Appliance 8,175 7,702 7,824 61,252 59, % 0.9% -1.2% Building Materials 34,247 34,501 32, , , % 7.2% -5.9% Food and Beverage 63,027 62,797 60, , , % 2.0% 3.9% Health and Personal Care 29,926 28,497 28, , , % 2.9% 4.0% Gasoline Stations 47,429 46,591 39, , , % -1.0% 11.5% Clothing & Accessories 23,632 22,193 22, , , % 2.2% -2.5% Sporting Goods 7,213 6,133 7,726 50,692 52, % 1.9% -1.2% General Merchandise 60,624 57,907 57, , , % 1.5% 2.8% Miscellaneous Store 11,439 10,680 11,413 85,775 84, % 2.2% -4.9% Non-Store Retailers 54,977 53,461 50, , , % 6.1% 3.4% Food Service & Drinking 63,382 62,319 57, , , % 3.7% 2.6% Price Changes Source: U.S. Census Bureau. The U.S. Consumer Price Index (CPI) rose 2.3 percent between September 2017 and September Seven of the eight components increased during the period, with the greatest increase in transportation, which rose +3.7 percent. Housing (+2.7 percent) and other goods and services (+2.2 percent) followed with the second and third-largest increases, respectively. Apparel reported the only decrease over-the-year, falling 0.6 percent. Metro Denver Economic Development Corporation November 6, 2018 Page 10

12 Data is now released bi-monthly for the Denver-Aurora-Lakewood area. Between July and September, the index rose 0.8 percent to Five of the eight components rose over the two-month period, with apparel and education and health services reporting the largest increases, rising 10.8 percent and 2.1 percent, respectively. Other goods and services (-0.3 percent) and recreation (-0.1 percent) reported the only decreases during the period. Housing remained flat, reporting a level of According to the AAA Daily Fuel Gauge Report, the national average fuel price for October decreased 2.9 percent from September to $2.79 per gallon. The October average fuel price was 12.5 percent above the prior year s level ($2.48 per gallon). Metro Denver reported a 2.7 percent decrease in the average fuel price between September and October. The average fuel price of $2.82 per gallon for October in Metro Denver was $0.03 higher than the national average. The area reported average fuel prices that were 15.5 percent higher for October 2018 than the previous year s level. Stock Market The Dow Jones industrial average was dragged down by a weak housing report and a beleaguered technology sector. The tech-heavy Nasdaq fell from its September 2018 high. Some Wall Street experts said the steep sell-off in the last hour of trading was a scramble by sellers who are looking beyond this year and toward more modest earnings in 2019 about 5 percent growth instead of 20 percent. A weakening Chinese economy has combined with an upcoming U.S. election to cast an air of uncertainty over markets. Between September and October, all four stock market indices reported decreases. The NASDAQ reported the largest decrease, falling 9.7 percent, followed by the Bloomberg Colorado Index (-7.6 percent), the S&P 500 (-6.9 percent) and the DJIA (-5.1 percent). Between September 2017 and September 2018, three of the four indices posted increases. The NASDAQ reported the largest increase, rising 8.6 percent, followed by the DJIA (+7.4 percent), and the S&P 500 (+5.3 percent). The Bloomberg Colorado index reported the only decrease, falling 2.1 percent over-the-year. Stock Market Indexes Month of Month of Month of YTD Return YTD Return Ann Avg Return Ann Avg Return Oct-18 Sep-18 Oct Bloomberg Colorado % -2.2% 30.6% -51.0% S&P 500 2, , , % 15.0% 29.6% -38.5% NASDAQ 7, , , % 25.0% 38.3% -40.5% DJIA (Dow Jones) 25, , , % 18.3% 26.5% -33.8% Travel & Tourism Sources: Bloomberg.com; Yahoo! Finance. Nonprofit arts and culture activity in the seven-country metro area reached a record $1.9 billion in 2017, supporting increased employment, capital spending, and tourism, according to a new study from the Colorado Business Committee for the Arts. That is an 8 percent increase since 2015, the last year the study was conducted. The study also found that arts and culture supported 11,820 jobs in 2017, a 10 percent increase over Outdoor recreation s economic impact in Colorado has more than doubled in just the past four years, adding $62.5 billion to the state s economy and supporting 511,000 direct and indirect jobs, according to a new report conducted for Colorado Parks and Wildlife. In that time, the outdoor recreation sector grew from having a $34.5 billion impact and employment in the sector increased 63 percent, from 313,000 to 511,000, comprising 19 percent of all jobs in Colorado. About 90 percent of adult Coloradans took part last year in at least one of the 30 outdoor activities listed in the report. Condé Nast Traveler magazine ranked Denver No. 12 on its Best Big City list for the U.S. The city was noted for the nearly 900-acre Red Rocks Park, the city-to-slope Winter Park Express Ski Train, and the restaurant scene. The traveler magazine also made a list of the best hotels in Colorado, including nine hotels in the Metro Denver area. The Four Metro Denver Economic Development Corporation November 6, 2018 Page 11

13 Seasons hotel in Denver ranked No. 2, followed by the Renaissance Denver Downtown City Center Hotel at No. 5, Denver-based Hotel Teatro at No. 6, and the St. Julien Hotel and Spa in Boulder ranked No. 8. The average hotel occupancy rate in Metro Denver fell 2.3 percentage points between August and September to 82.9 percent occupied. Between September 2018 and the previous year, occupancy fell 1 percentage point. The average room rate increased 0.3 percent over-the-year, rising by $0.43 per night. Metro Denver Hotel Statistics Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Sep-18 Aug-18 Sep % Change Percent of Hotel Rooms Occupied 82.9% 85.2% 83.9% 76.7% 77.9% -1.2% 70.8% 65.0% Average Hotel Room Rate $ $ $ $ $ % $ $ Source: Rocky Mountain Lodging Report. Denver International Airport (DEN) set a monthly passenger traffic record when more than 5.9 million travelers passed through the airport in August. DEN says 246,170 additional passengers traveled through the airport during the month, making it the second-busiest month ever for the airport. Though this was a 2.4 percent decrease from July, the August 2018 level was 4.3 percent higher than the August 2017 level. Denver International Airport Passengers Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual Aug-18 Jul-18 Aug % Change Number of Airline Passengers 5,973,496 6,119,150 5,727,326 42,915,431 41,135, % 52,556,359 51,245,432 Residential Real Estate Source: Denver International Airport, Traffic Statistics. Hines and Trez Capital acquired a 765-acre property in Thornton, with plans to develop a single-family home and mixed-use community. Hines, the Houston-based international real estate firm, will oversee development of the project including the community master plan and infrastructure, neighborhoods, and more. Known as Parterre, the master-planned community will be located between Holly and Quebec streets. Construction is expected to begin by late Denver-based Zocalo Community Development in planning a new apartment development at 3433 and 3463 Walnut St. in Denver. The project is slated to have 381 apartments in total, 40 percent of which will be studios. There also will be about 10,000 square feet of commercial space on the first floor. Kansas City-based Alsation Land Co. in planning a 238-unit apartment complex for 600 Park Avenue West in Five Points. The development will consist of 45 studios, 147 one-bedroom units, and 46 two-bedroom units, and is expected to break ground the first quarter of Construction is underway for the Fall River Apartments in Longmont, a senior affordable housing project. The 60-unit complex will be for residents 55 and older who make 50 percent or less than the median area income. With expected monthly rents between $600 and $1,067 for one and two-bedroom units of about 675 and 930 square feet, respectively, Fall River will begin pre-leasing in spring Core Spaces, a Chicago-based collegiate student housing builder, plans to redevelop th Street in Boulder. The current tenant of the location is Liquor Mart, which has a long-term lease for the property. The intention is to start from the ground up, with plans for a mixed-use development. Core Spaces, founded in 2010, has residential developments across the country. Metro Denver Economic Development Corporation November 6, 2018 Page 12

14 Home Resales Metro Denver Home sales throughout Metro Denver fell in September, forcing sellers to cut their asking prices and pushed up inventory of properties available for sale at an unprecedented rate. Metro Denver s housing market has shown signs of cooling since early summer. Normally, the inventory of homes for sale dips slightly in September as sellers remove inventory from the market. But buyers, after years of coping with a lack of affordability, are now pulling back. The luxury end of the market, which was running hot this summer, was especially hard hit. Sales of homes worth $1 million or more fell 44.4 percent between August and September. Metro Denver existing home sales decreased 5.7 percent between August and September. Over-the-year, home sales decreased 14.6 percent, a sign that the market is continuing to cool. Unsold homes on the market were 7 percent higher in September than August and were 16.1 percent higher than September Compared with last year, there were 1,221 additional homes on the market. The average sales price for single-family homes rose 6.8 percent over-the-year to $491,674, while the average sales price of condominiums ($299,203) increased 7.2 percent during the same period. Previously-Owned Home Sales Activity Month of Month of Month of YTD Total YTD Total YTD Total Ann Total Ann Total Sep-18 Aug-18 Sep % Change Home Sales (Closed) 4,180 4,433 4,894 41,164 45, % 53,631 47,837 Unsold Homes on Market 8,807 8,228 7,586 8,807 7, % 8,575 24,365 Average Sales Price-Single Family $491,674 $500,828 $460,162 $508,653 $465, % $335,871 $270,261 Average Sales Price-Condo $299,203 $300,471 $279,066 $300,045 $274, % $198,441 $171,350 Median Sales Price-Single Family $405,000 $411,000 $395,000 $278,900 $219,900 Median Sales Price-Condo $260,000 $259,900 $250,000 $160,000 $138,000 National Source: Colorado Comps LLC; Denver Metro Association of Realtors; REcolorado. Total existing-home sales declined in September after a month of stagnation in August, according to the National Association of Realtors (NAR). All four major regions reported no gain in sales activity last month. The report suggests rising interest rates have led to a decline in sales, preventing consumers from making quick decisions on home purchases. Total housing inventory at the end of September decreased from 1.91 million in August to 1.88 million existing homes available for sale and is up from 1.86 million a year ago. Unsold inventory is at a 4.4-month supply at the current sales pace, up from 4.3 last month and 4.2 months a year ago. Properties typically stayed on the market for 32 days in September, up from 29 days in August but down from 34 days a year ago. Forty-seven percent of homes sold in September were on the market for less than a month. Metro Denver Economic Development Corporation November 6, 2018 Page 13

15 Home Prices NAR data shows that the median existing-home price for all housing types in September was $258,100, up 4.2 percent from September 2017 ($247,600). September s price increase marks the 79th straight month of year-overyears gains. The median price in the Northeast was $286,200, which was up 4.1 percent over-the-year. In the Midwest, the median price was $200,200, up 1.9 percent from last year. The median home price in the South was up 3 percent to $223,900, while the median price in the West was $388,500, up 4.1 percent from September A separate NAR report revealed that the median price in the Boulder MSA ($604,200) during the third quarter of 2018 was 4.3 percent lower over-the-quarter but was 7.2 percent higher over-the-year. The Denver-Aurora MSA ($450,100) was 2.8 percent lower than the second quarter but was 7.7 percent above the year-ago level. The national median sales price during the third quarter of 2018 decreased 0.4 percent over-the-quarter to $266,900 but was 4.8 percent higher than the previous year s level. Of the 178 MSAs included in the third quarter 2018 report, the Boulder MSA reported the seventh-highest median price, while the Denver-Aurora MSA median price was the 12 th -highest. Median Sales Price of Existing Single-Family Homes ($000s) Quarter 3 Quarter 2 Quarter 3 YTD Avg YTD Avg YTD Avg Median Median 2018 (p) 2018 (r) % Change Boulder MSA $604.2 $631.1 $563.5 $607.9 $ % $371.8 $359.6 Denver-Aurora MSA $450.1 $462.9 $418.1 $451.5 $ % $280.6 $219.3 United States $266.9 $268.0 $254.7 $260.1 $ % $197.4 $196.6 According to the S&P/Case-Shiller home price index, Denver housing prices depreciated slightly in August for the first time in 32 months. The Denver index decreased 0.02 percent over-themonth to However, the index rose 7.7 percent over-the-year. Las Vegas (+13.9 percent), San Francisco (+10.6 percent), and Seattle (+9.6 percent) recorded the largest increases over-the-year. Denver (+7.7 percent) ranked fourth. Chicago (+2.9 percent), Washington, D.C. (+2.8 percent), and New York (+2.8 percent) recorded the smallest increases over-the-year. Source: National Association of REALTORS. (p) =preliminary (r) =revised The national home price index increased overthe-month by 0.2 percent and rose 5.8 percent over-the-year, showing that price gains are beginning to moderate around the nation. Metro Denver Economic Development Corporation November 6, 2018 Page 14

16 Foreclosures Foreclosures in Metro Denver fell 12.9 percent or by 31 fewer homes foreclosed between September 2017 and September Five of the seven counties in Metro Denver reported decreases in the number of foreclosures overthe-year, with Boulder County reporting the largest decrease of 54.5 percent. Arapahoe County fell 21.8 percent, followed by the City and County of Denver (-12.2 percent) and Adams County (-10.8 percent). Douglas and Jefferson Counties reported the only increases in foreclosures over-the-year, rising 30 percent and 12.1 percent, respectively. Real Estate Foreclosures Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total Sep-18 Aug-18 Sep % Change Total Metro Denver* ,046 2, % 7,520 24,727 Adams County % 1,636 5,629 Arapahoe County % 1,700 5,860 Boulder County % Broomfield County % Denver County % 1,616 6,145 Douglas County % 769 2,180 Jefferson County % 1,303 3,669 *The total number of election and demand setups (initial filings) received by county public trustees. Filings may be subsequently cured or withdrawn. Sources: County public trustees Between August and September, five of the seven counties reported decreases in foreclosure filings. Broomfield County fell from five foreclosures in August to zero in September. The City and County of Denver fell 25 percent overthe-month, followed by Arapahoe County (-20.4 percent) and Douglas County (-13.3 percent). Boulder County and Adams County reported the only increases in foreclosures over-the-month, rising 42.9 percent and 3.6 percent, respectively. New Home Sales Sales of new single-family homes in September were at a seasonally adjusted annual rate of 553,000, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. This was 5.5 percent below the revised August rate of 585,000 and 13.2 percent below the September 2017 estimate of 637,000. Between September 2017 and 2018, three of the four regions reported decreases in home sales. The Midwest reported the only increase, rising 4.1 percent over-the-year. The Northeast reported the largest decrease, falling 51.3 percent to 19,000 homes sold. The West (-15.8 percent) and the South (-11.4 percent) also decreased, falling to 139,000 homes and 318,000 homes sold, respectively. Metro Denver Economic Development Corporation November 6, 2018 Page 15

17 New Home Construction National Builder confidence for newly built single-family homes rose one point to 68 in October on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Builders are motivated by solid housing demand, fueled by a growing economy and a generational low for unemployment. Builders are also relieved that lumber prices have declined for three straight months from elevated levels earlier this summer, but they need to manage supply-side costs to keep home prices affordable. According to the Census Bureau, the seasonally adjusted annual number of nationwide residential building permits increased 1.7 percent in September (1.3 million permits) from August and increased 1.3 percent above September The single-family attached market rose 14.3 percent between August and September, followed by the single-family detached market, which rose 3.3 percent. The multifamily market reported the only decrease, falling 2.8 percent overthe-month. Between September 2017 and September 2018, single-family attached units rose to 40,000 permits, an increase of 11.1 percent. Single-family detached units rose to 854,000 permits, an increase of 2.8 percent. Multi-family units fell 2.8 percent over-the-year to 376,000 units permitted. Two of the four regions reported increases in permits over-the-year, the South (+8.5 percent) and the West (+2.1 percent). The Northeast (-20.8 percent) and the Midwest (-9.5 percent) reported decreases during the period, falling to 95,000 permits and 171,000 permits, respectively. Metro Denver Residential building permits for the Metro Denver area increased 83.9 percent in September compared with the prior year. The over-the-year increase in total units permitted was attributed to a 272 percent increase in multi-family permits and a 200 percent increase in single-family attached permits. Single-family detached permits decreased 7.3 percent between September 2017 and September Metro Denver recorded an increase in permits over-themonth, rising 54.6 percent. Multifamily units reported the only increase during the period, rising percent, while single-family detached (-16.2 percent) and single-family attached permits (-3.2 percent) reported decreases between August and September. Residential Building Permits Month of Month of Month of YTD Total YTD Total YTD Total Total Total Sep-18 Aug-18 Sep % Change Single-Family Detached Units 864 1, ,491 8, % 7,396 4,037 Single-Family Attached Units % Multi-Family Units 1, ,834 10, % 9,145 5,296 Total Units 2,553 1,651 1,388 17,588 18, % 16,940 9,557 Apartment Rental Market Source: U.S. Census Bureau. The Denver area s average rents inched down 1.3 percent to $1,465 a month during the third quarter compared to the previous quarter, according to the Apartment Association of Metro Denver. Even with the quarter-to-quarter dip, rents Metro Denver Economic Development Corporation November 6, 2018 Page 16

18 were still up 3.8 percent over the year. On the construction side, 2,570 apartments were built during the third quarter, 25 percent fewer than were added in the previous quarter and 40 percent fewer than in the same quarter of The apartment vacancy rate throughout Metro Denver decreased in the third quarter of 2018, falling 0.5 percentage points to 5.5 percent from the second quarter of However, the average vacancy rate increased over-the-year by 0.1 percentage point. Vacancy rates ranged from 4 percent in the Boulder/Broomfield and Jefferson County submarkets to 7.1 percent in the Denver submarket. Vacancy rates rose over-the-year in three of the six submarkets, with the largest increase reported by Arapahoe County (+1 percentage point). Adams, Douglas, and Jefferson Counties reported decreases, falling 0.8 percentage points, 0.6 percentage points, and 0.4 percentage points, respectively. The average monthly rental rate of apartments in Metro Denver decreased over-the-quarter in five of the six submarkets in the third quarter of The average rental rate ranged from $1,387 in Adams County to $1,643 in the Boulder/Broomfield County submarket. Apartment Statistics Quarter 3 Quarter 2 Quarter 3 YTD Average YTD Average YTD Average Annual Average Annual Average % Change Apartment Vacancy Rate 5.5% 6.0% 5.4% 5.9% 5.4% 4.6% 6.6% Average Monthly Rental Rate (all units) $1,465 $1,484 $1,412 $1,456 $1, % $1,026 $882 Source: Denver Metro Apartment Vacancy and Rent Survey. Commercial Real Estate Greenwich, Connecticut-based J.A. Green Development Corporation is planning a 1 million-square-foot JAG Logistics Center at Denver International Airport (DEN). The company specializes in airport-adjacent industrial developments. The goal of this project is to combine third-party logistics and freight-forward uses. The building design is intended to move freight more efficiently and includes a mezzanine level with ample office space so as not to interfere with product movement. The development will be followed by a second phase on 172 acres the company has in escrow. First Aurora Commerce Center, a new industrial park with five buildings, is being developed by First Industrial Realty Trust, Inc. The first phase of construction is a $38.3 million, 555,840-square-foot logistics center, which is expected to be completed in summer The remaining four buildings will range in size from 130,000 square feet to 587,000 square feet. The project is located about 11 miles away from Denver International Airport, near the intersection of E- 470 and I-70. A five-story, 100,000-square-foot medical pavilion will soon be developed at Saint Joseph's Hospital in Denver's Uptown neighborhood. It will include medical services, retail, restaurants, wellness, fitness, and entertainment options. The project is expected to be completed in the second quarter of 2020 and will be located at the intersection of Park Avenue, Ogden Street, and 18th Avenue. Crescent Real Estate is developing the property at 5505 Central Avenue in Boulder, with plans to add a new two-story 56,000-square-foot office building. Construction on the new building, which is expected to be complete next August, is also set to include improvements of three surrounding offices. Denver-based developer Koelbel and Company has broken ground on an 11-acre parcel in the town of Parker called Pine Bluffs Plaza, located at the northeast corner of Parker Road and Hess Road. The site will be transformed into a mix of food, fitness, and service providers in two phases and will be anchored by a free-standing emergency room and medical office. Phase one includes five buildings and has a total of 51,825 rentable square feet including a 10,800- square-foot free standing emergency room and a 13,500-square-foot building dedicated to medical office tenants. Denver-based LCP Development is slated to redevelop the 6.7-acre site at the northeast corner of 20th Avenue and Depew Street. The company is rebranding the site as Edgewater Public Market and expects to include a mix of retailers, along with about 20 food and beverage purveyors. The site will also include a plaza, featuring a lawn and seating, which Metro Denver Economic Development Corporation November 6, 2018 Page 17

19 will be set up between the existing retail strip and the new structure. LCP hopes to finish the project by July or August Local furniture tycoon Jake Jabs donated $12 million to CU Denver, half of which will go to constructing a new event center and the remaining half will be invested into programs, research, and scholarships at the entrepreneurship center. The event center will have over 300 seats, two large classrooms, a catering kitchen, business incubator space, and a third-story auditorium. Adolfson & Peterson Construction recently broke ground on the Broomfield Community Center Reconstruction project, which was designed by Davis Partnership Architects. What began in 2015 as a master plan for a multiphase expansion and renovation of Broomfield s aging municipal community center has evolved into a full replacement on the same site of the existing facility. The new 93,124-square-foot community center will offer nearly three times the square footage as the original facility, greatly expanding all aspects of its recreation and senior programs and services. Office Market According to Marketbeat by Cushman & Wakefield, Denver s office market continued to trend positively during the third quarter 2018, with robust net absorption, just shy of +807,000 square feet. Due to a very limited supply pipeline, demand by developers for new development sites will continue to be robust. Costar reported that the national office market ended the third quarter of 2018 with a vacancy rate of 9.1 percent. The vacancy rate was unchanged from the previous quarter, with net absorption totaling positive 20.8 million square feet in the third quarter. Rental rates ended the third quarter at $25.49 per square foot, an increase over the previous quarter. Nationally, there was 161 million square feet of office space under construction at the end of the third quarter. The Metro Denver office market reported positive trends for the third quarter of According to CoStar Realty data, the direct vacancy rate fell 0.4 percentage points over-the-year to 9.3 percent vacancy. The average lease rate rose 1.8 percent between the third quarters of 2017 and 2018, gaining $0.46 per square foot during the period. Office Market Statistics Quarter 3 Quarter 2 Quarter 3 Quarter 3 Quarter 3 Quarter Number of Buildings 6,319 6,316 6,282 6,244 6,202 6,178 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 9.3% 10.0% 9.7% 9.1% 9.6% 10.2% Vacancy Rate (with sublet) 10.2% 10.7% 10.5% 9.8% 10.2% 10.6% Avg. Lease Rate (direct, per sq. foot, full service) $26.58 $26.62 $26.12 $25.42 $24.31 $22.98 New Construction Completed (year-to-date) 2.95 MSF, 2.88 MSF, 2.42 MSF, 0.98 MSF, 1.34 MSF, MSF, Currently Under Construction 25 Bldgs 4.36 MSF, 45 Bldgs 21 Bldgs 3.72 MSF, 37 Bldgs 26 Bldgs 5.49 MSF, 51 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 23 Bldgs 4.84 MSF, 36 Bldgs 8 Bldgs 2.83 MSF, 29 Bldgs 23 Bldgs 2.85 MSF, 25 Bldgs Office construction in Metro Denver was robust during the third quarter of There was 2.95 million square feet of space completed across 25 buildings by the end of the third quarter Two of the largest office buildings completed so far in 2018 included the 672,000-square-foot 1144 Fifteenth Class A high rise-office building and the 324,098-square-foot Village Center Station II office building in Greenwood Village. There was 4.36 million square feet of space under construction at the end of the third quarter of 2018, a 20.6 percent decrease in space under construction compared with the same time last year. Of this space, the largest project in terms of square footage was the Block 162 tower, which will be adding 566,050 square feet of office space to the Denver market. The next largest project currently under construction is Metro Denver Economic Development Corporation November 6, 2018 Page 18

20 the 16 Chestnut Building, which is the future location of DaVita s worldwide headquarters, adding 428,219 square feet. Eighty-two percent of the office space under construction is in the City and County of Denver. Industrial & Flex Market Nearly 6 million square feet of industrial space was under construction early in the fourth quarter of 2018, according to Costar research. More than 80 percent of the projects underway in Denver are logistics space, comprised of the warehouse and distribution industrial subtypes. The amount of speculative development has never been higher. Out of approximately 27 logistics projects currently under construction, 80 percent have at least some available space, and two-thirds are entirely available. According to Marketbeat by Cushman & Wakefield, Denver s industrial market reported that leasing activity and absorption recorded huge rebounds after a slow start to the year and should continue to trend upward with approximately 5.1 million square feet of new product expected by the end of the second quarter Construction costs continue to rise and tenant activity has slowed, but with construction activity near all-time highs, it appears investors have not been dissuaded from the market. The U.S. industrial market ended the third quarter 2018 with a vacancy rate of 4.6 percent, according to the Costar National 3Q 2018 market report. Rental rates ended the third quarter at $6.79 per square foot, an increase over the previous quarter. A total of 479 buildings delivered to the market in the quarter, totaling 70.4 million square feet. CoStar data revealed that the industrial market remains healthy through the third quarter of The third quarter direct vacancy rate was 0.1 percentage points lower than the same period last year. The average lease rate rose 4.3 percent between the third quarters of 2017 and 2018, adding $0.33 per square foot to the average lease rate. Industrial Market Statistics Quarter 3 Quarter 2 Quarter 3 Quarter 3 Quarter 3 Quarter Number of Buildings 7,064 7,049 7,025 6,983 6,957 6,945 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 4.3% 4.0% 4.4% 3.5% 2.6% 3.6% Vacancy Rate (with sublet) 4.6% 4.3% 4.8% 3.8% 2.9% 3.8% Avg. Lease Rate (direct, per square foot, NNN) $7.98 $7.97 $7.65 $7.31 $6.85 $5.76 New Construction Completed (year-to-date) 2.39 MSF, 1.34 MSF, 2.41 MSF, 2.71 MSF, 1.24 MSF, 2.13 MSF, Currently Under Construction 26 Bldgs 6.71 MSF, 33 Bldgs 11 Bldgs 6.33 MSF, 37 Bldgs 30 Bldgs 6.94 MSF, 33 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 19 Bldgs 3.82 MSF, 34 Bldgs 4 Bldgs 1.57 MSF, 8 Bldgs 19 Bldgs 1.77 MSF, 8 Bldgs There was 2.39 million square feet of industrial space completed across 26 buildings as of the end of the third quarter of 2018 as industrial construction continued at a healthy pace. Major completed projects included a 701,900-square-foot distribution center in Majestic Commercenter in Aurora and the 245,847-square-foot warehouse property at Eastpark 70 in Aurora. Adams County welcomed 66.6 percent of the completed industrial space through the third quarter of 2018, or 1.6 million square feet. There were 33 buildings with over 6.7 million square feet of space under construction during the period, including 2.4 million square feet for Amazon in Thornton. The Metro Denver flex market recorded falling vacancy rates and increasing average lease rates through the third quarter of the year. According to CoStar, the direct vacancy rate for flex space fell 0.6 percentage points to 6.2 percent between the third quarters of 2017 and The average lease rate rose 3.6 percent over-the-year to $12.22 per square foot. There was 350,568 square feet of new space completed as of the end of the third quarter of 2018, including 133,122 square feet of flex space in the Interpark industrial development in Broomfield. Thirteen buildings offering 1.22 million square feet of new flex space are under construction, with most of the new construction split between Adams and Arapahoe Counties. Metro Denver Economic Development Corporation November 6, 2018 Page 19

21 Flex Space Statistics Quarter 3 Quarter 2 Quarter 3 Quarter 3 Quarter 3 Quarter Number of Buildings 1,505 1,505 1,496 1,482 1,474 1,465 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 6.2% 6.8% 6.8% 6.8% 6.9% 7.7% Vacancy Rate (with sublet) 6.5% 7.2% 7.0% 6.9% 8.0% 9.0% Avg. Lease Rate (direct, per square foot, NNN) $12.22 $12.12 $11.80 $10.83 $10.33 $9.71 New Construction Completed (year-to-date) 0.35 MSF, 0.35 MSF, 0.49 MSF, 0.13 MSF, 0.33 MSF, 0.37 MSF, Currently Under Construction Retail Market 7 Bldgs 1.22 MSF, 13 Bldgs 7 Bldgs 0.32 MSF, 9 Bldgs 11 Bldgs 0.34 MSF, 7 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 4 Bldgs 0.36 MSF, 7 Bldgs 3 Bldgs 0 MSF, 0 Bldg 6 Bldgs 0.53 MSF, 6 Bldgs According to Marketbeat by Cushman & Wakefield, the retail market in Metro Denver reported that rental rates will continue to rise, driven by low vacancy, but at a more modest pace as they have surpassed record highs. Leasing activity will pick back up as new product delivers now and throughout the foreseeable future. Costar reported that the U.S. retail market did not experience much change in market conditions in the third quarter of The vacancy rate remained flat at 4.4 percent over-the-quarter, and net absorption was positive 14.8 million square feet. Quoted rental rates increased from the second quarter 2018 levels, ending at $16.89 per square foot. The Metro Denver retail market reported a flat vacancy rate and an increase in the average lease rate over-the-year through the third quarter of 2018, according to CoStar Realty data. The direct vacancy rate remained at 4.4 percent between the third quarter of 2017 and the third quarter of 2018, while the average lease rate for retail space rose 2.8 percent over-the-year, adding $0.51 per square foot during this same period. Retail Market Statistics Quarter 3 Quarter 2 Quarter 3 Quarter 3 Quarter 3 Quarter Number of Buildings 12,356 12,333 12,254 12,130 12,018 11,951 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 4.4% 4.5% 4.4% 4.5% 4.8% 5.3% Vacancy Rate (with sublet) 4.7% 4.7% 4.9% 4.7% 5.0% 5.4% Avg. Lease Rate (direct, per square foot, NNN) $18.68 $18.34 $18.17 $16.34 $15.70 $15.67 New Construction Completed (year-to-date) 0.84 MSF, 0.53 MSF, 1.20 MSF, 0.93 MSF, 0.54 MSF, 0.36 MSF, Currently Under Construction 78 Bldgs 1.57 MSF, 69 Bldgs 48 Bldgs 1.59 MSF, 66 Bldgs 74 Bldgs 1.57 MSF, 59 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 63 Bldgs 1.64 MSF, 59 Bldgs 32 Bldgs 0.99 MSF, 47 Bldgs 43 Bldgs 0.19 MSF, 16 Bldgs There were 69 buildings under construction during the third quarter of 2018, totaling 1.57 million square feet. Some of the largest projects under construction included the 330,000-square-foot Denver Premium Outlets at I-25 and 136th Avenue in Thornton and the 185,000-square-foot 9th & Colorado Retail project located on the former campus of the University of Colorado Health Sciences Center. While not yet reflected in the CoStar data, the Denver Premium Outlets celebrated their grand opening on September 27. Metro Denver reported 834,855 square feet of retail space completed as of the end of the third quarter. The largest space completed was the King Soopers in the Candelas neighborhood of Arvada, adding 124,564- square-feet of new retail, followed by the 77,344-square-foot building at the Promenade at Castle Rock. Metro Denver Economic Development Corporation November 6, 2018 Page 20

22 Monthly Economic Indicators Positive Changes Nonfarm Employment Growth % Companies Hiring (Denver Area) Unemployment Rate Initial Unemployment Insurance Claims Total National Retail Sales Mountain Region Consumer Confidence Index Monthly/Quarterly Direction Year-Over-Year Direction Year-to-Date Direction 7 of of of 18-4,000 42,300 44,700 Employment down 0.2% from Aug to Sept 25% 25% 27% Companies expecting to add workers fell 4 percentage points from 3Q 2018 to 4Q % 0.4 percentage point 2.9% Unemployment down 0.3 percentage points between Aug and Sept Employment up 2.5% from Sept 2017 to 2018 Companies expecting to add workers rose 5 percentage points from 4Q 2017 to 4Q 2018 Unemployment increased from Sept 2017 to % -9.4% -10.6% Claims decreased from Aug to Sept Claims decreased from Sept 2017 to 2018 YTD employment up 2.7% through Sept 3.3% 6.9% 5.6% National sales increased from July to Aug National sales increased from Aug 2017 to 2018 YTD average up 1 percentage point compared with 2017 Up 0.2 percentage point from 2017 YTD average YTD average claims decreased through Sept 2018 YTD sales rose through Aug % Index down 11.6% from Sept to Oct Index down from Oct 2017 to 2018 YTD average up 3.3% through Oct 2018 Hotel Occupancy Denver International Airport Passengers Bloomberg Colorado Index 82.9% -1.0 percentage point 76.7% Decreased 2.3 percentage points from Aug to Sept Occupancy decreased from Sept 2017 to % 4.3% 4.3% Passengers down from July to Aug Passengers up from Aug 2017 to 2018 YTD occupancy decreased 1.2 percentage points from last year YTD passengers increased through Aug % -0.5% Index down 7.6% from Sept to Oct Index down from Oct 2017 to 2018 YTD return down through Oct 2018 Dow Jones Industrial Average 25, % 1.1% Index down 5.1% from Sept to Oct Index up from Oct 2017 to 2018 YTD return up through Oct 2018 Home Sales (closed) Median Home Price (Denver-Aurora MSA) 4, % 41,164 Sales down 5.7% between Aug and Sept Sales down from Sept 2017 to 2018 YTD sales down 8.6% through Sept 2018 $450, % $451,500 Down 2.8% from 2Q 2018 to 3Q 2018 Price up from 3Q 2017 to 3Q 2018 YTD price 9.3% higher through 3Q 2018 Foreclosures % 2,046 Down 12.1% from Aug to Sept Down from Sept 2017 to 2018 Down 9.1% YTD through Sept 2018 Residential Building Permits (Total) 2, % 17,588 Permits increased 54.6% from Aug to Sept Permits up Sept 2017 to 2018 YTD permits down 6.6% through Sept 2018 Metro Denver Economic Development Corporation November 6, 2018 Page 21

23 5.5% 0.1 percentage point 5.9% Apartment Vacancy Rate Vacancy decreased 0.5 percentage points from 2Q 2018 to 3Q 2018 Vacancy increased from 3Q 2017 to 3Q 2018 YTD average up 0.5 percentage points from last year 10.2% -0.3 percentage points -0.3 percentage points Office Vacancy Rate (with Sublet) Vacancy rate decreased from 2Q 2018 to 3Q 2018 Vacancy rate down from 10.5% one year ago Vacancy rate down from 10.5% one year ago 4.6% -0.2 percentage points -0.2 percentage points Industrial Vacancy Rate (with Sublet) Vacancy rate increased from 2Q 2018 to 3Q Q 2018 vacancy down from 4.8% one year ago 3Q 2018 vacancy down from 4.8% one year ago 4.7% -0.2 percentage points -0.2 percentage points Retail Space Vacancy Rate (with Sublet) Vacancy rate remained flat from 2Q 2018 to 3Q Q 2018 vacancy down from 4.9% one year ago 3Q 2018 vacancy down from 4.9% one year ago Metro Denver Economic Development Corporation November 6, 2018 Page 22

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