National Economic Overview

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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 Broomfield MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties). This report presents recent data and long term trends for the seven county region, MSAs, or counties, depending on availability. The analysis includes four sections: labor force and employment, the consumer sector, residential real estate, and commercial real estate. Notable Rankings Forbes released a list of the nation s best places for business, ranking Denver in fourth, Fort Collins in fifth, Greeley in 20th, and Boulder in 23rd. The report stated that Denver s diverse economy and significant outdoor recreational options attract educated, young professionals. The net migration into the Denver area was reported as among the strongest in the nation over the last five years. The cities ahead of Denver and Fort Collins in rank order were Raleigh, N.C., Des Moines, Iowa, and Provo, Utah. According to WalletHub, a financial insights website, Denver ranked as the fourth most recovered city from the recession. Laredo, Texas ranked first overall followed by Irving, Texas, and Fayetteville, N.C. The study considered the 150 largest cities in the nation in terms of most and least recovered based on the number of new businesses, inflow of college educated workers, median household income, home price appreciation, decreases in the foreclosure rate, and many other indicators. Of the metrics considered in the ranking, Denver ranked first in employment and earnings opportunities. A NerdWallet study ranked the Denver Aurora Broomfield area as the ninth best place for science, technology, engineering, and mathematics (STEM) graduates. The study considered the income level of STEM jobs and the size of STEM industries in the 75 largest U.S. metropolitan areas. According to the company s results, Denver s annual mean wage for STEM jobs was $84,380 and 8.2 percent of all jobs in Denver were in STEM industries. The San Jose Sunnyvale Santa Clara MSA in California ranked number one, followed by the Seattle Bellevue Everett MSA in Washington. Bizwomen, a website affiliated with the Denver Business Journal, analyzed the best U.S. cities for women in business and ranked Denver fifth in the nation. The report considered the 100 largest metropolitan areas and based the ranking on 16 factors including educational attainment, female poverty rate, percentage of women in management positions, and median annual earnings. Washington, DC was ranked the best city in the nation for businesswomen. U.S. News and World Report recently ranked Children s Hospital Colorado as the sixth best children s hospital in America. Six of its specialty areas also placed in the top 10 in their respective categories: diabetes and endocrinology (fourth), neonatology (fourth), pulmonology (fifth), orthopedics (seventh), cancer (ninth), and gastroenterology/gi surgery (10th). Considering the specialty program rankings and the overall ranking, the hospital was named to the U.S. News Honor Roll, which included only nine other children s hospitals. Clinical data surveys of physicians were used to determine the rankings, and 183 pediatric centers nationwide were part of the survey. U.S. News and World Report ranked the University of Colorado Hospital (UCH) as the top hospital in Colorado. Nine of the hospital s specialties also ranked in the top 50 national programs in their respective areas. The hospital s affiliated pulmonology program at National Jewish Health was ranked second, the highest ranked program for UCH. The other nationally ranked programs at UCH were cancer (15th), nephrology (18th), gynecology (19th), diabetes and endocrinology (34th), urology (35th), neurology and neurosurgery (40th), orthopedics (45th) and gastroenterology and GI surgery (46th). Craig Hospital of Englewood was ranked seventh nationally among rehabilitation hospitals and came in third in Colorado. Other Metro Denver hospitals in the Colorado top ten consisted of: Porter Adventist Hospital of Denver (second) Medical Center of Aurora (fourth) Rose Medical Center of Denver (fourth) Metro Denver Economic Development Corporation August 5, 2014 Page 1

3 Denver Health Medical Center (sixth) Parker Adventist Hospital (seventh) Sky Ridge Medical Center (seventh) Presbyterian St. Luke s Medical Center (seventh) Exempla St. Joseph Hospital (10th) Environment Ohio, a non profit research and policy center, released a report on the energy produced by solar energy sites. Of the top 20 solar cities in the report, Denver ranked 10th. The analysis stated Denver is one of several cities to encourage the adoption of solar energy by equipping public buildings with solar power. The report also mentioned that the City and County of Denver partnered with Denver Public Schools to install solar power systems on 28 schools. According to Environment Ohio, Denver s cumulative solar PV capacity is 25 megawatts and already installed 9.4 megawatts. Clean Edge, Inc. released the 2014 Clean Tech Leadership Index report analyzing the top states for producing ecofriendly and environmentally safe technology, ranking Colorado as fourth in the nation, up one position from the previous year. The index also tracks the 50 largest metropolitan areas in the United States and Denver ranked 10th, two positions below the 2013 ranking. The index analyzed state data in three major categories: technology, policy, and capital. These three categories include data on clean energy generation, energy storage, green buildings, energy efficiency expenditures, and many other indicators. Colorado received an overall score of 66.8, while California scored a 93.7 and ranked first. Denver received an overall score of 49.7, while San Francisco scored 94.4 and ranked first among the largest metropolitan areas. The 2014 Green Building Adoption Index rated the top 10 U.S. cities with the highest percentage of green commercial space and Denver ranked seventh. The report compiled by CBRE Group, Inc. and Maastricht University stated that 49.3 percent of commercial real estate in Denver was certified as green construction. The study reported Minneapolis as the greenest city in the nation, with 77 percent of the commercial real estate green certified, and San Francisco was ranked second with 67.2 percent. The National Association of Realtors released the best markets in the nation for millennial homebuyers, ranking Denver among the top 10. The report studied the top 100 metropolitan areas that have a large millennial presence, solid local job market conditions, and strong migration patterns of young adults. The research showed that 15.7 percent of Metro Denver s population was under the age of 32 between 2010 and Company spokespersons stated that the Denver economy provides millennials with the income needed to purchase a home. Travel + Leisure magazine s World s Best Awards ranked many of Colorado s lodging facilities among the top rated on the many lists released by the company. The Four Seasons Resort and Residences in Vail ranked 57th in the world and the Sebastian Vail A Timbers Resort ranked 98th in the world on the top 100 hotels worldwide list. The Four Seasons Hotel Denver ranked 23rd among the top 50 large city hotels in the continental United States. There were seven skitown resorts in Colorado that ranked among the top resorts in the continental U.S.: Four Seasons Resort and Residences, Vail (7th), The Sebastian, Vail (15th), Viceroy Snowmass, Snowmass Village (22nd), Little Nell, Aspen (27th), Ritz Carlton, Bachelor Gulch in Avon (31st), Park Hyatt Beaver Creek Resort and Spa (37th), and the St. Regis Aspen Resort (44th). Policy Watch Local The U.S. Congress passed the Workforce Innovation and Opportunity Act, a policy designed to streamline and update the existing federal job training programs. The legislation is an amendment and reauthorization of the Workforce Investment Act of 1998, which expired in The programs will train individuals to better match them with employers needs and provide state and local workforce boards more flexibility in adapting the programs. It also Metro Denver Economic Development Corporation August 5, 2014 Page 2

4 created new prospects and expectations for disabled Americans by providing them with the skills and training necessary to succeed in competitive employment. Local Governor John Hickenlooper announced that all four oil and gas drilling initiatives would be removed from the November ballet. The two industry supported measures were initiative 121, which would have withheld state oil and gas revenue from communities banning drilling, and initiative 137, which required a fiscal impact note for all initiatives. The other two removed ballot initiatives included measures to require drilling rigs to be 2,000 feet from residential homes and adding an environmental bill of rights to the state constitution. Instead of the ballot initiatives, Gov. Hickenlooper plans to create an 18 member task force that will make recommendations to the legislature by a twothirds vote. The compromise also required that the Colorado Oil and Gas Conservation Commission drop its lawsuit against the city of Longmont over its oil and gas ordinance. The Denver Office of Economic Development (OED) launched a new retail attraction program that is designed to strengthen the city s retail sector, create jobs, and raise retail sales tax revenues. The program was funded by a $200,000 appropriation from the 2014 city budget and plans to attract small to mid sized retailers. The new funding supports the city s recruitment package, which includes business personal property tax credits, site selection assistance, and workforce development services. OED also developed a retail recruitment and marketing website that promotes the city s restaurants, entrepreneurs, and retail locations as well as a data mapping tool. National Economic Overview The U.S. Bureau of Economic Analysis (BEA) released the advanced estimate of real gross domestic product (GDP) for the second quarter of The estimate showed that GDP increased at an annual rate of 4 percent through the second quarter, up from the first quarter of 2014 revised growth rate of 2.1 percent. The advanced estimate represents incomplete source data that is subject to further revision in the coming months. The high second quarter GDP growth rate is attributed to increases in personal consumption expenditures, private inventory investment, exports, nonresidential investment, state and local government spending, and residential fixed investment. The second estimate of second quarter 2014 GDP will be released August 28. The July conference of the Federal Open Market Committee (FOMC) reported that economic activity in the second quarter rebounded due to improved labor market conditions and the unemployment rate continuing to decline. The committee stated that there is evidence that labor resources remain significantly underutilized, household spending is starting to increase, the housing market recovery is slow, and that fiscal policy is restraining economic growth but the restraint is beginning to reduce. The report also stated that the committee expects economic activity to expand at a moderate pace with labor market indicators and inflation moving towards the long term levels consistent with the Federal Reserve s dual mandate. The FOMC did not revise current monetary policy, but will continue to monitor and assess economic indicators for further policy adjustments. The next committee meeting will be held on September 17th. Economic Indexes & Notable Data Releases National & International The U.S. trade deficit fell to $44.4 billion in May, down 5.5 percent from the April deficit of $47.0 billion (revised). Imports decreased to $239.8 billion, falling $0.7 billion between April and May, and exports rose $2.0 billion to $195.5 billion. The over the month decline in imports is attributed to decreases in industrial supplies and materials ($1.7 billion), other goods ($0.7 billion), consumer goods ($0.5 billion), and foods, feeds, and beverages ($0.2 billion). The slight growth in exports between April and May reflected increases in automotive vehicles, parts, and engines ($0.8 billion), other goods ($0.5 billion), consumer goods ($0.4 billion), industrial supplies and materials ($0.2 billion), and foods, feeds, and beverages ($0.1 billion). Metro Denver Economic Development Corporation August 5, 2014 Page 3

5 The Conference Board Leading Economic Index for the U.S. increased through June to 102.2, rising 0.3 percent between May and June. The June increase adds to the six months of growth in the index, signaling an expanding economy and potential for accelerated expansion through the end of the year. Economists at the Conference Board reported that favorable financial conditions, positive labor market trends, and growth in new orders for manufacturing offset the weak housing market during the first half of the year. The Institute for Supply Management s Purchasing Managers Index fell 0.1 percentage points to 55.3 percent in June, compared with the May level of 55.4 percent. The June index level marked the 13th consecutive month of expansion, as measured by a value greater than 50. Of the 18 manufacturing industries tracked in the index, 15 industries reported growth in manufacturing. The Imports Index reported the largest increase over the month, rising 2.5 percentage points to 54.5 percent. The New Orders Index also rose between May and June, increasing 2 percentage points to 56.9 percent. The Institute for Supply Management s Non Manufacturing Index decreased 0.3 percentage points in June to 56 percent, compared with the May level of 56.3 percent. The index tracks 18 non manufacturing industries and 14 industries reported growth between May and June. The New Exports Orders Index rose 2 percentage points over themonth to 53 percent, reporting the third month of growth. The Employment Index also increased 2 percentage points during the period, recording the fourth month of growth. Local The Leeds Business Confidence Index reported positive expectations for the third quarter of 2014, posting a slight increase from 61 to 61.2 over the quarter. The increase in the index marks the 11th consecutive quarter of positive expectations. Survey respondents reported a one percentage point increase in capital expenditures and a 0.8 percentage point decline in the state economic outlook. The index reported that the state economic outlook maintained higher positive expectations than the national economic outlook, a 37 quarter trend. The Mountain States Employers Council released the annual Colorado Compensation Survey reporting that Colorado employers intend to increase workers pay by an average 2.8 percent in The survey included 444 Colorado employers, representing 38,884 employees. Employers in Metro Denver also reported projected wage increases of 2.8 percent in 2015, the same rate that was expected for this year. The 2.8 percent increase is the highest level since 2008 when the projected wage increase was 3.3 percent. In Metro Denver, the construction sector reported expected wage increases of 2.1 percent while the nonprofit sector reported a 3.3 percent pay raise. The U.S. Department of Education (DOE) released a list of Colorado colleges that are reporting large increases to tuition, rising above the national average. According to the DOE, national tuition cost rose 13 percent for public fouryear universities between the and school years. Western State Colorado University reported a 35 percent increase during the same period, the largest increase in the state. Metropolitan State University, Colorado State University Pueblo, and Adams State University all reported tuition increases of 30 percent. According to the Colorado Tourism Office, the state recorded 64.6 million visitors who spent $17.3 billion throughout the state in 2013, both measures marking new state records. Colorado launched a national Come to Life marketing campaign to boost tourism and the campaign generated $344 dollars in travel spending for every $1 invested in the campaign. Visit Denver also announced that Metro Denver set tourism records as well, attracting over 14 million visitors who spent more than $4 billion during According to IHS Inc. and Paycheck Inc., the Rocky Mountain states led the nation in small business job growth in June for the fourth month straight. The region reported job growth of 1.77 percent in June compared with the previous year s level. The report stated that the June small business index reached , meaning the current employment in the region is percent higher than the pre recession base year of Metro Denver Economic Development Corporation August 5, 2014 Page 4

6 Labor Force and Employment Employment in Metro Denver increased 2.9 percent between June 2013 and 2014, creating an additional 42,200 jobs during the period. The Denver Aurora MSA reported an increase of 2.7 percent, creating 35,900 additional jobs, during the same period. Compared with last June, employment in the Boulder MSA rose 3.7 percent, representing 6,300 jobs. The education and health services supersector reported the largest percent increase over the year in employment, rising 4.8 percent and adding 8,600 jobs. The professional and business services supersector created 10,100 jobs and increased employment by 3.8 percent during the same period. The leisure and hospitality supersector reported strong employment growth as well, rising 4.5 percent and adding 7,500 jobs between June 2013 and The information supersector reported a loss of 1,700 jobs over the year, a decline of 3.2 percent. Colorado employment rose 2.8 percent in June compared with the previous year s level, adding 66,700 new jobs over the same period. National employment levels increased 1.9 percent over the year, with the addition of nearly 2.6 million jobs. Nonfarm Wage & Salary Employment (000s, not seasonally adjusted) Month of Month of Month of Year to Date Average Year to Date Average Year to Date Average Annual Growth Rate Annual Growth Rate Jun 14(p) May 14 Jun % 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, , , , , % 4.5% 1.2% United States 139, , , , , % 4.3% 1.1% *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 Aviation United Airlines announced Denver will reclaim 175 jobs that were previously outsourced to SkyWest Airlines. The company decided to outsource 600 positions and bring 400 positions back to the company s airline hubs including Denver, Honolulu, Phoenix, and Dulles in northern Virginia. The other 600 positions will be filled by contractors. The available positions include ticket and gate agents as well as baggage handlers for mostly United Express flights. Metro Denver Economic Development Corporation August 5, 2014 Page 5

7 Bioscience Amgen Inc., a biotechnology drug manufacturer, announced plans to reduce employment by 2,400 to 2,900 workers nationwide and close its two facilities in Boulder County. In January, Amgen reduced Colorado staffing levels by 200 employees, leaving 430 workers in the Boulder County facilities. With Amgen being the largest employer for private biotech jobs, it is unclear if the Boulder County workers will be offered employment elsewhere. The company s workforce reduction and facility closures will be completed by the end of the Cleantech Colorado will be the new U.S. headquarters for Future Earth, an international research effort to address global climate change issues, and is one of five international locations. The Future Earth project is a 10 year research initiative that will address environmental change solutions and actions. The project will be part of the new Center for Global Environment and reside within the new Sustainability, Energy and Environment Complex at CU Boulder. The center will be managed by CU Boulder and CSU. The worldwide project is expected to include nearly 60,000 scientists and students. Lighthouse Solar Inc. announced plans to stop providing installation services of solar energy systems and released 25 employees. The company is dropping its employment levels from 45 to 15 workers. Scott Franklin, the company s president, stated the company will direct focus to the product side of the solar energy business and offer project management services while contracting out installation. Fossil Fuels Whiting Petroleum Corp. and Kodiak Oil & Gas, two Denver based oil companies, plan to merge and create the largest crude oil producer in the Bakken shale of the northern Great Plains. Whiting Petroleum will acquire Kodiak Oil & Gas for over $6 billion in a stock and debt deal. Whiting Petroleum CEO James Volker stated that the combined company would save nearly $1 billion over the next five years. The completed merger is expected in the fourth quarter of this year. Halliburton Co. reported 150 available positions, including entry level jobs, throughout the state. The company launched an advertising campaign in order to attract the most qualified individuals when many companies are competing for employees in the oil and gas industry. Company spokespersons stated that there is a great deal of competition for the best employees due to a shortage of experienced workers since the boom in industry. IT Software MDA Information Systems, a remote sensing and GIS technology company headquartered in Maryland, announced plans to expand their Longmont branch. The company selected a 10,754 square foot building at 1951 South Fordham Street, which is double the size of the current location. MDA information Systems expects to create an additional 23 positions over the next two years. Other Business and Employment Headlines The first U.S. patent office west of the Mississippi opened in Denver on June 30. The Denver location is the second satellite location for the patent office and is the first of three to be located in the western U.S. The office will house 20 patent judges to handle appeals and add 120 jobs in the first year of operation. The new location is expected to generate an economic impact of $440 million in the first five years. Ardent Mills is relocating its company headquarters to Denver, specifically to four floors at 1875 Lawrence Street in Downtown Denver. One floor will be dedicated entirely to their Research, Quality and Technical Quality Center and baking laboratory. The company expects to employ roughly 200 people at the new location. Ardent Mills is a new company, combining milling operations of ConAgra and Horizon Milling LLC, and expects to have annual revenues near $4 billion. Metro Denver Economic Development Corporation August 5, 2014 Page 6

8 Crocs, Inc. announced plans to downsize the company in order to better meet the needs of customers and become more efficient. The company will open a global commercial center in Boston by the end of the year but maintain a product creation and global services center in Niwot in Boulder County. The Boulder County facility currently employs 450 individuals but expects to release 70 positions through the rest of the year. Spokespersons for the company stated that the layoffs will save the company $4 million dollars in 2014 and $10 million in ARC Abatement Inc. leased a 7,526 square foot facility in Broomfield that will serve all of Colorado, southern Wyoming, and western Nebraska. The company provides environmental assessment and environmental remediation services for commercial, industrial, educational, and government facilities. The Broomfield office initially plans to employ 10 workers and subcontract the testing in Colorado, but expects to increase employment by 50 workers over the next couple of years. Employment Outlook The Manpower Employment Outlook Survey expects third quarter hiring in the Denver Aurora Broomfield MSA to grow at a brisk pace. The percentage of companies hiring increased 6 percentage points between the second and third quarter, with 26 percent of companies expanding their employment levels. This was the highest percent of companies planning to hire since the fourth quarter of The percentage of companies planning to decrease employment levels rose over thequarter, increasing 3 percentage points to 8 percent. The majority of companies intend to maintain staff levels through the third quarter of the year, though the level fell 8 percentage points over the quarter to 64 percent. The survey reported that sectors with the best job outlooks are construction, goods manufacturing, and information, while financial activities plans to reduce staffing levels. Employment Outlook Survey Quarter 3 Quarter 2 Quarter 3 YTD YTD Ann Avg Denver Aurora Broomfield MSA Percent of Companies Hiring 26% 20% 23% 21% 22% 11% Percent of Companies Laying Off 8% 5% 5% 5% 6% 12% Percent of Companies No Change 64% 72% 70% 71% 68% 74% Percent of Companies Unsure 2% 3% 2% 2% 3% 3% United States Percent of Companies Hiring 22% 19% 22% 19% 19% 15% Percent of Companies Laying Off 4% 4% 6% 5% 6% 14% Percent of Companies No Change 71% 73% 70% 72% 72% 68% Percent of Companies Unsure 3% 4% 2% 3% 3% 5% Source: Manpower Inc. Hiring expectations in the U.S. increased slightly through the third quarter of The percentage of employers planning to increase employment levels rose 3 percentage points between the second and third quarter surveys, with 22 percent planning to hire more employees. Companies planning to decrease employment levels was unchanged from the prior quarter but was 2 percentage points lower than the previous year. The percentage of companies planning to maintain staffing levels (71 percent) fell 2 percentage points from the previous quarter but rose 1 percent from the prior year. The survey stated that hiring expectations nationwide are strongest in the mining, wholesale and retail trade, and leisure and hospitality sectors. Unemployment The unemployment rate throughout the seven counties in the Metro Denver area reported significant improvements between June 2013 and The Metro Denver unemployment rate fell 1.8 percentage points over the year to 5.1 percent and was 0.1 percentage point lower than the May level. Adams County reported the largest decline in unemployment between June 2013 and 2014, falling 2.2 percentage points to 5.7 percent. Four of the seven Metro Denver Metro Denver Economic Development Corporation August 5, 2014 Page 7

9 counties reported unemployment rates below five percent including Jefferson County (4.9 percent), the City and County of Broomfield (4.7 percent), Douglas County (4.6 percent), and Boulder County (4.3 percent). Colorado reported an unemployment rate of 5.4 percent during the month of June, a 0.1 percentage point decline over the month and 1.9 percentage point decline over the year. The national unemployment rate increased to 6.3 percent in June compared with May, but the unemployment rate was 1.5 percentage points below the previous year. Labor Force Statistics (000s, not seasonally adjusted civilian labor force) June YTD Avg 2013 YTD Avg Labor Unemployment Labor Unemploy Labor Unemploy Ann Avg Unemploy Ann Avg Unemploy Force Rate Force ment Rate Force ment Rate ment Rate ment Rate Metro Denver 1, % 1, % 1, % 8.2% 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 156, % 155, % 155, % 9.3% 5.5% Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary June unemployment insurance claims decreased in Metro Denver, falling nearly 13 percent between May and June. The June level was also 10.7 percent lower than the year ago level. Claims throughout Colorado also reported an over themonth decrease, dropping 19 percent, and were 9 percent below the previous year s level. Weekly First Time Unemployment Insurance Claims Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Jun 14 May 14 Jun % Change 2009 Metro Denver 1,197 1,375 1,341 1,427 1, % 2,541 Colorado 2,178 2,689 2,394 2,687 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. Consumer Sector Sentiment & Spending The Consumer Confidence Index for the U.S. continued to rise through July, reporting a level of 90.9 from the revised June level of 86.4, an increase of 5.2 percent over the month. The national index for July 2014 was also 12.2 percent above the July 2013 level. Analysts at The Conference Board stated the July index level is the highest level since October 2007 (95.2). They also reported that the increase is attributed to job growth boosting consumers assessments of current conditions and the increase in confidence suggests continued growth through the second half of the year. Colorado is included in the Mountain Region Index and the area also reported an increase in consumer confidence. The index rose to 86.7 in July from the June revised level of 82.5, increasing 5.1 percent over the month. However, the index was 4.8 percent lower in July 2014 compared with a year prior. Metro Denver Economic Development Corporation August 5, 2014 Page 8

10 Consumer Confidence Index Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Jul 14 Jun 14 Jul % Change Mountain % United States % Source: The Conference Board. (p) = preliminary National retail sales through June continued to rise compared with the previous year s level, with overall retail sales rising 4.2 percent during the period, but the growth rate was down from the revised May level of 4.4 percent. Motor vehicle sales were 6.3 percent higher in June 2014 than June 2013 but were 0.3 percent lower than the May level. The building materials sector reported a 3.7 percent increase over the year and a 1 percent decrease over the month. Gasoline sales continued to improve, recording a 0.9 percent increase between June 2013 and 2014 and a 0.3 percent increase between May and June. Core retail sales, which excludes motor vehicle, building material, and gasoline sales, reported a 0.5 percent increase in June compared with May. According to the National Retail Federation s (NRF) mid year report, retail sales grew 2.9 percent during the first half of the year and the organization expects them to grow at least 3.9 percent during the second half. The NRF growth calculation included general retail sales and non store retailers but excluded automobiles, gasoline stations, and restaurants. The growth rate for retail sales for the first half of the year was lower than their forecast of 4.1 percent, but spokespersons for the NRF stated that as consumers continue to be more optimistic about their spending decisions, retail sales will continue to improve barring any extreme weather. Total Retail Sales ($000s) Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth Annual Growth Mar 14 Feb 14 Mar % Change Total Metro Denver 9,724,475 7,220,531 9,207,980 24,207,313 23,368, % 11.6% 7.4% Adams County 2,005,432 1,599,795 1,791,948 5,237,718 4,871, % 17.4% 11.7% Arapahoe County 1,952,806 1,395,151 1,916,378 4,709,746 4,702, % 8.2% 2.6% Boulder County 956, , ,657 2,204,950 2,148, % 9.1% 2.1% Broomfield County 217, , , , , % 8.3% 49.4% Denver County 2,341,788 1,782,197 2,238,003 5,972,889 5,779, % 13.5% 8.1% Douglas County 726, , ,194 1,868,201 1,787, % 5.7% 16.9% Jefferson County 1,523,775 1,108,249 1,448,994 3,704,965 3,593, % 10.5% 3.8% Colorado 16,359,258 12,112,998 15,114,846 40,582,393 38,417, % 12.2% 7.8% Source: Colorado Department of Revenue. Metro Denver retail sales increased through March 2014, reporting a strong recovery from slow retail sales growth in the beginning of the first quarter. Metro Denver retail sales increased 5.6 percent over the year, with total retail sales reaching $9.7 billion in March. Each of the seven Metro Denver counties reported over the year increases as well as over the month growth. The largest increase in retail sales between March 2013 and 2014 was in Adams County, where sales rose 11.9 percent to $1.8 billion. Boulder County and the City and County of Broomfield reported the greatest over the month increases in sales, rising 53 percent and 50 percent, respectively. The remaining five counties each reported over themonth growth greater than 25 percent through March. Retail sales in Colorado were 8.2 percent higher in March 2014 than March According to the U.S. Bureau of Labor Statistics, the U.S. Consumer Price Index (CPI) continued to increase through June, with growth in both the core which excludes food and energy costs and the overall CPI measures. The overall CPI rose 0.2 percent and the core CPI rose 0.1 percent over the month. The core CPI increased 1.9 percent over the year and the overall CPI increased 2.1, the third consecutive month of gains over 2 percent in the overall CPI. The growth in CPI between June 2013 and June 2014 can be attributed to over the year increases in medical care services (+ 2.6 percent), housing (+2.5 percent), and food and beverage services (+2.2 percent). Metro Denver Economic Development Corporation August 5, 2014 Page 9

11 According to the AAA Daily Fuel Gauge Report, the national average fuel price for July decreased 4.3 percent from June to $3.52 per gallon. The July average fuel price was 3 percent lower than the prior year s level ($3.63 per gallon). Metro Denver reported no change in the average fuel price between June and July. The average fuel price of $3.59 per gallon for July in Metro Denver was $0.07 higher than the national average. The area reported average fuel prices 2.3 percent higher in July 2014 than the previous year s level. Stock Market With violence rising in the Middle East, U.S. sanctions against Russia accumulating each week, and slowing economic growth, the stock market through July was quite unpredictable. Three of the four stock market indexes reported declining trends through July compared with June. The Bloomberg Colorado index reported the only over the month increase, rising 0.4 percent to The DJIA (16,563.3) reported the largest decline over the month, falling 1.6 percentage points. The S&P 500 and the NASDAQ reported declines in July compared with June, decreasing 1.5 percent and 0.9 percent, respectively. All four indexes reported levels for July 2014 that were higher than the July 2013 levels. Stock Market Indexes Month of Month of Month of YTD Return YTD Return Ann Avg Return Ann Avg Return Jul 14 Jun 14 Jul Bloomberg Colorado % 14.6% 46.2% 17.7% S&P 500 1, , , % 18.2% 23.5% 9.0% NASDAQ 4, , , % 20.1% 43.9% 8.6% DJIA (Dow Jones) 16, , , % 18.3% 18.8% 3.1% Travel & Tourism Sources: Bloomberg.com; Yahoo! Finance. The average hotel occupancy rate in Metro Denver rose 11 percentage points to 86.4 percent occupancy in June compared with the May level. The June level was 3.6 percentage points higher than the previous year. The average room rate for June was $ per night, 9.8 percent higher than the May level and 9 percent higher over the year. Metro Denver Hotel Statistics Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Jun 14 May 14 Jun % Change Percent of Hotel Rooms Occupied 86.4% 75.4% 82.8% 74.4% 68.0% 9.4% 59.0% 61.9% Average Hotel Room Rate $ $ $ $ $ % $ $84.42 Source: Rocky Mountain Lodging Report. Spokespeople for Denver International Airport (DIA) reported that 4.6 million passengers passed through the airport in May, increasing 9.6 percent from the 4.2 million passengers in April. The May 2014 level was 2.1 percent higher than the May 2013 level, recording an additional 93,026 passengers through the airport. Number of Airline Passengers Denver International Airport Passengers Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual May 14 Apr 14 May % Change ,563,190 4,161,815 4,470,164 21,105,942 20,680, % 50,167,485 42,275,913 Source: Denver International Airport, Traffic Statistics. Metro Denver Economic Development Corporation August 5, 2014 Page 10

12 Residential Real Estate The Moffat Train Station in Downtown Denver, built in 1904, is being renovated into a community center as part of an upscale senior living community. The 2 acre Balfour at Riverfront Park development is being built by Balfour Development and the company spent nearly $1 million restoring the station. The station will have a renovated interior that serves as a common area for residents and amenities including a baby grand piano, fireplace, and large living room area. The community center is part of the senior living community that contains 205 apartments, with assisted living and memory care units, ranging from $3,000 to $10,000 per month. Construction began on the Homes at Willow Park East, which are located in Denver s Stapleton neighborhood. The development will include 770 single family homes, with prices ranging between mid $100,000 to $800,000. The homes, just north of Interstate 70, will be from 1,000 to 3,500 square feet. The development will include open spaces, parks, and connect to The Shops at Northfield Stapleton and Denver International Airport through public transportation. The first round of completed homes is expected in the winter of A new luxury apartment complex in downtown Denver opened this month across the street from the Museum of Contemporary Art. The ten story building called Verve was developed by real estate company Amstar in conjunction with The Opus Group. The apartment community offers amenities including free Wi Fi, reserved parking garage, pool and spa with mountain and city views, outdoor fireplace and grill, and state of the art fitness center with yoga room. Eviva Cherokee, a new 274 unit luxury apartment complex, will be located in the Golden Triangle of Denver and be developed by the Integral Group and Charter Realty Group LLC. The complex will include studios, one and twobedroom units, and townhomes. Amenities in the development will include a fitness center with locker rooms, aerobics studios, and yoga rooms, conference center and business lounge, swimming pool, barbecue grills, fire pits, and sports bar. Construction on the complex is expected in the fall. McWhinney Real Estate Services Inc. announced plans to construct a 250 apartment complex in Broomfield. The development will be located on 935 acres west of Interstate 25. The construction is expected to begin in late The old Marathon Oil site will be redeveloped in to the Littleton Village development located at 7400 South Broadway, becoming Littleton s largest mixed use development. The 77 acres has potential for 250,000 square feet of retail and office space and up to 900 housing units. Watt Investment Partners stated that grading of the land has begun while negotiations with homebuilders are underway. The company does not have an estimated time of when the first residential units will be completed but they are working as fast as possible to secure building contracts. Home Resales The National Association of Realtors (NAR) released the June analysis of U.S. existing home sales, reporting that sales increased 2.6 percent between May and June to 5.04 million homes sold annually. Home sales continue at the highest pace since October 2013 (5.13 million) but were 2.3 percent below the June 2013 level of 5.16 million sales. The housing inventory rose at the end of June to 2.3 million, 2.2 percent higher over the month and 6.5 percent higher over the year, representing a 5.5 month supply of homes for sale. NAR economists stated that inventories are at the highest level in over a year and price gains have slowed throughout the country, but new home construction needs to increase by at least 50 percent to cover the supply shortage in the market. Existing home sales in Metro Denver increased slightly between May and June, rising 5.5 percent to 5,479 total homes sold during the month of June. The June home sales level marked the first month of 2014 where home sales were higher than the previous year, rising 0.3 percent in June 2014 compared with the previous year. Unsold homes on the market were 2.3 percent higher in June 2014 than May but they were still 55.3 percent lower than the previous year s inventory level. The average sales price for single family attached homes fell 2 percent between May and June to $226,201 but was 12.6 percent higher than the previous year s price. The average sales price of single family detached homes ($379,233) increased 0.6 percent over the month and 7.5 percent over the year. Metro Denver Economic Development Corporation August 5, 2014 Page 11

13 Previously Owned Home Sales Activity Month of Month of Month of YTD Total YTD Total YTD Total Ann Total Jun 14 May 14 Jun % Change 2009 Home Sales (Closed) 5,479 5,191 5,460 24,434 25, % 39,892 Unsold Homes on Market 7,777 7,604 17,393 7,777 17, % 26,884 Average Sales Price (Single Family Attached) $226,201 $230,890 $200,918 $221,865 $193, % $160,199 Average Sales Price (Single Family Detached) $379,233 $376,976 $352,643 $360,571 $332, % $266,968 Median Sales Price (Single Family Attached) $182,500 $183,000 $161,250 $136,000 Median Sales Price (Single Family Detached) $315,000 $312,000 $290,000 $220,000 Home Prices Source: Metrolist, Inc. NAR data shows the June median existing home sales price across the U.S. was $223,300, an over the year increase of 4.3 percent. The June increase in median home sales price marks the 28th consecutive month of over the year price gains. All four U.S. regions reported increases in the median existing home sales price between June of 2013 and Of the four U.S. regions, the Midwest reported the largest over the year increase in June (+6.2 percent) to $177,900. The median sales price over the year in the Northeast was up 3.2 percent, the West was up 2.7 percent, and the South rose 0.5 percent. Median Sales Price of Existing Single Family Homes ($000s) Quarter 1 Quarter 4 Quarter 1 YTD Avg YTD Avg YTD Avg Median Median 2014 (p) 2013 (r) % Change Boulder MSA $418.7 $442.8 $387.8 $418.7 $ % $345.5 $325.3 Denver Aurora MSA $288.4 $279.3 $261.2 $288.4 $ % $219.9 $239.1 United States $191.6 $196.9 $176.4 $191.6 $ % $172.1 $195.2 Source: National Association of REALTORS. (p) =preliminary (r) =revised A separate NAR report revealed that median home prices throughout the Metro Denver area were mixed for the first quarter of the year. The Boulder MSA reported a 5.4 percent decrease ($418,700) in home prices between the fourth quarter of 2013 and the first quarter of While home prices were lower over the quarter, they were 8 percent higher than the first quarter of The Denver Aurora MSA showed growth in home prices, reporting a 3.3 percent increase over the quarter to $288,400. Between the first quarter of 2013 and 2014, the Denver Aurora MSA recorded a 10.4 percent increase in the median sales price. The national median sales price fell 2.7 percent over the quarter to $191,600 but it was still 8.6 percent higher than the previous year s level. Of the 173 MSAs included in the first quarter 2014 report, the Boulder MSA reported the seventh highest annual median price and the Denver Aurora MSA median price was 18th highest. According to the S&P/Case Shiller home price index, Denver housing prices increased in May compared with April. The Denver index rose 1.3 percent to , an absolute increase of 1.99 points, recording the sixth largest overthe month increase of the 20 cities. For the second consecutive month, all 20 cities tracked by the index reported over the month increases as well as over theyear increases in their indexes. Denver s home prices in May 2014 were 8.2 percent higher than the prior year s level. Las Vegas continued to report the largest overthe year increase, rising 16.9 percent between May 2013 and Analysts with the company stated that while there was growth in housing prices, every city in the report, with the exception of Charlotte and Tampa, recorded a deceleration in the annual price rates. Metro Denver Economic Development Corporation August 5, 2014 Page 12

14 Foreclosures The June foreclosure report released by RealtyTrac reported the U.S. foreclosure rate decreased 2 percent between May and June. The total filings for June (107,194) were also 16 percent below the June 2013 level. The June 2014 level of foreclosure filings was the lowest level since July According to the report, ten states reported the lowest level of total foreclosure activity since August of 2006 including Texas, Georgia, Colorado, Tennessee, Arizona, and Nevada. Daren Blomquist, spokesperson for RealtyTrac, stated that nationwide foreclosure activity in June dropped to significantly low levels and through the end of the year the foreclosure numbers should begin to flat line and report historically normal levels. During the first half of 2014, nine states reported an increase in overall foreclosure activity compared with the same time the previous year. Housing foreclosures throughout the Metro Denver area continued to report declines in each of the 7 counties between May 2013 and Metro Denver recorded a near 37 percent decrease in foreclosures through May compared with the previous year and was 15.2 percent lower than the previous month. Douglas County reported the largest decrease in foreclosures over the year, falling 54.8 percent. The City and County of Broomfield reported no change in foreclosure activity between May 2013 and 2014, while the other six counties reported declines over 30 percent during the same period. Jefferson County was the only county to report an increase in foreclosures between April and May, rising 44 percent. Real Estate Foreclosures Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total May 14 Apr 14 May % Change Total Metro Denver* ,574 3, % 26,509 12,311 Adams County % 5,646 2,499 Arapahoe County % 6,233 3,125 Boulder County % 1, Broomfield County % Denver County % 6,141 3,351 Douglas County % 2, Jefferson County % 4,027 1,880 *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. New Homes The Census Bureau report on new home sales after adjustment for seasonal trends stated that national home sales in June fell to 406,000 annual sales from the revised May level of 442,000 annual sales. The June homes sales level was 8.1 percent lower than May and was 11.5 percent below the previous year s level. All four regions in the U.S. reported decreases in sales overthe month. The Northeast reported the largest over themonth decrease in sales, falling 20 percent between May and June. The South also reported significant declines, decreasing home sales by 9.5 percent over themonth. The Midwest ( 8.2 percent) and the West ( 1.9 percent) also reported decreases in new home sales between May and June. With 67,000 total sales, the Midwest reported the only increase in sales between June 2013 and 2014, rising 19.6 percent. The Northeast ( 27.3 percent), the South ( 17.4 percent), and the West ( 9.4 percent) all posted decreases in sales over the year. Metro Denver Economic Development Corporation August 5, 2014 Page 13

15 The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index reached a milestone in July. The index rose 4 points to 53 for July from the June level of 49. NAHB spokespersons reported that the builder confidence level being over 50 is the first time since January, signaling more builders view sales conditions as good rather than poor. They further stated that the improving job market and job security helped the growth in builder confidence as people become more comfortable about purchasing a home. All three components of the index rose over the month with the current sales conditions index rising to 57, the prospective buyers index rose to 39, and the expectations for future sales index rose to 64. According to the Census Bureau, the seasonally adjusted annual number of nationwide residential building permits in June (963,000 permits) continued to decline, falling 4.2 percent from May, but were 2.7 percent higher than the prior year. Single family detached permits nationwide rose 2.6 percent between May and June and were 0.6 percent higher than June Permits issued for multi family units (301,000 permits) fell 17.1 percent over the month, continuing to lead the overall decline in national permits during the period. The Midwest reported the largest increase in permits between June 2013 and 2014, rising nearly 22 percent to 178,000 permits. The West also reported over the year growth in permits, increasing 2.8 percent. Declines in building permits occurred in the Northeast ( 6.7 percent) and the South ( 1.3 percent) in June compared with the previous year. The Midwest was the only region to report an increase in permits between May and June, rising 6.6 percent. Residential building permits for the Metro Denver area reported positive market trends through the end of June compared with the prior year. Metro Denver reported an 80 percent increase in total permits issued between June 2013 and 2014, with an additional 786 permits issued. Single family attached permits rose nearly 31 percent over the year and single family detached permits rose nearly 29 percent. The total permit growth is attributed to a significant rise in multi family permits, rising 213 percent and reporting 578 additional permits in June 2014 compared with June Compared with May 2014, permits though June in Metro Denver rose 65.4 percent with 699 additional permits. The single family attached market reported the only decline in permits over the month, falling 2.7 percent. Residential Building Permits Month of Month of Month of YTD Total YTD Total YTD Total Total Total Jun 14 May 14 Jun % Change Single Family Detached Units ,887 3, % 2,397 14,260 Single Family Attached Units , % 601 4,843 Multi Family Units ,846 1, % 438 2,681 Total Units 1,767 1, ,921 5, % 3,436 21,784 Apartment Rental Market Source: Home Builders Association of Metro Denver. The Denver Metro Apartment Vacancy and Rent Survey for the second quarter of 2014 reported the second consecutive quarter of decreasing vacancy rates. The Metro Denver apartment vacancy rate fell 0.4 percentage points from the first quarter level, as declines in three of the six submarkets contributed to the over the quarter decline. The Boulder/Broomfield submarket reported the largest decline in vacancy between the first quarter and the second quarter, falling 2.3 percentage points to 4.4 percent vacancy. The City and County of Denver also reported a significant decline in the vacancy rate, decreasing 1.2 percentage points to 5.6 percent, while Adams County reported a 0.2 percentage point decline to 4.5 percent. Jefferson County (3.7 percent), Douglas County (3.8 percent), and Arapahoe County (4.6 percent) reported slight increases in the vacancy rate during the same period. Every county reported higher vacancy rates in the second quarter of 2014 compared with the previous year, with the exception of Jefferson County reporting no change. Metro Denver Economic Development Corporation August 5, 2014 Page 14

16 Apartment Statistics Quarter 2 Quarter 1 Quarter 2 YTD Average YTD Average YTD Average Annual Average Annual Average % Change Apartment Vacancy Rate 4.7% 5.1% 4.2% 4.9% 4.4% 8.1% 9.7% Average Monthly Rental Rate (all units) $1,117 $1,074 $1,022 $1,095 $1, % $877 $817 Source: Denver Metro Apartment Vacancy and Rent Survey. While vacancy rates reported mixed trends, the average rental rate of apartments in Metro Denver reported an all time high. The second quarter average rental rate in Metro Denver ($1,117) was 4.1 percent higher than the previous quarter s level. This rate was also 9.3 percent higher than the second quarter of 2013, marking the 17th consecutive quarter of overthe year gains. All seven counties reported average rental rates above $1,000 during the second quarter and the average second quarter rental rates in the six submarkets ranged from $1,024 in Adams County to $1,351 in Douglas County. The City and County of Denver (+9.8 percent), Jefferson County (+9.7 percent), and Adams County (+9.6 percent) reported the largest increases in rental rates between the second quarters of 2013 and Commercial Real Estate The Arvada Urban Renewal Authority Board announced Buckingham Construction to redevelop the Ralston Creek North area. The 14 acre parcel includes the Arvada Square shopping center, Independence Plaza, and a former Safeway building. The Ralston Creek North area is part of the larger Ralston Fields Urban Renewal Area, spanning 68 acres. The area will eventually be redeveloped into a Walmart and other retail stores. The completed site will be surrounded by a new park, have a creek and bike path, and a regional sporting complex. Work on the development is expected to begin in Prologis Inc. announced plans to expand the Prologis Stapleton Business Center North building due to increased demand for distribution space. There will be 392,000 square feet of new space added to the existing facility for a finished 794,000 square feet and have enough land for an additional 461,000 square feet. The facility is located off Interstate 70 and Pena Boulevard. Completed construction on the building is expected in early Prime West Development, a Denver based commercial real estate developer, is constructing a $90 million office tower in Denver s southeast corner. The 310,000 square foot speculative office building will be energy efficient and anchored to One Belleview Station, attracting a mixed use community. The 16 story building will include features such as flexible floor plates, efficient mechanical systems, five levels of structured parking, a fitness center, outdoor meeting areas, and retail and restaurant space on the ground floor. The completed building is expected in spring The multimodal Denver Union Station officially opened on July 26. The $1.7 billion revitalization of Denver Union Station includes 10 independent local retail and restaurant outlets across 22,000 square feet on the ground floor, a 12,000 square foot public common area, 40,000 square feet of outdoor plaza space, and a 112 room Crawford Hotel. Denver Union Station serves as the region s transportation hub providing passenger rail service for Amtrak, the Ski Train, and future FasTracks commuter rail lines; an expanded regional bus facility for RTD regional and express buses, the Downtown Circulator, and the 16th Street Mall Shuttle; and light rail service. Office Market According to the second quarter office report released by Newmark Grubb Knight Frank, the Denver office market expanded during the first half of 2014, recording 18 consecutive months of declining vacancy rates. The second quarter office vacancy rate of 14.9 percent is the lowest level since There were 10 projects spanning 1.4 million square feet of office space under construction or being renovated during the quarter. Much of the development is located in the LoDo micromarket, where rental rates for Class A space in the Central Business District rose 6.6 percent over theyear and rental rates for Class A space in the Southeast Suburban area increased 3.1 percent over the year. The company expects the trend of decreasing vacancy rates and increasing rental rates to continue through the end of the year. Metro Denver Economic Development Corporation August 5, 2014 Page 15

17 The midyear analysis of the Denver office market by CoStar Realty Information stated that Denver s office market vacancy rate fell to 10.8 percent. During the second quarter, Class A and Class B space had a vacancy rate of 11.6 percent, while Class C space had a vacancy rate of 5.8 percent. The largest lease signings thus far in 2014 included: CoBank at Village Center Station III, URS Corporation at URS Center, and Aircell at EOS Phase 1 in Broomfield. CoStar Group reported that the U.S. office market ended the second quarter with a vacancy rate of 11.4 percent, a 0.1 percentage point decline from the previous quarter. The national office market recorded an average lease rate of $22.22 per square foot during the second quarter, a 0.1 percent increase compared with the first quarter. The Metro Denver office market reported a slight decrease in the vacancy rate and an increase in the average lease rate through the second quarter of According to CoStar, the direct vacancy rate fell 0.2 percentage points to 10.8 percent vacancy. The 2014 direct vacancy rate was the lowest second quarter vacancy rate since the second quarter of 2001 when the vacancy rate was 8.3 percent. The average lease rate rose 4.3 percent during the second quarter compared with the previous year s level. The average lease rate gained $0.93 per square foot between the second quarters of 2013 and Office property construction remained brisk through the second quarter but projects completed to date were slightly below prior years. There was 1.7 million square feet of space under construction through the second quarter of 2014, a 119 percent increase from the prior year. There was 310,000 square feet of space completed as of mid 2014, which was lower than this same time during the past four years. The largest office project completed so far this year was the 106,000 square foot One Union Station building at 16th and Wynkoop streets. Office Market Statistics Quarter 2 Quarter 1 Quarter 2 Quarter 2 Quarter 2 Quarter Number of Buildings 5,939 5,928 5,914 5,898 5,886 5,865 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 10.8% 11.0% 11.6% 12.1% 13.0% 13.3% Vacancy Rate (with sublet) 11.2% 11.5% 12.0% 12.5% 13.5% 14.1% Avg. Lease Rate (direct, per sq. ft, full service) $22.38 $22.04 $21.45 $20.16 $19.87 $20.22 New Construction Completed (year to date) 0.31 MSF, 0.08 MSF, 0.49 MSF, 0.35 MSF, 0.45 MSF, 0.73 MSF, Currently Under Construction Industrial & Flex Market 12 Bldgs 1.73 MSF, 21 Bldgs 4 Bldgs 2.00 MSF, 21 Bldgs 8 Bldgs 0.79 MSF, 10 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 4 Bldgs 1.30 MSF, 9 Bldgs 9 Bldgs 0.71 MSF, 8 Bldgs 4 Bldgs 0.73 MSF, 14 Bldgs Newmark Grubb Knight Frank released the second quarter analysis of the industrial market, reporting the 10th consecutive quarter of positive absorption. According to the report, industrial market vacancy fell to 4.2 percent in the second quarter of 2014, 0.3 percentage points below the first quarter and 2.3 percentage points below the second quarter of 2013 (6.5 percent). Industrial property sales for the first six months of 2014 have surpassed the total sales for Two additional speculative warehouses and one build to suit space were under construction during the second quarter of the year. The company expects that with the supply for Class A building being limited, pre leasing in speculative developments will continue at a steady pace through the end of the year. CoStar Realty data showed that the industrial market improved significantly during the second quarter of The data showed that with record low vacancy rates, construction picked up considerably in order to keep up with pent up demand for industrial space. The second quarter direct vacancy rate fell 0.2 percentage points to 3.4 percent compared with the first quarter and was 1.7 percentage points lower than the second quarter of The average lease rate rose 6.7 percent between the first and second quarter of 2014, adding $0.35 per square foot to the average lease rate. There was also a 16.1 percent increase over the year in the average lease rate. There was nearly 1.2 million square feet of industrial space competed through the second quarter of the year, the highest level since the second quarter of Much of the Metro Denver Economic Development Corporation August 5, 2014 Page 16

18 completed construction about 44 percent was in the City and County of Denver, including two buildings in the Enterprise Business Center at Stapleton. There was also 1.3 million square feet of space under construction during the period, including three buildings that are over 255,000 square feet each. Industrial Market Statistics Quarter 2 Quarter 1 Quarter 2 Quarter 2 Quarter 2 Quarter Number of Buildings 6,916 6,906 6,895 6,885 6,875 6,869 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 3.4% 3.6% 5.1% 6.1% 6.6% 6.2% Vacancy Rate (with sublet) 3.7% 3.9% 5.4% 6.6% 7.2% 6.9% Avg. Lease Rate (direct, per square foot, NNN) $5.61 $5.26 $4.83 $4.59 $4.63 $4.76 New Construction Completed (year to date) 1.18 MSF, 0.10 MSF, 0.88 MSF, 0.06 MSF, 0.08 MSF, 0.07 MSF, Currently Under Construction 13 Bldgs 1.31 MSF, 9 Bldgs 4 Bldgs 2.22 MSF, 17 Bldgs 3 Bldgs 0.17 MSF, 4 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 3 Bldgs 0.50 MSF, 6 Bldgs 2 Bldgs 0.24 MSF, 4 Bldgs 3 Bldgs 0 MSF, 0 Bldgs The Metro Denver flex market reported modest progress through the second quarter of the year. The direct vacancy rate for flex space declined 0.3 percentage points to 9.4 percent between the first and second quarters of 2014, the lowest rate since the fourth quarter of The average lease rate increased 2 percent over the quarter to $9.72 per square foot. The second quarter average lease rate was also 6 percent higher than the previous year and added $0.55 per square foot during the period. The flex market reported 360,000 square feet of new space was completed through the end of the second quarter and 420,000 square feet of space remains under construction. Flex Space Statistics Quarter 2 Quarter 1 Quarter 2 Quarter 2 Quarter 2 Quarter Number of Buildings 1,458 1,452 1,449 1,445 1,444 1,440 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 9.4% 9.7% 12.3% 12.6% 13.4% 14.2% Vacancy Rate (with sublet) 10.8% 11.1% 13.7% 13.9% 14.7% 15.6% Avg. Lease Rate (direct, per square foot, NNN) $9.72 $9.53 $9.17 $8.87 $8.90 $9.28 New Construction Completed (year to date) 0.36 MSF, 0.07 MSF, 0.07 MSF, 0.00 MSF, 0 MSF, 0 MSF, Currently Under Construction Retail Market 5 Bldgs 0.42 MSF, 6 Bldgs 2 Bldgs 0.45 MSF, 7 Bldgs 2 Bldgs 0.10 MSF, 3 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 1 Bldgs 0.20 MSF, 2 Bldgs 0 Bldgs 0 MSF, 1 Bldgs 0 Bldgs 0.02 MSF, 1 Bldgs The retail market analysis by Newmark Grubb Knight Frank for the second quarter of the year reported a 0.3 percentage point decline in the vacancy rate to 6.7 percent between the first and second quarters of The second quarter 2014 vacancy rate was the lowest vacancy rate since The report also stated that investment sales were strong for the last eight quarters, with 1.4 million square feet of retail space sold during the second quarter. The company expects that the retail market in Denver will maintain strong growth through the end of the year as pent up demand continues to drive speculative development. CoStar Group reported that the U.S. retail market ended the second quarter of 2014 with a vacancy rate of 6.4 percent, 0.1 percentage points lower than the first quarter of the year. The national retail market during the second quarter Metro Denver Economic Development Corporation August 5, 2014 Page 17

19 reported an average lease rate of $14.81 per square foot, a 1.2 percent increase over the first quarter of 2014 ($14.64 per square foot). The retail market in Metro Denver reported mixed trends through the second quarter of The direct vacancy rate increased 0.1 percentage points between the first and second quarter of 2014, but it was 0.5 percentage points below the second quarter 2013 level. The average lease rate for retail space increased slightly, rising 0.1 percent over the quarter and adding $0.02 per square foot. Compared with the second quarter of 2013, the average lease rate was 1.5 percent higher in the second quarter of 2014 and added $0.23 per square foot to the lease rate. Most of the retail spaces completed have been relatively small projects. Of the 32 buildings completed so far in 2014, 28 of them are smaller than 15,000 square feet, with an average size of 5,900 square feet. About 38 percent of the 320,000 square feet of retail space completed so far this year was located in Adams County. An additional 580,000 square feet of retail space was under construction during the second quarter, including three spaces that are 96,000 square feet or larger. Retail Market Statistics Quarter 2 Quarter 1 Quarter 2 Quarter 2 Quarter 2 Quarter Number of Buildings 11,400 11,375 11,321 11,246 11,205 11,171 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 5.8% 5.7% 6.3% 6.9% 7.3% 7.9% Vacancy Rate (with sublet) 5.9% 6.0% 6.5% 7.1% 7.6% 8.2% Avg. Lease Rate (direct, per square foot, NNN) $15.35 $15.33 $15.12 $14.56 $14.61 $15.26 New Construction Completed (year to date) 0.32 MSF, 0.13 MSF, 0.69 MSF, 0.09 MSF, 0.51 MSF, 0.32 MSF, Currently Under Construction 32 Bldgs 0.58 MSF, 23 Bldgs 20 Bldgs 0.60 MSF, 19 Bldgs 39 Bldgs 0.35 MSF, 16 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 15 Bldgs 0.67 MSF, 27 Bldgs 8 Bldgs 0.44 MSF, 7 Bldgs 11 Bldgs 0.17 MSF, 6 Bldgs Metro Denver Economic Development Corporation August 5, 2014 Page 18

20 Monthly/Quarterly Direction Annual Direction Positive Changes 17 of of 18 Nonfarm Employment +13, ,200 Growth Employment rose 0.9% from May to June YTD employment up 2.8% through June 26% 21% % Companies Hiring Companies expecting to add workers YTD average down 1 percentage point (Denver Area) increased from 2Q 2014 to 3Q 2014 compared with % 5.7% Unemployment Rate Unemployment fell 0.1 percentage points May to June Down from 2013 YTD average of 6.9% 12.9% 10.9% Initial Unemployment YTD average claims decreased 10.9% through Insurance Claims Claims decreased from May to June June 2014 Total Retail Sales 34.7% 3.6% Metro sales increased from Feb. to Mar. YTD sales up through Mar Mountain Region Consumer Confidence Index Index up 5.1% from June to July YTD average up 20.3% through July % 74.4% Hotel Occupancy Increased 11 percentage points from May to June YTD occupancy up 9.4% DIA Passengers 9.6% 2.1% Passengers increased from Apr. to May YTD passengers increased through May 2014 Bloomberg Colorado Index % Index up 0.4% from June to July YTD Return through July 2014 Dow Jones Industrial 16, % Average Index decreased 1.6% from June to July YTD Return through July 2014 Home Sales (closed) 5,479 24,434 Sales up 5.5% from May to June YTD sales down 3.5% through June 2014 Median Home Price $288,400 $288,400 (Denver Aurora MSA) Up 3.3% from 4Q 2013 to 1Q 2014 YTD price 10.4% higher through 1Q 2014 Foreclosures 442 2,574 Down 15.2% from Apr. to May Down 31.6% YTD through May 2014 Residential Building Permits 1,767 8,921 (Total) Permits increased 65.4% from May to June YTD permits up 62.1% through May % 4.9% Apartment Vacancy Rate Vacancy decreased 0.4 percentage points from 1Q 2014 to 2Q 2014 YTD average up 0.5 percentage points through 2Q % 0.8 percentage points Office Vacancy Rate Vacancy rate down 0.3 percentage points 2Q 2014 vacancy rate down from 12% one (with Sublet) from 1Q 2014 to 2Q 2014 year ago 3.7% 1.7 percentage points Industrial Vacancy Rate Vacancy rate down 0.2 percentage points 2Q 2014 vacancy rate down from 5.4% one (with Sublet) from 1Q 2014 to 2Q 2014 year ago Retail Space Vacancy Rate (with Sublet) 5.9% 0.6 percentage points Vacancy rate down 0.1 percentage point from 1Q 2014 to 2Q Q 2014 vacancy rate down from 6.5% one year ago Metro Denver Economic Development Corporation August 5, 2014 Page 19

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