MonthlyEconomicIndicators. May2017. Monthlyanalysis of18keyeconomic indicatorsin MetroDenver. EnergeticBodies.EnergeticMinds.

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1 MonthlyEconomicIndicators May2017 EnergeticBodies.EnergeticMinds. Monthlyanalysis of18keyeconomic indicatorsin MetroDenver

2 The Monthly Economic Indicators is a comprehensive analysis of economic conditions in the seven-county Metro Denver area, or the region comprised of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson Counties. There are two metropolitan statistical areas (MSAs) located within the Metro Denver region: the Boulder MSA (Boulder County) and the Denver-Aurora-Lakewood MSA (the Denver MSA) (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties). This report presents recent data and long-term trends for the seven-county region, MSAs, or counties, depending on availability. The analysis includes four sections: labor force and employment, the consumer sector, residential real estate, and commercial real estate. Notable Rankings Denver ranked No. 5 on a new list of the 20 Best U.S. Cities for Business Travel. Travel risk-management company On Call International rated cities that were best equipped for hosting productive, seamless business travel experiences. This included on-time flights, hotel prices, reliability of 4G LTE mobile networks, traffic congestion, and efficiency of emergency rooms. Detroit ranked No. 1 in the country, followed by Phoenix, Cleveland, Minneapolis, and Denver. The relocation company MoveHub released a report ranking the 50 U.S. states to find what state is best for women to live and work. The ranking used data from the National Partnerships for Women and Families, the National Conference of State Legislatures, WalletHub, and the Kaiser Family Foundation. The study used data including the state s gender pay gap, political representation, reproductive rights, and the prevalence of domestic violence. Hawaii ranked number one in the nation, followed by Vermont and Minnesota. Colorado ranked No. 19 in the report. Denver ranked eighth in the nation for the most Leadership in Energy and Environmental design (LEED) certified properties that have been constructed since January The LEED-certification program provided a property with either a Silver, Gold, or Platinum certification depending on energy efficiency. Scoring was based on 6 points for every platinum-certified property, 4 points for gold, 2 points for silver, and 1 point for certified properties. Denver ranked eighth with 11.6 million square feet of certified space, with 40 total medals totaling a 131 medal score. Washington, D.C. ranked first with 20.5 million square feet of certified space, with 117 total medals totaling a 390 medal score. A new report from the pay compensation company PayScale ranked colleges by 20-year return on investment (ROI), factoring in the school s on-campus costs. The Colorado School of Mines ranked first in Colorado and fifth in the country, recording an $833, year net ROI for in-state students. The University of Colorado at Boulder delivered a 20-year net ROI of $431,000, ranking 176th in the U.S., followed by Colorado State University with a 20-year net ROI of $349,000, ranking 310th in the nation. According to new research by Buffalo Business First, the Colorado School of Mines in Golden ranked the highest out of all Colorado public colleges and 18th in the nation for offering the best educational experience to their students. Business First analyzed 499 public colleges using a 22-part formula to generate the rankings that included retention rates, graduation rates, earnings of alumni, school resources, tuition rates, and housing costs. The University of Michigan ranked No. 1 in the nation. According to the travel service company RewardExpert, Boulder is the most-visitable city in the Mountain West region. The ranking was compiled using 13 metrics, broken down into four categories consisting of affordability, safety, recreational activities, and city profile. Of the top 25 mid-sized cities ranked in the Mountain West, nine were in Colorado, including Lakewood (No. 15), Thornton (No. 17), Arvada (No. 19), and Westminster (No. 20). Denver ranked No. 3 in the nation in a new survey of America s top 20 craft spirits tourism destinations. To create the Craft Spirits Tourism Index, Travelocity/American Distilling Institute examined the number of craft distilleries by population, the number of awards received by local craft spirits, accessibility by air, hotel cost, and other. Denver ranked behind Seattle and Portland in the large metro area category, while Boulder (No. 4) and Fort Collins (No. 7) ranked in the top ten of the small metro area category. In the 2017 Airline Quality Rating compiled by researchers at Embry-Riddle Aeronautical University and Wichita State University, Frontier finished 12th of the 12 airlines ranked, with Alaska Airlines ranking No. 1 and Delta No. 2. The Metro Denver Economic Development Corporation May 2, 2017 Page 1

3 ratings were based on mishandled baggage, consumer complaints, on-time performance, and involuntary denied boardings. According to WalletHub s best airline rankings, Frontier also finished 12th of the 12 airlines ranked, with Alaska and Delta again finishing first and second, respectively. The ranking was compiled based on cancellations and delay rates, baggage mishaps, and in-flight comfort. According to a report by U.S. News and World Report ranking the Nation s best high schools, Colorado ranked 15th out of the 50 states and Washington, D.C. To compile the report, schools were assigned gold, silver, and bronze medals on several metrics including overall performance on state high school proficiency tests, disadvantaged students performance on the same tests, graduation rates, and advanced placement test data. Colorado had 317 eligible high schools, with 4.7 percent (15 schools) obtaining the gold medal, while 47 schools received the silver medal. Colorado s top-ranked high school was Peak to Peak Charter School in Lafayette. Denver had the 11th-worst ozone levels in the nation according to a report released by the American Lung Association. The report used data from 2013 to 2015 gathered from federal, tribal, state, and county agencies. The report also gave 12 Colorado counties a grade of D or F for the number of high ozone days, with ten of those counties being on the Front Range. The association said Colorado s ozone problem stems from vehicle exhaust, the oil and gas industry, trees, coal-burning power plants, and weather conditions. Fort Collins had the 15th-worst rating in the nation, but both Denver and Fort Collins fared better this year than in the previous year s report. National Economic Overview The U.S. Bureau of Economic Analysis (BEA) released the advance estimate of real gross domestic product (GDP) for the first quarter of The first estimate is based on source data that are incomplete or subject to further revision by the source agency. The estimate showed that GDP increased at a slower rate in the first quarter, recording an annual rate of 0.7 percent, which was 1.4 percentage points below the fourth quarter of 2016 of 2.1 percent. The increase in real GDP in the first quarter reflected positive contributions from nonresidential fixed investment, exports, residential fixed investment, and personal consumption expenditures. These were offset by negative contributions from private inventory investment, state and local government spending, and federal government spending. The deceleration in real GDP in the first quarter of 2017 reflected a deceleration in personal consumption expenditures, and accelerations in both nonresidential and residential fixed investment. The second estimate of real gross domestic product for the first quarter of 2017 will be released May 26, The March meeting of the Federal Open Market Committee (FOMC) reported that the labor market continued to strengthen and that economic activity continued to expand at a moderate pace. Job gains remained solid and the unemployment rate was little changed in recent months. Household spending continued to rise moderately while business fixed investments steadied. Inflation increased in recent quarters, moving close to the Committee s 2 percent long-run objective. With this current economic outlook, the FOMC agreed to increase the target federal funds rate to the 0.75 percent to 1 percent range. The federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data. The next FOMC meeting will be held May 2-3. Economic Indexes & Notable Data Releases National & International The U.S. trade deficit was $43.6 billion in February, down $4.6 billion from the January deficit of $48.2 billion (revised). Imports decreased to $236.4 billion, falling $4.3 billion between January and February. February exports were $192.9 billion, an increase of $0.4 billion from January. For goods, the deficit was $65 billion in February, down from $69.6 billion in January. For services, the surplus was $21.4 billion in February, up from $21.3 billion in January. The Conference Board Leading Economic Index (LEI) for the U.S. increased in March to (2010=100), up 0.4 percentage points from February. After seven consecutive monthly gains, the U.S. LEI is at its highest level in over a decade. Widespread gains across a majority of the leading indicators point to an improving economic outlook for 2017, Metro Denver Economic Development Corporation May 2, 2017 Page 2

4 with new orders in manufacturing and the interest rate spread more than offsetting declines in the labor market components in March. The Institute for Supply Management s Manufacturing Index decreased 0.5 percentage points in March to 57.2 percent, compared with the February level of 57.7 percent. Among the 18 manufacturing industries tracked in the index, 17 reported growth between February and March, while one industry recorded no change over-the-period. The Employment and New Export Orders Indexes recorded the largest over-the-month increases, rising 4.7 percentage points and 4 percentage points, respectively. Six of the indexes recorded contractions in February, with the Production Index recording the largest contraction, falling 5.3 percentage points. The overall economy grew for the 94th consecutive month. The Institute for Supply Management s Non-Manufacturing Index grew in March for the 87th consecutive month. The index for the month of March came in at 55.2 percent, falling 2.4 percentage points from February. This represents continued growth in the non-manufacturing sector at a slower rate. Of the 18 non-manufacturing industries, 15 reported growth in March, with information, educational services, and professional, scientific, and technical services reporting contraction between February and March. The New Export Orders Index recorded the largest increase overthe-month, rising 5.5 percentage points, while the Business Activity/Production Index recorded the largest decline over-the-month, falling 4.7 percentage points. The Organization for Economic Cooperation and Development (OECD) released their annual report measuring how 35 countries tax wage earners to compare tax burdens across the world. The OECD measures a tax wedge, or the gap between what a worker receives in pay and what they eventually spend or save. According to the report, the U.S. was in the bottom third of countries, with Belgium and France recording the highest tax burdens out of the 35 countries analyzed. The average single U.S. worker with no kids earned $52,543 in 2016 and paid a combined $13,649 in payroll taxes, federal income taxes, and state and local government taxes, while employers provided another $4,020 in payroll taxes. The overall rate was 31.7 percent, 4 percentage points below the OECD average of the 35 countries analyzed. According to the Associated Press, the District of Columbia ($36,569) pays the most per capita amount of federal taxes, which includes federal income, employment, estate, and trust taxes. The next closest state is Delaware, at $16,322 a person. Colorado ranked 16th on the list with the average person paying $9,030 in federal taxes, just above the U.S. average of $8,943. The Associated Press calculated each state s per-capita tax bill using data from the IRS and population estimates from the Census Bureau. Local The University of Colorado Boulder Leeds Business School released their second quarter Leeds Business Confidence Index for The overall index improved based on strong readings in every component, with panelists most optimistic about the state economy. The index value of 63.4 for the second quarter of 2017 was up 3.1 points from last quarter and 8 points from the second quarter of Of the index components, national expectations increased from 61.3 to 63.9, and the state economy is expected to expand during the second quarter of 2017 with 68.9 percent of respondents expecting an increase. Both sales and profits expectations increased significantly over-the-quarter for the second quarter of 2017, with profits expectations increasing by 3.4 points to 62.8 and sales expectations increasing by 4.5 points to All metrics in the index reported a positive outlook for the second quarter of 2017, which was the second straight quarterly increase. The U.S. Federal Reserve System released its latest six-week Beige Book report, which covers the Fed s Kansas Citybased 10th District, which includes Colorado. According to the report, economic activity increased modestly in late February and March and most sectors were optimistic about growth in the next few months. Manufacturing activity expanded at a strong pace and real estate firms reported a modest rise in sales. Consumer spending activity rose at a modest pace, and District energy activity continued to increase modestly. Transportation activity declined modestly from the previous period, and agriculture credit conditions remained weak, with subdued farm income and continued low commodity prices. Employment and employee hours increased modestly during the period, and contacts in most sectors reported modest wage growth. Metro Denver Economic Development Corporation May 2, 2017 Page 3

5 According to the latest Colorado Secretary of State s Indicators Report, Colorado recorded 32,450 new-business filings in the first quarter of 2017, a 31 percent increase from fourth quarter 2016, and a 9.3 percent increase from a year ago. This represents the largest annual increase in the first quarter in the state since Of the new-business filings, 24,899 were for limited liability companies, which are popular for individuals, and are up 10.3 percent year-over-year. Denver ranked eighth in the nation for attracting people ages 18 through 35 in However, according to a new report from online market-research company Research Now, 41 percent of millennials move to a city without the intention of permanently staying there. Fifty-three percent of respondents to the survey conducted for the report said they plan to make a temporary move in the next five years. Denver ranked third among U.S. cities for millennial moves in The child poverty rate dropped slightly to 14.7 percent in Colorado from 2014 to 2015, according to the latest Kids Count report, remaining below the national average of 23 percent. This amounts to an estimated 180,000 children growing up in families at or below the federal poverty line, or about $24,000 for a family of four. Also in the report are findings of historical practices by banks in determining whether to approve home loans based on neighborhood economic security. This has caused areas of concentrated poverty that also seem to display racial segregation. Only 2 percent of Caucasian children whose families are above the poverty line live in concentrated-poverty neighborhoods, compared with 9 percent African American children, 10 percent Latino children, and 11 percent American Indian children. Forty-three Colorado companies raised $344.5 million in venture capital during the first quarter of 2017, recording more money raised in one quarter than was raised in the first half of According to the MoneyTree report from PricewatehouseCoopers LLP and CB Insights, private firms in Colorado raised $686 million during all of 2016, the lowest amount since 2013 and down 40 percent from the prior year. Colorado s first quarter 2017 funding ranked fourth nationally for the number of deals and the amount raised. California was the top state in both deals and dollars. Nationwide, venture capital deals declined to 1,104 deals and $13.86 billion in the first quarter of 2017, compared with $15.68 billion invested in 1,301 companies a year ago. Labor Force and Employment Employment in Metro Denver increased 2.1 percent between March 2016 and 2017, adding 34,300 jobs during the period. The employment growth consisted of a 2.1 percent increase in the Denver-Aurora-Lakewood MSA, adding 30,100 jobs, and a 2.3 percent increase in the Boulder-Longmont MSA, representing an additional 4,200 jobs. The education and health services supersector reported the largest percentage increase of 4.2 percent over-the-year, adding 8,600 jobs. The transportation, warehousing, and utilities supersector recorded the second-largest growth over-the-year of 4.1 percent, creating 2,200 new positions during the period. Two supersectors recorded declines in employment over-the-year. The information supersector declined 2.4 percent and lost 1,300 jobs and the manufacturing supersector declined 0.7 percent, losing 600 jobs. Colorado employment rose 2 percent in February compared with the previous year s level, adding 50,800 new jobs. National employment levels increased 1.5 percent over-the-year, with an additional 2.14 million jobs. Metro Denver Industry Cluster Headlines Aerospace Ball Corp. will add 145,000 square feet to its existing Aerospace Manufacturing Center in Westminster, which is slated to be completed in the spring of Spokespeople from the company said that the expansion would be used to keep pace with projected growth and meet the demand of the company s customers. Metro Denver Economic Development Corporation May 2, 2017 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 Mar-17 (p) Feb-17 (r) Mar % Change Total 11-County Metro Denver* 1, , , , , % 2.9% 2.1% Denver-Aurora-Lakewood MSA 1, , , , , % 2.9% 2.1% Boulder MSA % 2.7% 2.2% Natural Resources & Construction % 5.1% -1.4% Manufacturing % 2.2% -1.5% Wholesale & Retail Trade % 2.2% 2.1% Transp., Warehousing & Utilities % 2.7% 2.8% Information % -0.9% 0.8% Financial Activities % 2.1% -0.6% Professional & Business Services % 5.1% 5.7% Education & Health Services % 3.7% 3.9% Leisure & Hospitality % 3.4% 2.6% Other Services % 2.8% 2.0% Government % 0.9% 1.8% Federal Gov't % -0.8% -0.7% State Gov't % 1.8% 2.8% Local Gov't % 0.9% 2.1% Colorado 2, , , , , % 2.4% 2.3% United States 144, , , , , % 1.7% 1.1% *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 Aviation Copa Airlines will begin nonstop service four times a week starting December 11, 2017 between Denver International Airport (DEN) and Tocumen International Airport in Panama City, Panama. Denver will be Copa Airlines 13th U.S. destination and its 74th overall. Norwegian Air International received approval to begin flights to the U.S. and is offering $199 one-way flights between DEN and London Gatwick. Service from Denver to London begins Sept. 16, with twice-weekly flights on Tuesdays and Saturdays, with services increasing to three days a week Oct. 28. DEN opened a new parking lot at 61st and Pena Station, which features 800 parking spaces. Of the total spaces, 609 are covered by a solar canopy that is part of the larger smart-city development around the commuter rail station. The parking spaces are $4 a day, the lowest rate of any airport-owned option. Beverage Production Odell Brewing Co. announced plans to open a second taproom in RiNo on the corner of 30th and Larimer streets. The 4,000-square-foot, two-story facility will include a 10-barrel pilot brewhouse and is expected to open late The facility will also include an outdoor patio, space for live performances, and a partially covered rooftop. Metropolitan State University of Denver (MSU Denver) will invest $3.6 million into its beer-brewing program. The school plans to turn 8,000 square feet of space into a permanent brewing program, including five laboratories, 30 Metro Denver Economic Development Corporation May 2, 2017 Page 5

7 fermentation tanks, and an abundance of brewing equipment. MSU Denver hopes the program will work similar to a co-op, where local brewers can invest in the space upfront, then use the equipment and services afterwards. Arryved, a point-of-sale service company that caters toward breweries, acquired $700,000 in private equity funding. The company will use the funding to increase their customer service by hiring more staff, and improving their platform. The software is currently being used in several Colorado breweries including Avery Brewing Co., Left Hand Brewing, and Denver Beer Co. Oskar Blues Brewery is opening a taproom and live-music venue on Boulder s Pearl Street starting this summer. This will be the company s fourth Colorado taproom with two others scheduled to be completed by the end of 2017 in Colorado Springs and Denver. Energy Cleantech For the second year in a row, Colorado ranked No. 4 for wind power employment with more than 6,000 jobs, according to the American Wind Energy Association. Across the country, the wind industry added 15,000 jobs, growing the total number of wind jobs to 102,000. Colorado ranked No. 7 for the nation s fastest growing states when its wind generation increased 26.1 percent. Colorado ranked No. 17 on the list of states that produced the most electricity from renewables such as solar and wind in 2015, according to a study by 24/7 Wall St. Colorado generated 18 percent of its electricity from renewables, and the state s 10-year renewable energy growth was percent, the 10th-highest in the nation during the period. Healthcare and Wellness According to Leapfrog Group s semiannual report on hospital safety, Colorado ranked 21st among states for the number of top-performing hospitals it has among its total participants. Sixteen of the 43 Colorado health centers participating scored an A for their ability to limit or eliminate errors, accidents, and infections, up from 14 that earned the top grade in The number of B grades fell from 17 to 12 and the number of C grades increased from 12 to 15. Douglas County-based TeleTech Holdings Inc. acquired Connextions Inc., a healthcare technology and services company, for $80 million. Connextions delivers member acquisition, retention, and engagement services to healthcare plans, providers, and pharmacy benefits managers to drive growth, improve health outcomes, and lower costs. With the acquisition, TeleTech expects the annual healthcare business s revenue to grow by $115 million to more than $300 million with the partnership. IT-Software The Denver startup CyberGRX received $20 million in an investment round led by Bessemer Venture Partners. The company, which helps businesses identify, assess, and remediate cyber risks in their extended networks, has experienced increased demand as multiple security breaches have been reported by large companies such as Target and Yahoo. CyberGRX plans to use the funding to accelerate growth and add 25 to 30 employees to their current 40- person labor force. Ricoh USA, an international imaging and electronics company, laid off 20 workers in Colorado due to a five percent reduction of its workforce nationally. The company employs more than 109,000 worldwide and more than 26,000 people in the U.S. Ricoh has many Colorado offices and services centers including Boulder, Aurora, Littleton, and Colorado Springs. Denver-based Orderly Health received $150,000 from 500 Startups, a venture capital fund/accelerator program, and plans to use the funds to hire two full-time software engineers and to invest in sales and marketing. Orderly Health provides software that answers healthcare-related questions that are submitted from the software s users. It can provide insurance coverage information, nearby healthcare providers, and projected healthcare costs. Currently, the software company has pilot programs in New York and Colorado that give users access to Orderly as a part of their employer-provided health insurance. Metro Denver Economic Development Corporation May 2, 2017 Page 6

8 Synergy North America Inc., a British firm that helps small sellers with inventory and logistics, opened their U.S. headquarters in Broomfield. The small office currently has four employees with expectations of aggressive growth. The company opened the U.S. office in order to be closer to its U.S. customers. Other Industry Headlines French multinational dairy company Danone completed its $10 billion purchase of Broomfield-based WhiteWave. The combined company will operate under the name DanoneWave in North American and retain two headquarters, one in Broomfield and one in White Plains, New York. According to the Colorado Department of Agriculture, Colorado s 2017 forecast for net farm and ranch income will decrease to $392 million, down from $444 million in 2016 and down from $1.3 billion in Colorado s top agricultural commodities include cattle, corn, wheat, and milk, which have all seen large decreases in their prices. Currently, Colorado s 35,000 farms generate $41 billion in economic activity and employ more than 170,000 people. Employment Outlook The Manpower Employment Outlook Survey expects that the percentage of companies in the Denver-Aurora MSA hiring in the second quarter of 2017 will increase compared with the previous quarter. The percentage of companies hiring rose two percentage points between the first quarter of 2017 and the second quarter of 2017, with 27 percent of companies expanding their employment levels. The percentage of companies planning to decrease employment levels fell six percentage points from the first quarter, with 2 percent of companies planning to reduce employment levels. The majority of companies intend to maintain staff levels through the second quarter of the year, with the level rising 5 percentage points over-the-quarter to 69 percent. In the second quarter of 2017, job prospects appear best in durable goods manufacturing, transportation and utilities, wholesale and retail trade, professional and business services, education and health services, leisure and hospitality, other services, and government. Employers in financial activities plan to reduce staffing levels, while hiring in construction, nondurable goods manufacturing, and information is expected to be constant. Employment Outlook Survey Quarter 2 Quarter 1 Quarter 2 YTD YTD Ann Avg Denver-Aurora-Broomfield MSA Percent of Companies Hiring 27% 25% 23% 26% 23% 17% Percent of Companies Laying Off 2% 8% 1% 5% 3% 6% Percent of Companies No Change 69% 64% 74% 67% 72% 74% Percent of Companies Unsure 2% 3% 2% 3% 3% 3% United States Percent of Companies Hiring 22% 19% 22% 21% 21% 18% Percent of Companies Laying Off 3% 6% 4% 5% 5% 8% Percent of Companies No Change 73% 73% 72% 73% 72% 71% Percent of Companies Unsure 2% 2% 2% 2% 2% 4% Source: Manpower Inc. Hiring expectations in the U.S. strengthened slightly through the second quarter of 2017 compared with the prior quarter. The percentage of employers planning to increase employment levels rose 3 percentage points to 22 percent between the first and second quarters of The percentage of companies planning to reduce employment levels decreased 3 percentage points over-the-quarter, with 3 percent of companies planning to lay off employees. The percentage of companies planning to maintain staffing levels (73 percent) was 1 percentage point higher than the prior year s level, but unchanged from the previous quarter s level. The survey analysts stated that U.S. employers have a positive outlook for the coming quarter and they are seeing an emerging positive outlook from manufacturing employers who are reporting some of their strongest hiring plans since the end of the recession. Metro Denver Economic Development Corporation May 2, 2017 Page 7

9 Unemployment Metro Denver s not-seasonally adjusted unemployment rate in March fell 0.8 percentage points from the February level of 3.2 percent. Also, the March unemployment rate was 1.3 percentage points below the March 2016 level of 3.6 percent. All seven Metro Denver counties reported decreases in unemployment rates over-the-month, and all seven Metro counties reported decreases in unemployment rates over-the-year of one percentage point or more. Labor Force Statistics (000s, not seasonally adjusted civilian labor force) March 2017 (p) 2017 YTD AVG 2016 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, % 7.6% 3.8% Adams County % % % 9.4% 4.2% Arapahoe County % % % 7.7% 3.7% Boulder County % % % 6.2% 3.3% Broomfield County % % % 6.6% 3.5% Denver County % % % 7.9% 4.1% Douglas County % % % 6.0% 3.1% Jefferson County % % % 7.4% 3.6% Colorado 2, % 2, % 2, % 7.9% 3.7% United States 159, % 159, % 158, % 8.1% 4.6% Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary Adams County recorded the highest unemployment rate for March 2017, but recorded the largest decrease over-themonth. Boulder and Douglas Counties recorded the lowest unemployment rate of 2 percent, with both counties falling 0.8 percentage points over-the-month. Colorado s unemployment rate fell 0.9 percentage points over-the-month to 2.5 percent during the month of March, the lowest recorded non-seasonally adjusted unemployment rate since October The national unemployment rate of 4.6 percent in March was 0.3 percentage points below the February rate and was 0.5 percentage points below the previous year. The state s seasonally adjusted unemployment rate dropped to 2.6 percent, the lowest of any state in the country and the lowest ever in Colorado in records going back to This atmosphere creates a highly competitive employee market, causing employers to increase benefits and pay to acquire labor. Colorado is also seeing labor shortages in many of its supersectors including business services, financial activities, and construction. Weekly First-Time Unemployment Insurance Claims Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Mar-17 Feb-17 Mar % Change Metro Denver 958 1,107 1,298 1,202 1, % 1,627 1,211 Colorado 1,798 1,961 2,367 2,168 2, % 3,123 2,211 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. March unemployment insurance claims decreased in Metro Denver, falling 13.5 percent between February and March, and recorded a 26.2 percent decrease over-the-year. March recorded the smallest recorded unemployment insurance claims since June 2007 (932 claims). Claims throughout Colorado decreased over-the-month, falling 8.3 percent. Colorado s unemployment insurance claims also decreased 24 percent between March 2016 and Metro Denver Economic Development Corporation May 2, 2017 Page 8

10 Consumer Sector Sentiment & Spending The Consumer Confidence Index for the U.S. decreased in April 2017, reporting a level of from the revised March level of 124.9, a 3.7 percent decrease over-the-month. The national index for April 2017 was 27 percent above the April 2016 level of Analysts at The Conference Board stated that between March and April, the Present Situation Index fell 3.3 percent to and the Expectations Index fell 5.6 percent to Consumer confidence declined in April after increasing sharply over the past two months, but still remains at a strong level. Consumers assessed current business conditions, and, to a lesser extent, the labor market less favorably than in March. Despite April s decline, consumers remain confident that the economy will continue to expand in the months ahead. Colorado is included in the Mountain Region Index and the area reported an increase in consumer confidence between March and April. The index rose to in April from the March revised level of 122.5, an increase of 12.2 percent overthe-month and a 51.1 percent increase over-the-year. For the Mountain Region, the Present Situation Index rose to 168 in April from in March (revised), while the Expectations Index increased to from in March (revised). Consumer Confidence Index Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Apr-17 (p) Mar-17 (r) Apr % Change Mountain % United States % Source: The Conference Board. (p) = preliminary (r) = revised National retail sales decreased 0.2 percent between February and March, totaling $471 billion. Compared with year-ago data, retail sales were up 5.2 percent or an additional $72.4 billion. Motor vehicle sales rose 5.6 percent over-the-year, but fell 1.2 percent between February and March. The building materials sector reported an increase of 6.3 percent between March 2016 and 2017, but fell 1.5 percent over-the-month. Gasoline sales rose 14.3 percent over-the-year but decreased 1 percent over-the-month. Core retail sales, which excludes motor vehicle, building material, and gasoline sales, recorded a 0.3 percent increase between February and March and rose 3.9 percent over-the-year. Total Retail Sales ($000s) Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth Annual Growth Feb-16 Jan-16 Feb % Change Total Metro Denver 7,440,821 7,526,929 7,345,759 14,967,750 15,400, % 6.4% 9.8% Adams County 1,478,241 1,508,804 1,447,453 2,987,045 2,967, % 10.4% 13.0% Arapahoe County 1,428,805 1,442,657 1,462,199 2,871,462 3,081, % 3.1% 8.5% Boulder County 616, , ,273 1,292,809 1,377, % 8.2% 6.6% Broomfield County 155, , , , , % 0.2% 7.6% Denver County 1,872,968 1,887,623 1,927,396 3,760,591 3,974, % 1.9% 15.5% Douglas County 735, , ,983 1,409,817 1,218, % 17.0% 5.0% Jefferson County 1,154,043 1,175,758 1,141,207 2,329,801 2,471, % 8.2% 3.9% Colorado 12,375,305 12,581,790 12,371,256 24,957,095 25,944, % 7.0% 9.9% Source: Colorado Department of Revenue. Retail sales in Metro Denver increased 1.3 percent between February 2015 and 2016, the latest available data. Retail sales for February 2016 totaled $7.4 billion, an absolute increase of about $95 million compared with the February 2015 total of over $7.3 billion. Four of the seven Metro Denver counties reported year-over-year increases, with Douglas County (+29.2 percent) and Adams County (+2.1 percent) recording the largest increases. The City and County of Broomfield and Jefferson County also recorded growth in retail sales over-the-year, rising 1.9 percent and 1.1 percent, respectively. The largest decline in retail sales between February 2015 and 2016 was in Boulder County, falling 4.6 percent, followed by the City and Metro Denver Economic Development Corporation May 2, 2017 Page 9

11 County of Denver (-2.8 percent) and Arapahoe County (-2.3 percent). Six of the seven counties in Metro Denver recorded declines in sales between January and February, with Douglas County (+9 percent) recording the only increase in sales overthe-month. Retail sales in Colorado were unchanged over-the-year, recording nearly $12.4 billion in retail sales in February 2016, but retail sales were 1.6 percent lower over-the-month. The U.S. Consumer Price Index (CPI-U) increased 0.1 percent in March to 243.8, up from in February. Advances in the indexes for transportation (+4.6 percent), medical care (+3.5 percent), and housing (+3.1 percent) were major contributors. The food and beverage index recorded the smallest increase of 0.5 percent, followed by the apparel index (+0.6 percent), while the education and communications index recorded the only decline over-the-month (-2.2 percent). For the Denver- Boulder-Greeley area, the all items index increased by an average of 2.8 percent in The housing index (+6.1 percent) and medical care index (+1.3 percent) saw the largest increases over-the-year, with transportation reporting the largest decrease of 1.6 percentage points over-the-year. According to the AAA Daily Fuel Gauge Report, the national average fuel price for April increased 2.9 percent from March to $2.39 per gallon. The April average fuel price was 7.9 percent higher than the prior year s level ($2.21 per gallon). Metro Denver reported a 6.7 percent increase in the average fuel price between March and April. The average fuel price of $2.31 per gallon for March in Metro Denver was $0.08 lower than the national average. The area reported average fuel prices that were 10.4 percent higher in April 2017 than the previous year s level. Stock Market All four stock market indices improved between March and April, and all four recorded double-digit increases between March 2016 and The Bloomberg Colorado index increased 1.4 percent over-the-month to 556.2, and was 10.9 percent above the prior year s level. The DJIA rose 1.3 percent between March and April and rose 17.8 percent over-theyear. The NASDAQ recorded an increase between March and April of 2.3 percent, and a 26.6 percent increase over-theyear. The S&P 500 recorded a 0.9 percent increase over-the-month and increased 15.4 percent between April 2016 and Stock Market Indexes Month of Month of Month of YTD Return YTD Return Ann Avg Return Ann Avg Return Apr-17 Mar-17 Apr Bloomberg Colorado % 0.9% 3.5% 17.7% S&P 500 2, , , % 1.0% 13.4% 3.5% NASDAQ 6, , , % -4.6% 15.9% 9.8% DJIA (Dow Jones) 20, , , % 2.0% 7.3% 6.4% Sources: Bloomberg.com; Yahoo! Finance. Travel & Tourism For the first time since 1996, Denver will host a NCAA men s basketball tournament regional round in The Pepsi Center will host the West Regional NCAA round on March 25 and 27, The arena hosted first- and second-round matches in 2004, 2008, 2011, and Three Colorado proposals are among 11 U.S. finalists for the Hyperloop transportation network. The three routes are: (1) A 360-mile route connecting Denver International Airport to Pueblo, Vail, and Cheyenne, Wyoming; (2) A 242-mile route connecting Wyoming to Pueblo; and (3) A 1,152-mile route connecting Cheyenne, Wyoming to Houston, Texas. The 11 U.S. finalists join 24 international proposals, which soon will be narrowed down to three winners to work on further development. A new report by New York-based ValuePenguin found that Denver is the 10th lease affordable mid-sized city in the nation for public transit. The report defines mid-sized cities as those with populations of between 250,000 and 700,000. To compile the report, the company looked at data consisting of median earnings in the past 10 months by workers 16 years and over using public transportation as a means of transportation to work and the average of all Metro Denver Economic Development Corporation May 2, 2017 Page 10

12 monthly unlimited-use passes for major modes of transportation. According to the report, Denver commuters spend 4.4 percent of their income on transit, above the national average of 3.2 percent. The average hotel occupancy rate in Metro Denver rose 9.5 percentage points to 74.2 percent occupancy in March compared with the February level. The March level was 3.9 percentage points above the previous year s level. The average room rate for March was $ per night, 5.4 percent higher than the February level, and 5.4 percent higher over-theyear. Occupancy rates typically start increasing after the first of the year. Metro Denver Hotel Statistics Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Mar-17 Feb-17 Mar % Change Percent of Hotel Rooms Occupied 74.2% 64.7% 70.3% 67.1% 67.1% 0.0% 68.0% 67.0% Average Hotel Room Rate $ $ $ $ $ % $ $ Source: Rocky Mountain Lodging Report. Spokespeople for Denver International Airport (DEN) reported that over 4.2 million passengers passed through the airport in February, decreasing 5.2 percent from the 4.4 million passengers in January. The February 2017 level was 3.3 percent higher than the February 2016 level, reaching a new February passenger record. Denver International Airport s gross revenue increased by 4.4 percent from last year, to a record $976.4 million. Their operating revenue has grown 21.2 percent since 2010 and the non-airline revenue portion (revenue that comes from retail, restaurants, parking, car rentals, and the airport s new hotel) of that has increased 56.5 percent since Denver International Airport Passengers Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual Feb-17 Jan-16 Feb % Change Number of Airline Passengers 4,204,744 4,434,862 4,069,006 8,639,606 8,358, % 53,156,278 49,863,286 Residential Real Estate Source: Denver International Airport, Traffic Statistics. Miami developer Renzo Renzi is proposing a 40-story, 800-unit condominium development in downtown Denver. The Paradise Living development would include two 40-story towers with 400 units each and 30,000 square feet of retail space. Prices for the units would start at $320,000. The land for the project is currently under contract but the project has yet to be approved by the city. The developer plans to complete the project in the fall of Chicago-based AMLI Residential purchased 4-acres in the RiNo district with plans to construct 400 apartments. The two-tower development will include a pool fronting the South Platte River, bicycle storage and repair shop, and a dog park. The six and seven story buildings will include units ranging from 560 square feet to 1,400 square feet and will rent for roughly $2.10 per square foot. The development is expected to be completed by the fourth quarter of Denver s last Kmart, located at West Alameda Avenue and South Cherokee Street, will be replaced with 350 rental units as a part of the Denver Design District. The 8-acre site will include the apartment complex, a 460-space parking structure, and retail space. The project will likely break ground by the end of Gardner Capital plans to build a five-story, 116-unit apartment complex in Aurora located near East Alameda Avenue and South Chambers Road. The Alameda View Apartments is projected to cost $29 million with Gardner Capital seeking a $17 million grant from the City of Aurora. The development is expected to be completed by fall Zocalo Community Development plans to develop a $32 million affordable housing development that will replace a vacant hotel on 1st Avenue and S. Broadway. The development will include 50 residential units in the restored hotel building, a five-story addition with an additional 56 residential units, first floor retail, and an adjacent parking structure. Metro Denver Economic Development Corporation May 2, 2017 Page 11

13 A 29-unit condominium project with 10,000 square feet of ground floor retail space began construction at the end of April. The Wrigley on Penn development on the northwest corner of Pennsylvania Street and Bayaud Avenue will feature condominiums ranging from $325,000 to $685,000 with floor plans ranging from 500 to 1,300 square feet. The homes are expected to be move-in ready in May Mainspring Developers will begin construction on a 26-unit affordable condominium development that will offer units below $300,000. The three-story project called The Orpheus, located at 2825 W. 24th Ave. in Denver, will offer units ranging from 633 to 871 square feet, with prices starting at $259,000 and reaching as high as $369,900. Fuse Living, a developer with projects in Five Points and RiNo, will break ground on a 12-unit project in Cherry Creek. Two three-story buildings will be built consisting of two- and three-bedroom units starting at $850,000 and going up to $1.2 million. Construction of the development, which is located on Alameda Avenue between Monroe and Garfield, will begin this May. The Clyde, a six-unit development that will replace an accounting office and a residential building at 3734 Tejon St., is set to break ground in early May. The 1,400-square-foot townhomes will cost around $575,000. The Colorado Housing and Finance Authority awarded more than $20 million in state and federal tax credits in April to 12 proposed affordable housing complexes offering 1,290 units around Colorado. Eight projects providing 720 units were approved in Metro Denver. The projects receiving funding were: Brandon Flats (104 units), Laradon Homes (91 units), Platte Valley Homes (68 units), Sheridan Station (133 units), and Tammen Hall Apartments (49 units) in Denver; Flats at Two Creeks (78 units) and Indy Street Flats (115 units) in Lakewood; and Peoria Crossing (82 units) in Aurora. Home Resales Existing home sales in Metro Denver increased between February and March, increasing 49.1 percent to 4,725 homes sold during the month. Home sales were also 0.6 percent higher between March 2016 and Unsold homes on the market were 9.8 percent higher in March 2017 than March 2016, with 439 more homes on the market as of the end of the month. In addition, unsold homes on the market rose by 26.9 percent between February and March The average sales price for single-family homes rose 7.5 percent over-the-year to $449,708, while the average sales price of condominiums ($267,348) increased 9.4 percent during the same period. Between March 2016 and 2017, the single-family market added about $31,467 to the average sales price, while the condominium market added about $22,919 to the average sales price. Previously-Owned Home Sales Activity Month of Month of Month of YTD Total YTD Total YTD Total Ann Total Ann Total Mar-17 Feb-17 Mar % Change Home Sales (Closed) 4,725 3,169 4,695 11,438 11, % 45,203 49,789 Unsold Homes on Market 4,921 3,878 4,482 4,921 4, % 10,085 27,911 Average Sales Price-Single Family $449,708 $431,525 $418,233 $437,611 $409, % $304,178 $310,418 Average Sales Price-Condo $267,348 $256,093 $244,429 $258,820 $239, % $179,616 $180,321 Median Sales Price-Single Family $386,950 $372,000 $346,000 $250,000 $245,000 Median Sales Price-Condo $235,500 $231,750 $200,000 $142,000 $150,000 Source: Colorado Comps LLC; Denver Metro Association of Realtors; REcolorado. According to the National Association of Realtors (NAR), existing-home sales in March 2017 increased 4.4 percent to a seasonally adjusted annual rate of 5.71 million, up from the revised 5.47 million in February. Existing home sales in March increased by 5.9 percent over-the-year and recorded the strongest month of sales since February 2007 (5.79 million). Total housing inventory at the end of March increased 5.8 percent to 1.83 million existing homes available for sale, but is still 6.6 percent lower than a year ago (1.96 million) and has fallen year-over-year for 22 straight months. First-time buyers were 32 percent of sales in March, which was unchanged from February. NAR economists said that sales took off in March to their highest pace in over 10 years, and severe supply shortages resulted in the typical home coming off the market significantly Metro Denver Economic Development Corporation May 2, 2017 Page 12

14 faster than in February and a year ago. Properties typically stayed on the market for 34 days in March, down from 45 days in February, and down from a year ago (47 days). Home Prices According to county assessors in Metro Denver, notices of valuations sent to all property owners on May 1 will show property values rising by double-digits. Property taxes will likely increase along with the increase in median home valuations, but increases will vary depending on any changes to mill levies. County assessors reported that the median residential valuation increased 40 percent in Adams County, followed by Arapahoe County (26 percent), Denver County (25.9 percent), Boulder County (24 percent), Jefferson County (22.8 percent), and Douglas County (17.2 percent). Colorado homes are taxed at some of the lowest rates in the country, according to an analysis from ATTOM Data Solutions. The company looked at property taxes on more than 84 million single-family homes in 586 U.S. counties. Nationally, single-family homeowners paid an average of $3,296 in property taxes a year, while in Colorado they paid only $2,046. This amount was smaller even though the average market value of a home in Colorado ($394,604) is higher than the U.S. average of $285,495. Location, Inc., a geographic research and data mining company, predicts that Denver s housing market will see declines in housing prices starting in 2019, falling in some areas by more than 30 percent. The company used 200 variables to predict housing trends in Denver, Boulder, Greeley, and Fort Collins, and found that housing prices will drop by an average of 9.3 percent over the next five years. According to their data, the Boulder MSA will record the largest decline, predicting a 17 percent drop in home prices, while the Denver-Aurora-Lakewood MSA is projected to drop by 11 percent. NAR data shows the median existing-home price for all housing types in March was $236,400, up 6.8 percent from March 2016 ($221,400). March's price increase marked the 61st consecutive month of year-over-year gains. Median home prices in the West were the highest among all four regions ($347,500), rising 8 percent over-the-year. The median home price in the South increased 8.6 percent over-the-year, rising to $210,600. The Northeast median home price of $260,800 was 2.8 percent higher than the same time last year. The Midwest has the lowest median home price at $183,000, which was 6.2 percent higher than March A separate NAR report revealed that median home prices throughout the Metro Denver area decreased between the third and fourth quarters of The median price in the Boulder MSA ($494,800) was 4 percent lower and the price in the Denver-Aurora MSA ($381,600) was 1.3 percent lower. However, the median price in Boulder was 5.3 percent higher than the fourth quarter of Between the fourth quarters of 2015 and 2016, the Denver-Aurora MSA recorded a 7.9 percent increase. The national median sales price fell 2.6 percent over-the-quarter to $235,000 but was 5.7 percent higher than the previous year s level. Of the 178 MSAs included in the fourth quarter 2016 report, the Boulder MSA reported the seventh highest median price while the Denver-Aurora MSA median price was the 14th highest. Median Sales Price of Existing Single-Family Homes ($000s) Quarter 4 Quarter 3 Quarter 4 YTD Avg YTD Avg YTD Avg Median Median 2016 (p) 2016 (r) % Change Boulder MSA $494.8 $515.2 $469.9 $511.7 $ % $353.1 $366.4 Denver-Aurora MSA $381.6 $386.8 $353.5 $384.3 $ % $231.4 $249.5 United States $235.0 $241.3 $222.3 $235.5 $ % $166.2 $221.9 Source: National Association of REALTORS. (p) =preliminary (r) =revised Metro Denver Economic Development Corporation May 2, 2017 Page 13

15 According to the S&P/Case-Shiller home price index, Denver housing prices increased between January and February The Denver index was in February, recording 14 straight months of growth. Prices in 16 of the 20 cities tracked by the index increased or remained constant over-themonth and all 20 cities recorded increases overthe-year. Denver s home prices in February 2017 were 8.6 percent higher than the prior year s level, recording the fourth largest over-the-year increase of the 20 cities. Seattle (+12.2 percent) and Portland (+9.6 percent) recorded the largest overthe-year increases, while New York (+3.2 percent) reported the smallest increase. The national home price index increased 5.7 percent between February 2016 and Analysts for the index reported that there are still relatively few existing homes listed for sale and the small 3.8-month supply is supporting the recent price increases. Housing affordability has declined since 2012 as the pressure of higher prices has been a larger factor than stable to lower mortgage rates. Foreclosures Metro Denver recorded a 23.2 percent increase in foreclosures in March over the previous month but a 12 percent decrease over the year-ago level. Foreclosures decreased in Metro Denver from 332 in March 2016 to 292 in March Five of the seven counties in the metro area reported decreases in the number of foreclosures over-the-year. Broomfield County reported the largest decrease of 33.3 percent over-the-year, while Arapahoe County recorded the smallest decrease of 7.9 percent over-the-year. Six of the seven counties recorded increases in the number of foreclosures over-the-month. Broomfield County reported the largest increase over-the-month, rising 100 percent to four foreclosures, while Arapahoe County reported the smallest increase over-the-month, rising 8.3 percent. Adams County reported the only decline in foreclosures over-the-month, falling 3.6 percent to 53 foreclosures. Real Estate Foreclosures Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total Mar-17 Feb-17 Mar % Change Total Metro Denver* % 15,013 26,520 Adams County % 3,183 6,192 Arapahoe County % 3,589 6,237 Boulder County % Broomfield County % Denver County % 3,064 7,405 Douglas County % 1,534 1,865 Jefferson County % 2,650 3,588 *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. Metro Denver Economic Development Corporation May 2, 2017 Page 14

16 New Homes The Census Bureau report on new home sales after adjustment for seasonal trends stated that national home sales increased in March to 621,000 annual sales from the revised February level of 587,000 annual sales. The March home sales level was 5.8 percent above February and was 15.6 percent above the previous year s level. Three of the four regions reported over-themonth increases in home sales. The Northeast reported the largest over-the-month increase in sales, increasing 25.8 percent to 39,000 sales. The West and South also recorded over-themonth increases in new home sales, rising 16.7 percent to 175,000 sales and 1.6 percent to 323,000, respectively. The Midwest (-4.5 percent) reported the only over-the-month decline in new home sales, falling to 84,000 sales. All four regions reported over-the-year increases with the West region recording the largest increase of 32.6 percent, followed by the Midwest (+23.5 percent), Northeast (+21.9 percent), and the South (+5.9 percent). The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index for newly built single-family homes decreased in April, reporting a level of 68, down from the revised March level of 71. Readings above 50 indicate builders view sales conditions as good rather than poor. The index has been above 60 since September According to the Census Bureau, the seasonally adjusted annual number of nationwide residential building permits increased 4.2 percent in March (1.27 million permits) from February, and was 17.6 percent above March The overthe-month increase was driven by an 18.6 percent increase in multi-family permits, which was partially offset by a 15.6 percent decrease in single-family attached units over-the-month and a 0.6 percent decrease in single-family detached units. Single-family attached permits rose 11.8 percent over-the-year and single-family detached permits rose 14.1 percent. There was a 26.4 percent increase in multi-family permits between March 2016 and The Northeast (136,000 permits) reported the largest increase in permits over-the-year, rising 34.7 percent, while the Midwest (5.5 percent) recorded the smallest increase to 193,000 permits. The other two areas reported increases in permits with the South increasing 16.1 percent to 627,000 and the West posting a 22.9 percent increase to 311,000 permits. Residential Building Permits Month of Month of Month of YTD Total YTD Total YTD Total Total Total Mar-17 Feb-17 Mar % Change Single-Family Detached Units 1, ,005 2,614 2, % 5,947 7,799 Single-Family Attached Units % Multi-Family Units 1,230 1, ,184 2, % 8,679 6,195 Total Units 2,310 2,065 1,657 5,912 4, % 14,925 14,392 Source: U.S. Census Bureau. Residential building permits for the Metro Denver area increased 39.4 percent in March compared with the prior year. The over-the-year increase in total permits was attributed to a 97.1 percent increase in multi-family permits and a 5 percent increase in single-family detached permits. The single-family attached market recorded the only over-the-year decrease in permits, falling 10.7 percent, or 3 less permits over-the-year. Single-family attached units also recorded the only decrease in permits between February and March 2017, decreasing 28.6 percent. Both the single-family detached units and multifamily units recorded an increase over-the month, 23.2 percent and 4.8 percent, respectively. Total permits issued in Metro Denver increased 11.9 percent between February and March Metro Denver Economic Development Corporation May 2, 2017 Page 15

17 Apartment Rental Market The Denver Metro Apartment Vacancy and Rent Survey for the first quarter of 2017 reported decreasing vacancy in the metro area, decreasing 0.5 percentage points to 5.7 percent from the fourth quarter of The average vacancy rate in the first quarter of 2017 also decreased over-the-year by 0.4 percentage points. Vacancy rates ranged from 4.2 percent in Jefferson County to 6.6 percent in Adams County. Douglas County reported the largest over-the-year decrease of the counties, falling 5.3 percentage points. Vacancy rates declined over-the-year in four of the six submarkets, with Adams County increasing by 1.9 percentage points and Denver County increasing by 0.3 percentage points. Metro Denver builders delivered 3,246 new apartments in the first quarter of 2017, the highest quarterly total since the second quarter of According to the Denver Metro Apartment Vacancy and Rent Survey, the increased supply in apartments would normally depress rental prices, but the average rent for the newly built apartments are around $1,729 a month. These higher price points, when filled, will increase the metro wide average rent figure and provide upward pressure on prices. Apartment Statistics Quarter 1 Quarter 4 Quarter 1 YTD Average YTD Average YTD Average Annual Average Annual Average % Change Apartment Vacancy Rate 5.7% 6.2% 6.1% 5.7% 6.1% 4.7% 6.2% Average Monthly Rental Rate (all units) $1,383 $1,347 $1,315 $1,383 $1, % $974 $856 Source: Denver Metro Apartment Vacancy and Rent Survey. The average monthly rental rate of apartments in Metro Denver increased across all six submarkets in the first quarter of The first quarter average rental rate in Metro Denver ($1,383) was 2.7 percent higher than the previous quarter s level. The rate was also 5.1 percent higher than the first quarter of 2016, representing an increase of $67 in the average monthly rental rate over-the-year. The average rental rate ranged from $1,278 in Adams County to $1,565 in the Boulder/Broomfield submarket. Commercial Real Estate Castle Rock has approved a public financing package for a $300 million redevelopment project called Miller s Landing that will include office space, retail, and a hotel. The first phase of the development will include a $12 million remediation of the landfill site that currently occupies the 65-acre property. Phase two will include $65 million in public infrastructure improvements and will begin selling pad sites to vertical developers. The site will eventually include up to 450,000 square feet of office space, 250,000 square feet of retail, and a hotel with at least 250 rooms. Four phases will take place and the project is expected to be completed within a 10-year period. Majestic Realty Co. will break ground on possibly one of Colorado s largest single-building speculative industrial development in Aurora, building 701,500 square feet of space near I-70 and Tower Road. The building is expected to be completed in the first quarter of 2018 and is being built on 36 acres of the 1,000-acre Majestic Commercenter. The Denver Rock Drill, a $250 million mixed-used development located on 39th Avenue between Franklin and High streets, will include 300,000 square feet of office space, 65,000 square feet of retail space, 180 for-rent residential units, and a 175-room hotel by Sage Hospitality. Construction is expected to begin in early Minneapolis-based United Properties plans to build a mixed-use project called Interpark in Broomfield that will include two buildings totaling 228,000 square feet of flex/industrial space. Swisslog Healthcare Solutions, which automates healthcare systems, warehouses, and distribution centers, will be the first tenant of the development, taking 67,779 square feet. The project is expected to be completed during the second quarter of Hotel research company STR reported that 4,672 new hotel rooms are under construction in Denver. This represented a 62.4 percent increase for new hotel rooms under construction compared with last year and was the third highest in the nation. U.S. leaders were Nashville, Tennessee ( percent) and Seattle (+94.7 percent). Metro Denver Economic Development Corporation May 2, 2017 Page 16

18 Office Market According to the first quarter report from CBRE, the Denver office market started the year on a steady note as key fundamentals improved slightly in the first quarter of the year. There was negative net absorption of 82,967 square feet, which was driven by 268,959 square feet of negative absorption in Class A space. CBRE s Market Outlook stated that Denver s office market would continue to grow and remain healthy by elevated construction activity and growing direct lease rates. Downtown continues to see strong preleasing activity as out-of-state companies relocate to Denver, but suburban locations will see challenges in preleasing. The technology and business services industries are rapidly absorbing new-to-market space and backfilling vacant oil and gas office locations. Investor sentiment remains positive, especially for infill and transit oriented projects. According to the national CoStar first quarter market report, the U.S. office market reported no change in the vacancy rate of 9.7 percent. Net absorption for the overall U.S. office market was positive million square feet, the lowest absorption in the last three quarters. During the first quarter of 2017, 339 buildings totaling 21.3 million square feet were completed in the U.S. market area, an increase in total square footage from the fourth quarter of There were million square feet of office space under construction at the end of the first quarter of The Metro Denver office market reported increases in the vacancy rate and increases in the average lease rate through the first quarter of According to CoStar, the direct vacancy rate rose 0.4 percentage points over-the-year to 9.7 percent vacancy. The average lease rate rose 1.9 percent between the first quarters of 2016 and 2017, gaining $0.47 per square foot during the same period. Office construction in Metro Denver was robust during the first quarter of There was 765,400 square feet of space completed across nine buildings in the first quarter of Some of the largest office buildings completed through 2017 included the 299,702-square-foot Willow Dr. office building in Greenwood Village and the 235,000-square-foot Dairy Block office building in Denver. There was nearly 5.66 million square feet of space under construction during the first quarter of 2017, a 41 percent increase in space under construction compared with the same time last year. Of this space, nearly 3.57 million square feet of space was under construction in the City and County of Denver, the largest amount of space of the seven counties at 63 percent of total Metro Denver construction. Office Market Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 6,112 6,103 6,078 6,044 6,024 6,001 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 9.7% 9.3% 9.3% 9.8% 10.8% 11.7% Vacancy Rate (with sublet) 10.6% 10.1% 9.9% 10.4% 11.2% 12.1% Avg. Lease Rate (direct, per sq. foot, full service) $25.37 $25.34 $24.90 $23.77 $22.33 $21.18 New Construction Completed (year-to-date) 0.77 MSF, 1.36 MSF, 0.15 MSF, 0.02 MSF, 0.08 MSF, 0.08 MSF, Currently Under Construction Industrial & Flex Market 9 Bldgs 5.66 MSF, 45 Bldgs 28 Bldgs 5.91 MSF, 45 Bdgs 3 Bldgs 4.02 MSF, 37 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 3 Bldgs 2.76 MSF, 24 Bldgs 4 Bldgs 2.00 MSF, 21 Bldgs 1 Bldgs 1.19 MSF, 15 Bldgs According to the first quarter report from CBRE, Metro Denver s industrial market continued its positive net absorption for the 28th straight quarter as lease rates remained high. Construction activity remained strong with 5.2 million square feet under construction with over 4 million square feet set to deliver in The influx of e-commerce companies to the area will continue to add to the construction activity, increasing lead times and costs. Investment activity remains strong, but could see a shift if interest rates increase. Metro Denver Economic Development Corporation May 2, 2017 Page 17

19 According to the national CoStar first quarter market report, the U.S. industrial market ended the first quarter of 2017 with a vacancy rate of 5.3 percent, unchanged from the previous quarter. Net absorption for the overall U.S. market was positive 57.9 million square feet, down from 89.5 million from the fourth quarter of The flex building market recorded net absorption of positive 1 million square feet, down from 6.2 million in the fourth quarter of During the first quarter of 2017, 517 buildings totaling 63.3 million square feet were completed in the U.S. market, down from 66.1 million during the fourth quarter of There was million square feet of industrial space under construction at the end of the first quarter of CoStar Realty data revealed that the industrial market continued to loosen during the first quarter of The first quarter direct vacancy rate was 0.8 percentage points higher than the first quarter of The average lease rate fell 2.3 percent between the first quarters of 2016 and 2017, subtracting $0.17 per square foot to the average lease rate. There was also a 1.8 percent decrease over-the-quarter in the average lease rate. Industrial Market Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 6,974 6,962 6,939 6,927 6,904 6,888 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 3.9% 3.7% 3.1% 3.0% 3.7% 5.5% Vacancy Rate (with sublet) 4.3% 4.1% 3.4% 3.2% 4.0% 5.8% Avg. Lease Rate (direct, per square foot, NNN) $7.29 $7.42 $7.46 $6.40 $5.30 $4.73 New Construction Completed (year-to-date) 0.68 MSF, 4.51 MSF, 0.09 MSF, 0.39 MSF, 0.10 MSF, 0.08 MSF, Currently Under Construction 10 Bldgs 4.21 MSF, 31 Bldgs 30 Bldgs 2.33 MSF, 29 Bldgs 2 Bldgs 3.96 MSF, 22 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 1 Bldg 0.86 MSF, 4 Bldgs 4 Bldgs 2.22 MSF, 17 Bldgs 1 Bldgs 1.15 MSF, 9 Bldgs There were 10 industrial buildings completed in 2017 year-to-date, including 378,000 square feet in three buildings at the Hub 25 industrial park in Adams County and a 105,700-square-foot building near I-70 and Chambers. There were 31 buildings with over 4.21 million square feet of space under construction during the period. Flex Space Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 1,481 1,472 1,467 1,459 1,451 1,445 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 7.6% 8.1% 8.0% 7.8% 9.1% 12.3% Vacancy Rate (with sublet) 7.8% 8.2% 8.1% 9.0% 10.5% 13.6% Avg. Lease Rate (direct, per square foot, NNN) $11.88 $11.46 $10.70 $10.10 $9.54 $9.06 New Construction Completed (year-to-date) 0.46 MSF, 0.24 MSF, 0.04 MSF, 0.19 MSF, 0.07 MSF, 0.05 MSF, Currently Under Construction 9 Bldgs 0.06 MSF, 2 Bldgs 6 Bldgs 0.39 MSF, 8 Bldgs 2 Bldgs 0.39 MSF, 6 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 2 Bldgs 0.14 MSF, 1 Bldg 2 Bldgs 0.45 MSF, 7 Bldgs 1 Bldgs 0.06 MSF, 3 Bldgs The Metro Denver flex market recorded falling vacancy rates and increasing average lease rates through the first quarter of the year. The direct vacancy rate for flex space fell 0.4 percentage points to 7.6 percent between the first quarters of 2016 and The average lease rate rose 3.7 percent over-the-quarter to $11.88 per square foot. The fourth quarter lease rate was also 11 percent higher than the prior year s level and added $1.18 per square foot. There was 464,400 square feet of Metro Denver Economic Development Corporation May 2, 2017 Page 18

20 new space completed in 2017, including the 108,000-square-foot 6755 E. Yampa Street building in Denver and an 83,291- square-foot flex building in the Prairie Business Center in Louisville. Retail Market According to the first quarter report from CBRE, Metro Denver s retail market is expected to continue its strong growth. Availability of retail space dropped to 8 percent, the lowest level since the third quarter of 2007, even with construction activity exceeding 1 million square feet for the first time since Denver s retail market outlook remains steady but will continue to strive for supply and demand equilibrium. Increased speculative construction in suburban locations is expected as retailers follow residential development. Investors may shift focus to acquire more well positioned inventory like single tenant net-leased properties. According to the national CoStar first quarter market report, the U.S. retail market did not experience much change in market conditions in the first quarter of The vacancy rate remained unchanged at 4.8 percent, net absorption was slightly positive at 13.6 million square feet, and rental rates are slightly higher at $16 per square foot, up from $15.71 per square foot in the fourth quarter of During the first quarter of 2017, 1,020 buildings totaling 18 million square feet were completed, down from 24 million square feet completed in the fourth quarter of There was 86.7 million square feet of retail space under construction at the end of the first quarter of Metro Denver s retail market continued to gain momentum through the first quarter of The direct vacancy rate decreased 0.4 percentage points between the first quarters of 2016 and 2017 and was 0.1 percentage points below the fourth quarter 2016 level. The first quarter direct vacancy rate was the lowest first quarter level since the first quarter of The average lease rate for retail space rose 5.2 percent over-the-year, adding $0.85 per square foot during this same period. The majority of completed retail projects during the year were larger than the previous quarter. Of the 20 buildings completed so far in 2017, the overall average size was 26,410 square feet. Douglas County recorded the largest amount of retail space completed through 2017, reporting 317,747 square feet of retail space completed. There were 63 buildings under construction during the first quarter of 2017, totaling 1.27 million square feet. The overall average size of retail buildings under construction in the first quarter of 2017 was 20,102 square feet, with the largest building being the 235,000-square-foot general retail building at 9th and Colorado Blvd in Denver. Retail Market Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 11,958 11,937 11,869 11,769 11,695 11,610 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 4.4% 4.5% 4.8% 5.1% 5.4% 6.1% Vacancy Rate (with sublet) 4.7% 4.7% 5.0% 5.3% 5.7% 6.3% Avg. Lease Rate (direct, per square foot, NNN) $17.11 $16.57 $16.26 $15.73 $15.42 $15.15 New Construction Completed (year-to-date) 0.53 MSF, 1.32 MSF, 0.35 MSF, 0.19 MSF, 0.13 MSF, 0.20 MSF, Currently Under Construction 20 Bldgs 1.27 MSF, 63 Bldgs 90 Bldgs 1.19 MSF, 51 Bldgs 30 Bldgs 0.81 MSF, 33 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 12 Bldgs 0.71 MSF, 28 Bldgs 20 Bldgs 0.60 MSF, 19 Bldgs 20 Bldgs 0.90 MSF, 22 Bldgs Metro Denver Economic Development Corporation May 2, 2017 Page 19

21 Monthly Economic Indicators Positive Changes Nonfarm Employment Growth % Companies Hiring (Denver Area) Unemployment Rate Initial Unemployment Insurance Claims Total Retail Sales Monthly/Quarterly Direction Year-Over-Year Direction 11 of of of 18 6,400 34,300 34,500 Employment up 0.4% from Feb. to Mar. Employment up 2.1% from Mar to % 27% 26% Companies expecting to add workers rose 2 percentage points from 1Q 2017 to 2Q 2017 Companies expecting to add workers rose 4 percentage points from 2Q 2016 to 2Q % -1.3 percentage points 2.9% Unemployment fell 0.8 percentage points between Feb. and Mar. Unemployment rate down from Mar to 2017 Year-to-Date Direction -13.5% -26.2% -12.3% Claims decreased from Feb. to Mar. Claims decreased from Mar to 2017 YTD employment up 2.2% through Mar. YTD average up 3 percentage points compared with 2016 Down from 2016 YTD average of 3.5% YTD average claims decreased through Mar % 1.3% -2.8% Metro sales decreased from Jan. to Feb. Metro sales up from Feb to 2016 YTD sales down through Feb Mountain Region Consumer Confidence Index Hotel Occupancy DIA Passengers Bloomberg Colorado Index % Index up 12.2% from Mar. to Apr. Index up from Apr to 2017 YTD average up 35.8% through Apr % 3.9 percentage points 67.1% Increased 9.5 percentage points from Feb. to Mar. -5.2% 3.3% 3.4% Passengers down from Jan. to Feb. Occupancy increased from Mar to 2017 Passengers up from Feb to 2017 YTD occupancy unchanged from last year YTD passengers increased through Feb % 7.6% Index up 1.4% from Mar. to Apr. Index up from Apr to 2017 YTD return through Apr Dow Jones Industrial Average 20, % 6.0% Index up 1.3% from Mar. to Apr. Index up from Apr to 2017 YTD return through Apr Home Sales (closed) Median Home Price (Denver-Aurora MSA) 4, % 11,438 Sales up 49.1% from Feb. to Mar. Sales up from Mar to 2017 YTD sales up 2% through Mar $381, % $384,300 Down 1.3% from 3Q 2016 to 4Q 2016 Price up from 4Q 2015 to 4Q 2016 YTD price 8.7% higher through 4Q 2016 Foreclosures % 765 Up 23.2% from Feb. to Mar. Down from Mar to 2017 Down 21.4% YTD through Mar Residential Building Permits (Total) 2, % 5,912 Permits increased 11.9% from Feb. to Mar. Permits up from Mar to 2017 YTD permits up 23.8% through Mar Metro Denver Economic Development Corporation May 2, 2017 Page 20

22 5.7% -0.4 percentage points 5.7% Apartment Vacancy Rate Vacancy decreased 0.5 percentage points from 4Q 2016 to 1Q 2017 Vacancy decreased from 1Q 2016 to 1Q 2017 YTD average down 0.4 percentage points from last year 10.6% +0.7 percentage points +0.7 percentage points Office Vacancy Rate (with Sublet) Vacancy rate up 0.5 percentage points from 4Q 2016 to 1Q 2017 Vacancy rate up from 9.9% one year ago Vacancy rate up from 1Q 2016 to 1Q % +0.9 percentage points +0.9 percentage points Industrial Vacancy Rate (with Sublet) Vacancy rate up 0.2 percentage points from 4Q 2016 to 1Q Q 2017 vacancy up from 3.4% one year ago 1Q 2017 vacancy up from 3.4% one year ago 4.7% -0.3 percentage points -0.3 percentage points Retail Space Vacancy Rate (with Sublet) Vacancy rate unchanged from 4Q 2016 to 1Q Q 2017 vacancy rate down from 5.0% one year ago 1Q 2017 vacancy rate down from 5.0% one year ago Metro Denver Economic Development Corporation May 2, 2017 Page 21

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