Policy Watch. National. Local

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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 ranked small, medium, and large cities for the best cities in the country for employment, and three Colorado cities made the lists. Among the small cities in the country (less than 150,000 nonfarm jobs), Greeley ranked fifth, with 5.6 percent job growth over-the-year. Boulder placed first on the medium cities list (150,000 to 450,000 nonfarm jobs), with 3.2 percent job growth. Denver, which includes the Aurora and Broomfield areas, ranked 10th on the large cities list (more than 450,000 nonfarm jobs), with 3 percent job growth in Chief Executive magazine released their annual ranking of the best and worst states for business, placing Colorado in the number 16 position. The magazine conducted a survey of 500 CEOs, asking their opinions about the states with which they are affiliated. Colorado s current ranking is three positions lower than the previous year. Texas was ranked the best state and California ranked the worst state. The magazine stated that business-friendliness gets shaky as the state deals with marijuana legalization. Biz2Credit, an online market place for small business funding, ranked Denver as the third best city in the nation for small business. The ranking was based on credit score, cash flow, debt-to-income ratio, age of business, and annual revenue. Denver had the second highest average business credit score (649) and tenth average annual revenue ($482,483). The company considered businesses with fewer than 250 employees or less than $10 million in annual revenue. Forbes annual ranking of the world s 2,000 biggest public companies list includes nine Colorado companies. The ranking considers public companies and their individual revenues, profits, assets, and market value to build a composite score for the corporate size. The companies and their rankings include Dish Network (520), Liberty Media (651), Liberty Interactive (691), DaVita (714), Newmont Mining (1,033), Arrow Electronics (1,078), Western Union (1,122), Molson Coors Brewing (1,142), and Ball (1,380). According to Forbes, Dish Network was the only company with its headquarters in Colorado to make the most reputable companies list. Dish Network was ranked 146 out of 150 total companies across the country. The company received a score of 49.45, which was lower than the prior year s level. The Reputation Institute conducted the ranking and each company on the list is a large, publically traded company. Amazon ranked first on the list. The United State Census Bureau ranked Denver ninth among the 50 largest cities with the greatest percentage of commuters riding bikes rather than driving motor vehicles during the 2008 to 2012 period. The report found that 2.3 percent of Denver s population chooses to bike to work, an increase of 1.3 percentage points from the 2000 level of 1 percent. Denver commuters also walk to work, making up 4.4 percent of the population. Portland, Ore. landed the number one spot, with 6.1 percent of its population riding bikes. In a ranking of the best states to retire by Bankrate, Colorado ranked second among a list of the top 10 states. The ranking considered states that offer the best blend of affordability and lifestyle. The report stated that Colorado residents have high quality healthcare, lower-than-average tax burden, and residents are among the most content in the country. Bankrate stated that the downside to Colorado is the cost of living that is higher than 28 other states. North Dakota was ranked first and Utah ranked third. According to the 2014 American Fitness Index, a report produced by the American College of Sports Medicine, Denver is ranked the fourth fittest city in the country. The criteria for the ranking included preventative health behaviors, levels Metro Denver Economic Development Corporation June 3, 2014 Page 1

3 of chronic disease, and community resources to support physical activity. Denver received a score of 71.7 out of 100 possible points. The fittest city in the nation was Washington D.C. (77.3 points) followed by Minneapolis-St. Paul, Minn. (73.5 points) in second, and Portland, Ore. in third (72.1 points). The Trust for Public Land released the annual ParkScore ranking, which evaluates how well the nation s 60 largest cities meet the need for parks. The ParkScore ranking placed Denver in seventh place. The 2014 ranking for Denver is ten places higher than the 2013 ranking of 17th. The report scored the park systems in 60 U.S. cities and considered park access, percentage of residents within 10-minute walk to a park, park size, and the amount of city acreage dedicated to parks. According to the report, 84 percent of Denver residents live within a half-mile of a park. Aurora ranked 10th and Colorado Springs ranked 23rd. Policy Watch National Local The Obama administration released a report on the potential impact of climate change in the coming years. The National Climate Assessment reported the broadest official review of the impact of climate change ever compiled. The White House intends to target methane pollution related to natural gas, coal mining, livestock, and landfills in order to reach its goal of reducing greenhouse gas emissions by 17 percent of the 2005 levels before The report states that the Southwest states, including Colorado, can expect future droughts to be substantially hotter, reduction in latewinter and spring snowpack, declines in runoff and soil moisture leading to risks to the water supply, and drier climates. The report stated that these expected changes would affect the regional economy from the ski industry to lake and river recreation. The Regional Transportation District (RTD) commissioned a study on the transportation options to Denver s northwestern suburbs that was completed by the Northwest Area Mobility Study Planning and Development Committee. The report recommended RTD focus its efforts on completing the upgrades to the Bus Rapid Transit (BRT) system and then expand it to two other major corridors in the area. The BRT expansion to the two corridors could be built for $114 million and serve 14,000 riders per day. In comparison, the construction of a new commuter rail line between Westminster, Boulder, and Longmont was estimated to cost $1.4 billion in Boulder County officials voted to create a power and light utility service, separate from the Xcel services already offered to the area. Officials stated that the utility will remain a paper entity for the coming months and possibly for years, as the county has not committed to purchasing Xcel Energy s distribution service nor actually run a utility. The county made clear that the plan for the utility could change as the policy continues to evolve. Some officials voiced concerns about the cost of acquiring and starting the utility, stating that the cost exceeds the $1.9 million generated by the voter-approved utility occupation tax. The Colorado state government passed House Bill 1279, which provides a tax break on the business personal property tax for small companies. Companies with between $7,001 to $15,000 worth of equipment will receive a tax credit valued at the full value of that property tax. A similar bill passed in 2008 but it only covered $7,000 or less of such property. According to the Colorado Fiscal Institute, the average break from this bill will be $429 and stated that the break is not enough to affect hiring or major investment. Supporters of the bill argue that the tax break aids companies by putting money towards new computers or a new piece of equipment. Colorado Governor John Hickenlooper signed House Bill 1014, which expands the number of companies eligible for Colorado s job-growth tax incentive credit. The bill specifically lowers the amount of the average county salary that companies must pay to be qualified for the tax credit from 110 percent to 100 percent. It also lengthened the time period that companies can claim the tax break from five to eight years and requires that the income tax credit only be a major reason, not the only reason, the company relocated to Colorado. Metro Denver Economic Development Corporation June 3, 2014 Page 2

4 National Economic Overview The U.S. Bureau of Economic Analysis (BEA) released the second estimate of real gross domestic product (GDP) for the first quarter of The estimate showed that GDP decreased at an annual rate of 1 percent through the first quarter, down from the fourth quarter of 2013 growth rate of 2.6 percent. The advanced estimate reported positive GDP growth but the revised second estimate showed declining growth was due to larger decreases in private investment inventory than previously estimated. The estimate shows that declines in exports, nonresidential fixed investment, state and local government spending, and residential fixed investments led to decreases in GDP as well. The third revision of first quarter 2014 GDP will be released June 25. The April conference of the Federal Open Market Committee (FOMC) reports that the Federal Reserve is again revising the current monetary policy for continued economic recovery. The meeting revealed that the Federal Reserve will buy mortgage-backed securities at a pace of $20 billion per month rather than $25 billion per month. It will also revise the purchase of longer-term Treasury securities at a pace of $25 billion per month rather than $30 billion per month. While the committee is adjusting the policy, it will maintain the existing policy of reinvesting principal payments from its holdings of agency debt and rolling over maturing Treasury securities at auction. The committee also made note that while inflation is below the long-run objective, longer-run inflation expectations remain stable. The next committee meeting will be held on June 17th. Economic Indexes & Notable Data Releases National & International The U.S. trade deficit fell to $40.4 billion in March, down from the February deficit of $41.9 billion (revised). Imports increased to $234.3 billion, rising $2.5 billion between February and March, and exports increased $3.9 billion to $193.9 billion. The March increase in exports is attributed to rises in capital goods ($2.1 billion), industrial supplies and materials ($0.9 billion), automotive vehicles, parts, and engines ($0.6 billion), other goods ($0.3 billion), and foods, feeds, and beverages ($0.1 billion). The growth in imports through March is due to increases in consumer goods ($1.2 billion), foods, feeds, and beverages ($1.0 billion), capital goods ($0.9 billion), and other goods ($0.8 billion). The Conference Board Leading Economic Index for the U.S. reported continued growth through April, increasing 0.4 percent to between March and April. Economists at the Conference Board report that the rise in the index was driven by improving housing and financial market conditions, suggesting continued expansion through the second half of the year. The report also states that as consumers continue to spend and businesses increase investments, the economy will benefit through GDP growth. The Institute for Supply Management s Purchasing Managers Index rose to 54.9 percent in April compared with the March level of 53.7 percent, an increase of 1.2 percentage points. The index tracks 18 manufacturing industries and the April report shows growth in 17 of the manufacturing industries. One of the most notable changes was the over-themonth increase of 3.6 percentage points to 54.7 percent in the Employment Index. The survey reports the manufacturing sector expanded for the 11th consecutive month and survey respondents reported positive outlooks for the coming months. The Institute for Supply Management s Non-Manufacturing Index rose to 55.2 percent in April compared with the March level of 53.1, an increase of 2.1 percentage points. Of the 18 tracked non-manufacturing industries, 14 reported growth between March and April. The largest over-the-month increase was a 7.5 percentage point increase in three separate indexes including the Business Activities and Production Index, the Inventories Index, and the New Export Orders Index. The Non-Manufacturing Index reported the 51st consecutive month of growth and respondents indicated business conditions and the economy are improving. Metro Denver Economic Development Corporation June 3, 2014 Page 3

5 Local The Leeds Business Confidence Index reported growth for the second quarter of 2014, posting an increase from 59.9 to 61 over-the-quarter. This marked the 10th consecutive quarter of positive expectations. Confidence in the Colorado economy also grew, rising to 66.7 in the second quarter. Of all respondents, 66 percent expect the state economy to expand while 29 percent expect it to remain neutral. As for employment expectations, 43.5 percent of respondents report neutral hiring and 46.4 percent expect positive hiring levels. According to the Brookings Institution s Metropolitan Policy Program, Metro Denver employs 124,600 individuals in infrastructure jobs, which are jobs including roads, airports, water and power systems, and other amenities. Of the total jobs throughout Metro Denver, infrastructure accounts for 10.3 percent and places Denver in 60th place among the 100 largest cities in the nation. The report, titled Beyond Shovel Ready: The extent and impact of U.S. infrastructure jobs, stated that infrastructure jobs pay 30 percent more at the lower end of the income scale than noninfrastructure jobs. Labor Force and Employment 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 Apr-14 (p) Mar-14 Apr % Change Total 11-County Metro Denver* 1, , , , , % -4.3% 0.8% Denver-Aurora MSA 1, , , , , % -4.3% 0.8% Boulder-Longmont MSA % -4.7% 0.9% Natural Resources & Construction % -16.3% -0.7% Manufacturing % -10.2% -0.4% Wholesale & Retail Trade % -5.7% -0.1% Transp., Warehousing & Utilities % -6.2% 0.5% Information % -4.5% -5.4% Financial Activities % -4.4% -0.1% Professional & Business Services % -6.2% 3.5% Education & Health Services % 3.0% 3.2% Leisure & Hospitality % -3.4% 2.6% Other Services % -1.8% 1.7% Government % 1.5% -0.2% Federal Gov't % 0.6% -1.6% State Gov't % 4.0% 0.4% Local Gov't % 0.8% 0.0% Colorado 2, , , , , % 0.8% -1.4% United States 138, , , , , % -0.6% -0.3% *Includes the Denver-Aurora-Broomfield MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties) and the Boulder-Longmont MSA (Boulder County). Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary Metro Denver employment rose by 40,900 jobs between April 2013 and 2014, an increase of 2.8 percent. Compared with last April, employment in the Denver-Aurora MSA rose 2.8 percent, adding 36,300 jobs. The Boulder MSA reported a 2.7 percent increase in employment over-the-year, creating 4,600 jobs. Nearly one-fourth of the increase in employment in Metro Denver Economic Development Corporation June 3, 2014 Page 4

6 Metro Denver was attributed to the professional and business services supersector, where 10,200 jobs were created. The natural resources and construction supersector reported the largest over-the-year percentage increase, rising 5.1 percent. Two supersectors reported over-the-year declines: wholesale and retail trade (-2.2 percent) and information (-1.3 percent). Colorado employment rose 2.9 percent in April compared with the previous year s level, adding 69,200 new jobs over the same period. National employment levels increased 1.7 percent over-the-year, with the addition of nearly 2.4 million jobs. Metro Denver Industry Cluster Headlines Aviation Denver International Airport (DIA) announced a nonstop flight to Panama via United Airlines. Officials reported that the flight is seen as a gateway to destinations across Latin America and that Panama is a hub for international commerce. The flights from DIA will connect to Panama City s Tocumen International Airport. Beginning December 3, nonstop service will be offered daily November to August and five times weekly between September and October. DIA released a study in 2011 stating that the nonstop service would produce an estimated $72 million annual economic impact in Colorado. Bioscience AntriaBio Inc., a biopharmaceutical research and development company, is relocating all company operations (excluding the administrative headquarters) from Menlo Park, Calif. to Louisville. The company intends to revive a basal insulin product that was originally being developed by Fort Collins-based PR Pharmaceuticals Inc. Company chief executive Nevan Elam stated that the equipment would be moved to a 27,000-square-foot building at 1450 Infinite Drive. With the relocation, the company expects to hire up to 30 new employees at the Louisville site over the next year. Broadcasting and Telecommunications The corporate headquarters of Layer3 TV, a cable-tv service startup, is relocating from Boston to Denver s LoDo district. The move will generate 312 jobs paying an average wage of $92,083 over the next few years. The company is preserving the services it will offer until they are further along in planning, but the CEO of Layer3 stated that the company would sell directly to consumers and work within the existing cable ecosystem. DirecTV, the nation s largest satellite-tv service provider, will be acquired by AT&T in a deal with an estimated value of $48.5 billion. The stock-and-cash transaction for $95 per share gives DirecTV shareholders $28.50 per share in cash and $66.50 per share in AT&T stock. An AT&T spokesperson stated that DirecTV headquarters would remain in El Segundo, Calif. Healthcare and Wellness DaVita Healthcare Partners Inc. announced the company will close about 20 of their lowest-performing dialysis clinics. After a first quarter revenue meeting, the company revised the operating income guidance levels for both the corporate side and the dialysis services. DaVita officials reported that revenues and patient growth increased through the first quarter as treatments per day, and revenue per dialysis treatment rose. The company will close those clinics with the lowest percentage of privately insured patients. Littleton Adventist Hospital plans to renovate and expand the building, with a focus on expanding services to the area s growing population. The $30 million renovation is in the design phase but is expected to include a renovation of the grand atrium and lobby, expansion of the pre-operation and post-operation surgery areas, interventional radiology services, and cardiac services. The plan is to make surgery operations more efficient through reconfiguration of the hospital to aid nurses in easily reaching the tools they need. The hospital will also install new technology for radiation and cardiac services as well as build more conference space. Metro Denver Economic Development Corporation June 3, 2014 Page 5

7 IT-Software Pellucid Analytics Inc., a software developer, is relocating to a 7,000-square-foot building in east Boulder from downtown Boulder in order to expand the company. The company CFO stated that the company s client base is growing, calling for expanding employment to keep up with their demand. The current employment level includes 18 employees, but the company expects to increase to 40 to 50 employees over the next year. Other Business and Employment Headlines Photo Stencil, a full-service provider of high-performance stencils and tooling, is relocating to the Coors technology Center from Colorado Springs. The company is expanding to a 35,200 square-foot manufacturing facility, which includes a 10,000-square-foot Class 10,000 cleanroom, a 4,500-square-foot Class 1,000 cleanroom, and a small Class 100 cleanroom. According to the company s global vice president of sales, the new facility makes the company the cleanest stencil manufacturer anywhere. The facility is expected to begin full-scale manufacturing in the first quarter of The Community College of Denver (CCD) laid off 10 non-tenured professors due to budgetary restrictions. The CCD President Everette Freeman stated that the school s enrollment numbers were down for the fall, which lead to the school having budget issues. Freeman also stated that enrollment at the college dropped 50 percent over the last two years. The laid off professors were from the remedial education department and students will now take developmental classes in math, reading, and writing from the math or English department. Johnson & Wales University announced a $30 million renovation of its Denver Campus in hopes of jump-starting growth of the college. The renovation will include turning a century-old, vacant building into a center for classrooms, faculty offices, and student-affairs services as well as renovating a residence hall. The college expects the project to increase the student population to 2,000 in the future, and it will offer new programs in counseling psychology, media communication studies, and a Master s program for business administration. The project completion is expected by the beginning of the fall semester The University of Denver broke ground on a new 5-story, 130,000-square-foot science, technology, engineering, and mathematics (STEM) building. The $41 million project will include state-of-the-art classrooms and instructional and research labs. The building will serve as the home to the new School of Engineering and Computer Science. The facility will accommodate the increase in enrolling students through expanded research and instruction space, flexible classrooms, interdisciplinary centers, community areas, and faculty and administration offices. A feasibility study regarding upgrades and renovations to the National Western Stock Show, Denver Coliseum, and Colorado Convention Center was conducted and proposed many changes to improve the facilities. The report stated that making the proposed changes could bring 36,000 new people to the city, add 88 new annual events, and include 910,500 new visitors to the complex. The study estimated an economic impact of $47.2 million a year, including $3.4 million to local sales and hotel taxes. The suggested stock show renovations range from replacing the current Denver Coliseum with a 10,000 fixed seat, multi-use arena, and 40 suites for rodeo, hockey, and other year round events to replacing Exposition Hall with a multipurpose building for ice skating events. The master plan will be designed by Parsons Brinckerhoff and will be completed by the end of Employment Outlook The Manpower Employment Outlook Survey expects second quarter hiring in the Denver-Aurora-Broomfield MSA to continue at a steady pace. The percentage of companies hiring increased to 20 percent in the second quarter, up from 18 percent in the previous quarter. The percentage of companies cutting back employee levels increased to 5 percent from 3 percent in the previous quarter, but remained 1 percentage point lower than second quarter Companies planning to maintain employment levels declined over-the-quarter by 6 percentage points to 72 percent, up 3 percentage points from the prior year. Metro Denver Economic Development Corporation June 3, 2014 Page 6

8 Employment Outlook Survey Quarter 2 Quarter 1 Quarter 2 YTD YTD Ann Avg Denver-Aurora-Broomfield MSA Percent of Companies Hiring 20% 18% 21% 19% 22% 11% Percent of Companies Laying Off 5% 3% 6% 4% 7% 12% Percent of Companies No Change 72% 78% 69% 75% 68% 74% Percent of Companies Unsure 3% 1% 4% 2% 4% 3% United States Percent of Companies Hiring 19% 17% 18% 18% 18% 15% Percent of Companies Laying Off 4% 7% 5% 6% 7% 14% Percent of Companies No Change 73% 73% 73% 73% 73% 68% Percent of Companies Unsure 4% 3% 4% 4% 4% 5% Source: Manpower Inc. U.S. hiring expectations continued to grow throughout the second quarter of 2014, with companies reporting the lowest rate of reductions in workforce levels in roughly four decades. The percentage of employers planning to reduce staff levels decreased to 4 percent in the second quarter of 2014, a 3 percentage point decline from the previous quarter as well as 1 percentage point lower than the year-ago level. More companies plan to increase staffing levels, with 19 percent of companies planning to add employees, up from the previous quarter s level of 17 percent. The majority of companies nationwide plan to maintain staff levels, with 73 percent of respondents planning to sustain current employment levels. Unemployment The unemployment rate throughout the seven counties in the Metro Denver area reported significant changes through the month of April. The Metro Denver unemployment rate fell one percentage point between March and April to 5.3 percent and was 1.1 percentage points lower than the previous year. All seven Metro Denver counties reported unemployment rates below six percent except for Adams County, which fell 1.3 percentage points over-the-month to 6 percent. Douglas County (4.4 percent) and Boulder County (4.2 percent) reported the lowest unemployment rates of the seven counties, which were also the lowest unemployment rates for both counties since October Colorado reported an unemployment rate of 5.6 percent during the month of April, the lowest level since December The national unemployment rate fell to the lowest level since July 2008, declining 1.2 percentage points over-the-year to 5.9 percent. Labor Force Statistics (000s, not seasonally adjusted civilian labor force) April 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 154, % 155, % 154, % 9.3% 5.5% Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary Metro Denver Economic Development Corporation June 3, 2014 Page 7

9 April unemployment insurance claims increased in Metro Denver, rising 6.1 percent between March and April. Though claims rose, the April level was 13.2 percent lower than the year-ago level. Claims throughout Colorado also reported an over-the-month increase, rising 22.5 percent, but were also below the previous year s level by 22.5 percent. Weekly First-Time Unemployment Insurance Claims Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Apr-14 Mar-14 Apr % Change 2009 Metro Denver 1,384 1,305 1,595 5,990 6, % 2,541 Colorado 2,931 2,393 3,780 11,254 13, % 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. increased through May to 83 from the revised April level of 81.7, an increase of 1.6 percent over-the-month. The national index was 11.8 percent higher in May 2014 than the year prior. Analysts at The Conference Board stated the May growth in confidence was associated with consumers assessing the labor market more positively, improved short-term outlooks for jobs and personal finance, and expectations that are more positive. The number of respondents saying that they expect their income to grow in the next six months is the highest level since the December 2007 level. Colorado is included in the Mountain Region Index and the area reported slight increases in consumer confidence. The index rose to 92.7 in May from the April revised level of 91.1, increasing 1.8 percent over-the-month. The index was 6.5 percent higher in May 2014 compared with a year prior. Consumer Confidence Index Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg May-14 Apr-14 May % Change Mountain % United States % Source: The Conference Board. (p) = preliminary Retail sales across the U.S. improved through the month of April, reporting three straight months of growth. Overall retail sale increased 0.1 percent compared with March and rose 4 percent compared with April The largest over-the-year increase occurred in motor vehicle sales, where sales rose 9.8 percent between April of 2013 and Building materials increased 2.2 percent over-the-year and 0.4 percent over-the-month. After reporting declines in March, gasoline sales improved, rising 0.8 percent between March and April but were still 0.2 percent lower than the previous year s level. According to the National Retail Federation (NRF), national retail sales through April were nearly unchanged from the March level but were 4.7 percent higher than the prior year. NRF economists reported that though retail sales were low for the month, they have positive expectations for the second quarter. Retail categories that reported month-to-month growth included clothing and accessories stores (+1.2 percent), health and personal care stores (+0.6 percent), and building material and garden equipment stores (+2.7 percent). Metro Denver recorded growth in retail sales between February 2013 and 2014, reporting steady expansion throughout the local economy. The area reported an over-the-year increase of 1 percent, with total retail sales reaching $7.2 billion. The largest increase in retail sales between February 2013 and 2014 was in Douglas County, where sales rose 8.5 percent to $565 million. The only over-the-year decline occurred in Arapahoe County, with retail sales declining 2.2 percent to $1.4 billion. Retail sales in Colorado were 3.7 percent higher in February 2014 than February Four of the seven counties Metro Denver Economic Development Corporation June 3, 2014 Page 8

10 reported over-the-month declines, showing that the poor weather conditions influenced the retail market at the start of the year. Total Retail Sales ($000s) Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth Annual Growth Feb-14 Jan-14 Feb % Change Total Metro Denver 7,220,531 7,262,307 7,146,962 14,482,838 14,160, % -11.6% 7.4% Adams County 1,599,795 1,632,491 1,575,341 3,232,286 3,079, % -17.4% 11.7% Arapahoe County 1,395,151 1,361,789 1,426,032 2,756,940 2,785, % -8.2% 2.6% Boulder County 625, , ,206 1,248,338 1,217, % -9.1% 2.1% Broomfield County 145, , , , , % -8.3% 49.4% Denver County 1,782,197 1,848,904 1,777,826 3,631,101 3,541, % -13.5% 8.1% Douglas County 564, , ,422 1,141,846 1,108, % -5.7% 16.9% Jefferson County 1,108,249 1,072,941 1,096,898 2,181,190 2,144, % -10.5% 3.8% Colorado 12,112,998 12,110,137 11,682,129 24,223,135 23,302, % -12.2% 7.8% Source: Colorado Department of Revenue. According to the U.S. Bureau of Labor Statistics, the U.S. Consumer Price Index (CPI) continued to increase through April, with growth in both the core which excludes food and energy costs and the overall CPI measures. The overall CPI and the core CPI both rose 0.3 percent over-the-month. The core CPI also rose 1.8 percent between April 2013 and The growth in CPI between April 2013 and April 2014 can be attributed to over-the-year increases in housing (+2.5 percent), medical care services (+ 2.4 percent), and transportation services (+1.5 percent). According to the AAA Daily Fuel Gauge Report, the national average fuel price for May declined 0.8 percent from April to $3.66 per gallon. The May average fuel price was 1.2 percent higher than the prior year s level ($3.62 per gallon). Metro Denver reported greater declines in fuel prices compared with the national levels. Metro Denver reported an average fuel price of $3.42 per gallon for May, nearly 2 percent lower than the April price. The area also reported average fuel prices 9.8 percent lower in May 2014 than the previous year s level. Stock Market Each stock market index recorded higher closing values over-the-month and over-the-year, showing positive investment in the economy. The NASDAQ reported a 3.1 percent increase between April and May, with 4,242.6 as the end of the month close. The S&P 500 and the DJIA also rose over-the-month, increasing 2 percent and 0.8 percent, respectively. The Bloomberg Colorado index reported a 3.4 percent increase between April and May as well as a 17.5 percent increase overthe-year. The NASDAQ index also recorded the largest increase between May of 2013 and May 2014, rising 19.4 percent during the period. Stock Market Indexes Month of Month of Month of YTD Return YTD Return Ann Avg Return Ann Avg Return May-14 Apr-14 May Bloomberg Colorado % 8.9% 4.3% 17.7% S&P 500 1, , , % 14.3% 4.2% 9.0% NASDAQ 4, , , % 14.1% 8.5% 8.6% DJIA (Dow Jones) 16, , , % 15.3% 1.4% 3.1% Sources: Bloomberg.com; Yahoo! Finance. Metro Denver Economic Development Corporation June 3, 2014 Page 9

11 Travel & Tourism The average hotel occupancy rate in Metro Denver fell 2.2 percent to 74.3 percent occupancy in April compared with the March level. The April level was 8.5 percent higher than the previous year. The average room rate for April was $ per night, 4.2 percent higher than March and 4.5 percent higher over-the-year. Metro Denver Hotel Statistics Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Apr-14 Mar-14 Apr % Change Percent of Hotel Rooms Occupied 74.3% 76.0% 68.5% 71.0% 63.2% 12.3% 59.0% 61.9% Average Hotel Room Rate $ $ $ $ $ % $ $84.42 Source: Rocky Mountain Lodging Report. Spokespeople for Denver International Airport (DIA) reported that 4.2 million passengers passed through the airport in April, decreasing 8.4 percent from March s passenger level of 4.5 million. The April 2014 level was 3.2 percent higher than the April 2013 level, recording an additional 130,275 passengers through the airport. Number of Airline Passengers Residential Real Estate Denver International Airport Passengers Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual Apr-14 Mar-14 Apr % Change ,161,815 4,544,364 4,031,540 16,542,752 16,209, % 50,167,485 42,275,913 Source: Denver International Airport, Traffic Statistics. The Cottonwood Highlands area in Parker will expand with 660 new homes approved by the Town Council. The property plan already included 1,230 units, 22 acres of neighborhood retail, 30 acres of regional retail, and 18 acres of commercial space. The developer, Scott Carlson of Carlson Associates, has owned the 200 acres of land for 20 years and was waiting for the right real estate market in which to develop. The average sales price of the new homes will be $360,000, with 305 residential units opening by this fall. Southwest Longmont is the location of a new 599 residential development project that spans 126 acres. Markel Homes, a Boulder-based company, began infrastructure work on the West Grange site. The plan includes a 29-acre Dry Creek Community Park with ball fields, tennis and volleyball courts, and an 18-hole disc golf course. The development has four phases with the first phase consisting of 90 single-family and duplex homes across 28 acres, with the single-family home price starting at $400,000 and the duplex home price between $350,000 and $400,000. Home Resales Metro Denver home sales continued to increase, rising 15.6 percent between March and April to 4,302 homes sold. The area reported the highest number of sales since September, showing the market is improving, but sales were 7.4 percent lower than April Unsold homes on the market rose 1.5 percent over-the-month but were nearly 60 percent lower than the previous year. The limited inventory for homes lead to improvements in sales prices for homes on the market. The average sales price for single-family attached homes rose 5.8 percent to $225,930 between March and April and was 14.8 percent higher than the previous year. Single-family detached homes reported slower growth in the average sales price, rising nearly 4 percent over-the-month and 6.4 percent over the year to $363,682. Metro Denver Economic Development Corporation June 3, 2014 Page 10

12 Previously-Owned Home Sales Activity Month of Month of Month of YTD Total YTD Total YTD Total Ann Total Apr-14 Mar-14 Apr % Change Apr-14 Home Sales (Closed) 4,302 3,722 4,645 13,518 14, % 4,302 Unsold Homes on Market 6,443 6,347 14,606 6,443 14, % 6,443 Average Sales Price (Single Family Attached) $225,930 $213,557 $196,872 $215,635 $187, % $225,930 Average Sales Price (Single Family Detached) $363,682 $349,881 $341,821 $347,779 $322, % $363,682 Median Sales Price (Single Family Attached) $177,200 $171,500 $159,625 $177,200 Median Sales Price (Single Family Detached) $306,800 $291,581 $280,000 $306,800 Source: Metrolist, Inc. (p) =preliminary (r) =revised The National Association of Realtors (NAR) released the April analysis of U.S. existing-home sales, reporting that sales increased for the first time this year. Existing-home sales increased 1.3 percent between March and April, reaching a seasonally adjusted annual level of 4.65 million. While April was the highest sales level for the current year, the April 2014 level was 6.8 percent lower than the April 2013 level of 4.99 million sales. NAR economists reported that the rise in sales was inevitable in order to catch up with the low activity in the beginning of the year, but conditions will continue on a positive path as inventories expand. At the end of April, inventory levels were at 2.29 million existing homes for sale, representing a 5.9-month supply at the current sales pace. The West and the South reported increases in existing-home sales for the month, rising 4.9 percent and 1 percent, respectively. The Midwest declined 1 percent over-the-month, while the Northeast was unchanged. Home Prices NAR data show the April median existing-home sales price was $201,700, an over-the-year increase of 5.2 percent. Of the four U.S. regions, the West reported the largest over-the-year increase in April median home price (+9.7 percent) to $291,200. The median in the Midwest was up 5.8 percent over-the-year and the median in the South was up 3.2 percent. The Northeast reported the only decline in median home prices, falling 0.4 percent in April from the previous year. 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 $184.1 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 reported an increase in housing prices through March compared with the prior month. The Denver index rose 1.4 percent to , an absolute increase of 2.07 points, recording the fifth largest over-the-month increase. Of the 20 cities tracked by the index, New York City reported the only over-the-month decline, falling 0.3 percent. Denver s home prices in March 2014 were 9.1 percent higher than the prior year s level. Las Vegas reported the largest increase between March 2013 and 2014, increasing 21.2 percent. Analysts Metro Denver Economic Development Corporation June 3, 2014 Page 11

13 stated that prices are increasing at a slower pace and most of the gain was in apartment construction, not single-family homes. There is also discussion that student loans are preventing potential first time buyers from entering the market. Foreclosures According to the foreclosure report released by RealtyTrac, the U.S. foreclosure rate decreased 1 percent between March and April. The over-the-month decrease to 115,830 fillings was also 20 percent below the April 2013 level. Houses beginning the foreclosure process declined annually for the 21st consecutive month but the number of bank repossessions increased 4 percent over-the-month. Bob Blomquist, vice president of RealtyTrac, explained that the April foreclosure report is a sign that the banking market is working through the final remnants of foreclosures that were left over from the housing crisis. He also stated that though these properties may not be the top pick of buyers, they add much needed inventory to the market. Housing foreclosures throughout the Metro Denver area reported mixed trends in each of the seven counties for the month of March. Metro Denver recorded a 1.3 percent increase in foreclosures between February and March but the March 2014 level was 19.3 percent lower than the previous year. Four counties reported over-the-month increases in foreclosures including Adams County (+26.5 percent), Jefferson County (+16.3 percent), Douglas County (+15.6 percent), and Arapahoe County (+3.5 percent). While these four counties reported over-the-month increases, each county s level was lower than the prior year s level. Declines in foreclosures over-the-month occurred in the City and County of Broomfield (-83.3 percent), Boulder County (-27.3 percent), and the City and County of Denver (-27 percent). Real Estate Foreclosures Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total Mar-14 Feb-13 Mar % Change Total Metro Denver* ,611 2, % 26,509 9,427 Adams County % 5,646 1,899 Arapahoe County % 6,233 2,250 Boulder County % 1, Broomfield County % Denver County % 6,141 2,500 Douglas County % 2, Jefferson County % 4,027 1,532 *The total number of election and demand setups (initial filings) received by county public trustees. Filings may be subsequently cured or withdrawn. Sources: Colorado Division of Housing and county public trustees. New Homes The Census Bureau report on new home sales after adjustment for seasonal trends stated that national home sales in April rose to 433,000 annual sales from the March level of 407,000 annual sales. The April homes sales level was 6.4 percent higher than March but was 4.2 percent lower than the previous year s level. The Northeast was the only region in the U.S. that reported an over-the-month decline in sales, falling 26.7 percent between March and April. The Midwest (47.4 percent) and the South (3.1 percent) reported increases in new home sales over-the-month. The West reported no change in sales between March and April. New home sales in the Midwest reported the only positive over-the-year increase, growing 35.5 percent in April compared with the prior year. The Northeast reported the largest over-the-month decline, Metro Denver Economic Development Corporation June 3, 2014 Page 12

14 falling 31.3 percent to 22,000 total sales. The South (- 9.6 percent) and the West (-6.1 percent) also reported declines in sales in April compared with the prior year. The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index reported a slight decrease in builder confidence for May. The index declined one point to 45 for May from a downward revision of the April level (46). NAHB spokespersons reported that though the index fell, builders expressed optimism that sales will pick up in the next few months. Company economists reported that builders are waiting for consumers to become more confident and assured in their financial situations before building will pick up. According to the Census Bureau, nationwide residential building permits issued in April (1.06 million permits) increased 5.9 percent from March and were 1.8 percent higher than the prior year. The national single-family detached permit level was 0.5 percent lower between March and April and 4 percent lower than April Permits issued for multi-family units (436,000 permits) were responsible for the increase in national permits, rising 17.2 percent over-the-month and 11.8 percent over-the-year. The South and the West reported over-the-month increases in building permits, rising 14.7 percent and 6.9 percent, respectively. The Northeast reported the largest decline in permits between March and April, falling 16.9 percent to 113,000 permits. The Midwest also reported an over-the-month decline, decreasing 1.2 percent. Contrary to national levels, Metro Denver reported strong growth in residential building permits through the end of March. The year-to-date level of permits issued (4,543 permits) rose 63.8 percent during the first quarter of 2014 compared with the same period the prior year. Single-family attached permits reported significant growth over-the-year, rising percent between March 2013 and 2014 to 305 permits. Multi-family and single-family detached permits also increased over-the-year, rising 48.8 percent and 0.3 percent, respectively. While the residential construction market improved compared with the prior year, the market slowed between February and March with a 9.8 percent drop in permits. Residential Building Permits Month of Month of Month of YTD Total YTD Total YTD Total Total Total Mar-14 Feb-14 Mar % Change Single-Family Detached Units ,713 1, % 2,397 14,260 Single-Family Attached Units % 601 4,843 Multi-Family Units 762 1, , % 438 2,681 Total Units 1,715 1,901 1,225 4,543 2, % 3,436 21,784 Apartment Rental Market Source: Home Builders Association of Metro Denver. The Denver Metro Apartment Vacancy and Rent Survey for the first quarter of 2014 showed a trend of declining vacancy rates. The Metro Denver apartment vacancy rate fell 0.1 percentage points from the fourth quarter level, as declines in four of the six submarkets contributed to the over-the-quarter decline. Douglas County reported the largest decline in vacancy between the fourth quarter and the first quarter, falling 1.3 percentage points to 3.7 percent vacancy. Jefferson County also reported a steep decline of 1.2 percentage points to 3.4 percent vacancy. Adams County and Arapahoe County also reported declines over-the-quarter, falling 0.6 percentage points and 0.7 percentage points, respectively. The Boulder/Broomfield submarket reported the largest increase in vacancy, rising 3.3 percentage points to 6.7 percent Metro Denver Economic Development Corporation June 3, 2014 Page 13

15 vacancy. Only three of the six submarkets reported lower vacancy rates than their prior year s levels, including Adams County, Douglas County, and Jefferson County. Apartment Statistics Quarter 1 Quarter 4 Quarter 1 YTD Average YTD Average YTD Average Annual Average Annual Average % Change Apartment Vacancy Rate 5.1% 5.2% 4.6% 5.1% 4.6% 8.1% 9.7% Average Monthly Rental Rate (all units) $1,074 $1,042 $993 $1,074 $ % $877 $817 Source: Denver Metro Apartment Vacancy and Rent Survey. As vacancy rates generally declined, the average rental rate of apartments in Metro Denver continued to increase. The first quarter average rental rate in Metro Denver ($1,074) was 3.1 percent higher than the previous quarter s level. This rate was also 8.1 percent higher than the first quarter of Adams County reported the largest over-the-quarter increase, rising 4.2 percent, and the smallest increase was in Douglas County, rising 2 percent. The average first quarter rental rates in the six submarkets ranged from $1,262 in Douglas County to $988 in Adams County. Adams County was also the only county with an average rental rate below $1,000 during the first quarter. Commercial Real Estate A plan for office space development in Cherry Creek North was replaced with a new plan for a seven-story luxury hotel. The 150-room luxury hotel will be built at 245 Columbine Street by Columbine Development Partners LLC, a joint venture between BMC Investments and Sage Hospitality. The $60 million building has a 14-month construction period and amenities include a rooftop pool, a 1,500-square-foot fitness center, ground-floor retail, and 3,500 square feet of meeting and banquet space. According to city officials, the former Westminster Mall at U.S. 36 and Sheridan Boulevard will be redeveloped by San Diego-based Oliver McMillan. The redevelopment includes a high-density, pedestrian- and bike-friendly project spanning residential, commercial, and retail property types. The 105-acre site will incorporate a large park and landscaped boulevards running through the center of the site. Development around Denver Union Station continues to expand with a $100 million hotel and office building. Portman Holdings of Atlanta will construct the building at 1801 Wewatta Street, their first project in the Denver area. The building will be 200,000 square feet and be divided between office space and a 185-room hotel. Office Market According to a report by Newmark Grubb Knight and Frank (NGKF), Denver s office market continued to expand through the first quarter of the year. The report stated that the vacancy rate of 15.3 percent, the lowest rate since first quarter 2008, marked the 17th quarter of declines to the office vacancy rate. During the first quarter, the market absorbed 455,945 square feet of office space, a similar level to the previous quarter. NGKF reported that lease rates increased in all submarkets and property owners aggressively pushed prime rates in high demand markets such as the LoDo and Cherry Creek micromarkets. The office market had 11.8 million square feet of space valued at $2.2 billion change hands, resulting in the best year since Commercial real estate company Cassidy Turley expects continued improvement in the Metro Denver area office market in the next few years. The company reported that vacancy rates were at the lowest level in over a decade. There was 2.3 million square feet of office space absorption over the last year, with the largest transaction being the relocation of Aircell company headquarters to Broomfield from Illinois. Cassidy Turley also reported the average rental rate rose $0.11 on average during the first quarter, with rental rate increases across all classes of office buildings. The company expects steady activity to continue, along with increases in new construction projects and more leases being signed in the southeast submarket. Metro Denver Economic Development Corporation June 3, 2014 Page 14

16 The office market in Metro Denver continued to improve through the first quarter of 2014, with a decline in the vacancy rate and rising average lease rates. According to CoStar, the average vacancy rate fell to 10.8 percent in the first quarter compared with the fourth quarter level of 10.9 percent. The average lease rate increased 0.4 percent over-the-quarter to $22.01 per square foot, the highest rate since the second quarter of Compared with the first quarter of 2013, the average vacancy rate was down 0.9 percentage points and the average lease rate increased 4.5 percent. Office property construction during the fourth quarter improved to keep up with growing demand for business space. There was 2 million square feet of space under construction throughout the first quarter, an 11.7 percent increase from the prior quarter. Over three-quarters of the office space under construction is located in the City and County of Denver. There was 380,000 square feet of office space completed during the first quarter, which was nearly five times more than one year ago. Office Market Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 5,920 5,911 5,896 5,886 5,871 5,852 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 10.8% 10.9% 11.7% 12.4% 12.9% 13.1% Vacancy Rate (with sublet) 11.2% 11.4% 12.1% 12.8% 13.5% 14.0% Avg. Lease Rate (direct, per sq. ft, full service) $22.01 $21.92 $21.07 $19.94 $19.91 $20.18 New Construction Completed (year-to-date) 0.38 MSF, 0.95 MSF, 0.08 MSF, 0.29 MSF, 0.37 MSF, 0.01 MSF, Currently Under Construction Industrial & Flex Market 6 Bldgs 2.00 MSF, 21 Bldgs 15 Bldgs 1.79 MSF, 23 Bldgs 1 Bldgs 1.19 MSF, 15 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 3 Bldgs 0.70 MSF, 6 Bldgs 5 Bldgs 0.61 MSF, 10 Bldgs 1 Bldg 1.16 MSF, 7 Bldgs In a report by Newmark Grubb Knight and Frank (NGKF), the industrial market showed market recovery and movement into expansion during the first quarter of the year. The market reported the best growth of the last five years. The company stated that absorption rates were low over the last few years compared with the peak years of 2007, but the legalization of marijuana led the industry to absorb 4 million square feet of primarily low quality industrial space. The first quarter of the year reported 1.1 million square feet of net absorbed space and a vacancy rate that fell to a record low of 4.5 percent. NGKF expects rental rates to increase slightly through the end of the year with new supply being added to the market. Cassidy Turley reported that Metro Denver continued to achieve new records in the industrial market during the first quarter of The report showed that there was nearly 2.6 million square feet of speculative space expected in the market and nearly 70 percent of it is preleased. The company also reported that the marijuana legalization depleted class C space, leaving behind relatively no inventory in the industry class. With the class C space filled up, sales prices have doubled for many buildings and lease rates quadrupled in other buildings. Cassidy Turley expects the sales prices for marijuana facilities to remain elevated until the demand for the grow space is met. They also reported expectations of compressed vacancy rates and increased build-to-suit activity as companies look for relocation options. CoStar Realty data showed that the industrial market improved in the first quarter of The vacancy rate continued to decline, falling 0.5 percentage points to 3.5 percent vacancy compared with the fourth quarter of Declining vacancy rates were accompanied by increasing average lease rates, raising 11.7 percent to $5.26 per square foot compared with the same time a year ago. There was just over 100,000 square feet of new industrial space completed in the first quarter, with 55,000 square feet located in Boulder County and the remainder in Arapahoe County. New projects under construction increased 10.4 percent to 2.22 million square feet compared with the fourth quarter level of 2.01 million square feet. Of this space, 1.2 million of it is in the City and County of Denver and 710,000 is in Adams County. Metro Denver Economic Development Corporation June 3, 2014 Page 15

17 Industrial Market Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 6,900 6,887 6,880 6,873 6,862 6,857 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 3.5% 4.0% 5.4% 6.5% 6.3% 6.8% Vacancy Rate (with sublet) 3.8% 4.2% 5.8% 6.8% 6.8% 7.4% Avg. Lease Rate (direct, per square foot, NNN) $5.26 $5.07 $4.71 $4.56 $4.69 $4.76 New Construction Completed (year-to-date) 0.10 MSF, 0.93 MSF, 0.08 MSF, 0.01 MSF, 0 MSF, 0.01 MSF, Currently Under Construction 4 Bldgs 2.22 MSF, 17 Bldgs 5 Bldgs 2.01 MSF, 15 Bldgs 1 Bldgs 1.15 MSF, 9 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 1 Bldg 0.17 MSF, 4 Bldgs 0 Bldgs 0.13 MSF, 4 Bldgs 1 Bldg 0.02 MSF, 1 Bldg The Metro Denver flex market showed continued improvements during the fourth quarter. The flex space vacancy rate fell 0.8 percentage points over-the-quarter and 2.4 percentage points over-the-year. The average lease rate rose for the third straight quarter, increasing 1.7 percent to $9.53 per square foot compared with the fourth quarter of The rate was also 4.3 percent higher than the year-ago level of $9.14 per square foot. As the demand for flex space continued to increase, flex space construction reached new levels. There was a 95.7 percent increase in new construction between the fourth quarter and the first quarter, growing to 450,000 square feet under construction. The largest buildings under construction included buildings 1 and 2 in the Enterprise Business Center in Stapleton. Nearly 74,000 square feet of flex space was completed in the first quarter of Flex Space Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 1,449 1,446 1,444 1,440 1,440 1,436 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 9.9% 10.7% 12.3% 13.0% 13.8% 14.1% Vacancy Rate (with sublet) 11.3% 12.1% 13.6% 14.4% 15.2% 15.7% Avg. Lease Rate (direct, per square foot, NNN) $9.53 $9.37 $9.14 $8.84 $8.95 $9.33 New Construction Completed (year-to-date) 0.07 MSF, 0.10 MSF, 0.05 MSF, 0 MSF, 0 MSF, 0 MSF, Currently Under Construction Retail Market 2 Bldgs 0.45 MSF, 7 Bldgs 3 Bldgs 0.23 MSF, 5 Bldgs 1 Bldgs 0.06 MSF, 3 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 0 Bldgs 0.20 MSF, 3 Bldgs 0 Bldgs 0 MSF, 0 Bldgs 0 Bldgs 0 MSF, 0 Bldgs Newmark Grubb Knight and Frank (NGKF) released a report on the Metro Denver retail market, reporting strong absorption and declining vacancy through the first quarter of the year. The retail market absorbed 1.6 million square feet between 2012 and 2013, while first quarter absorption was 325,504 square feet. The vacancy rate (7 percent) was 0.4 percentage points lower compared with the fourth quarter of 2013, which was the lowest vacancy level since NGKF expects that there will be a great deal of speculative development through the year due to pent up demand for prime end-cap space, in order to make room for more national and regional retailers. According to Cassidy Turley, the retail market throughout the Metro Denver area reported modest improvements during the first quarter of the year. The vacancy rate fell to 6 percent and the average rental rate increased as well. Analysts stated that market demand is being run by specialty grocery stores, fitness users, discount retail stores, and Metro Denver Economic Development Corporation June 3, 2014 Page 16

18 restaurants. The company outlook reported that grocery store activity is growing exponentially with a continual expansion of the population and the Colorado Boulevard, Cherry Creek, and Downtown Denver markets continuing to thrive. The retail market in Metro Denver reported improvements in the first quarter that are consistent with prior quarters. The direct vacancy rate fell 0.4 percentage points to 5.7 percent over-the-quarter and was 0.8 percentage points lower than the prior year s level. The average lease rate rose from $15.22 in the fourth quarter to $15.34 in the first quarter, an increase of 0.8 percent. The lease rate was up 1.8 percent over-the-year. Construction in the retail markets slowed down during the first quarter of 2014 compared with the first quarter of Newly completed construction was 35 percent lower in the first quarter of 2014 compared with the prior year, falling to 130,000 square feet of completed space. The amount of space currently under construction declined over-the-year, decreasing 33.3 percent to 600,000 square feet. Current construction and completed construction is widely dispersed throughout Metro Denver. Retail Market Statistics Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter Number of Buildings 11,264 11,218 11,170 11,108 11,067 11,030 Existing Square Feet (millions) Vacant Square Feet (direct, millions) Vacancy Rate (direct) 5.7% 6.1% 6.5% 7.2% 7.4% 8.1% Vacancy Rate (with sublet) 6.0% 6.4% 6.7% 7.5% 7.7% 8.4% Avg. Lease Rate (direct, per square foot, NNN) $15.34 $15.22 $15.07 $14.65 $14.68 $16.66 New Construction Completed (year-to-date) 0.13 MSF, 1.15 MSF, 0.20 MSF, 0.04 MSF, 0.14 MSF, 0.03 MSF, Currently Under Construction 20 Bldgs 0.60 MSF, 19 Bldgs 69 Bldgs 0.42 MSF, 29 Bldgs 20 Bldgs 0.90 MSF, 22 Bldgs Source: CoStar Realty Information, Inc. MSF=Million Square Feet 8 Bldgs 0.37 MSF, 15 Bldgs 2 Bldgs 0.59 MSF, 8 Bldgs 3 Bldgs 0.43 MSF, 10 Bldgs Metro Denver Economic Development Corporation June 3, 2014 Page 17

19 Monthly/Quarterly Direction Annual Direction Positive Changes 12 of of 18 Nonfarm Employment +14, ,300 Growth Employment increased 1% from Mar. to Apr. YTD employment up 2.9% through Apr. 20% 19% % Companies Hiring Companies expecting to add workers YTD average down 3 percentage points (Denver Area) increased from 1Q 2014 to 2Q 2014 compared with % 6.0% Unemployment Rate Unemployment fell 1 percentage point from Mar. to Apr. Down from 2013 YTD average of 7% 6.1% -11.4% Initial Unemployment YTD average claims decreased 11.4% through Insurance Claims Claims increased from Mar. to Apr. Apr Total Retail Sales -0.6% 2.3% Metro sales decreased from Jan. to Feb. YTD sales up through Feb Mountain Region Consumer Confidence Index Index up 1.8% from Apr. to May YTD average up 33.4% through May % 71.0% Hotel Occupancy Down 1.7 percentage points from Mar. to Apr. YTD occupancy up 12.3% DIA Passengers -8.4% 2.1% Passengers decreased from Mar. to Apr. YTD passengers increased through Apr Bloomberg Colorado Index % Index up 3.4% from Apr. to May YTD Return through May 2014 Dow Jones Industrial 16, % Average Index increased 0.8% from Apr. to May YTD Return through May 2014 Home Sales (closed) 4,302 13,518 Sales up 15.6% from Mar. to Apr. YTD sales down 7.6% through Apr Median Home Price $288,400 $288,400 (Denver-Aurora MSA) Up 3.3% from 4Q to 1Q 2014 YTD price 10.4% higher through 1Q 2014 Foreclosures 543 1,611 Up 1.3% from Feb. to Mar. Down 29.8% YTD through Mar Residential Building Permits 1,715 4,543 (Total) Permits decreased 9.8% from Feb. to Mar. YTD permits up 63.8% through Mar % 5.1% Apartment Vacancy Rate Vacancy decreased 0.1 percentage points from 4Q to 1Q 2014 YTD average up 0.5 percentage points through 1Q % -0.9 percentage points Office Vacancy Rate (with Vacancy rate down 0.2 percentage points 1Q 2014 vacancy rate down from 12.1% one Sublet) from 4Q 2013 to 1Q 2014 year ago 3.8% -2 percentage points Industrial Vacancy Rate Vacancy rate down 0.4 percentage points 1Q 2014 vacancy rate down from 5.8% one (with Sublet) from 4Q 2013 to 1Q 2014 year ago Retail Space Vacancy Rate (with Sublet) 6.0% -0.7 percentage points Vacancy rate down 0.4 percentage points from 4Q 2013 to 1Q Q 2014 vacancy rate down from 6.7% one year ago Metro Denver Economic Development Corporation June 3, 2014 Page 18

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