Adams County Economic Forecast 2020 v3 · 2020 ECONOMIC & REAL ESTATE UPDATE December 4, 2019....

ADAMS COUNTY2020 ECONOMIC & REAL ESTATE UPDATE

December 4, 2019

AGENDA

•MACRO ECONOMY & EMPLOYMENT SITUATION

•DEMOGRAPHIC UPDATE

•COMMERCIAL REAL ESTATE MARKETS

•OFFICE

•RETAIL

•MULTIFAMILY

• INDUSTRIAL

•OUTLOOK

MACRO ECONOMY &

EMPLOYMENT SITUATION

Source: U.S. Bureau of Economic Analysis, 2018; Moody’s Analytics, July 2019. 2018 GDP figures will be released in August 2019.

FRONT RANGE—A LEADER IN ECONOMIC GROWTHDENVER’S ECONOMY GREW 3.6% IN 2017, COMPARED TO THE 2.1% NATIONAL METRO AVERAGE

COLORADO VS. NATIONAL UNEMPLOYMENT RATECOLORADO CONSISTENTLY LOWER THAN NATIONAL AVERAGE

Source: U.S. Bureau of Labor Statistics, Nov. 2019.

0

2.0

4.0

6.0

8.0

10.0

12.0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Une

mpl

oym

ent r

ate

(%)

United States Colorado

TOTAL EMPLOYMENT LEVELSMARKETS ABOVE/BELOW PREVIOUS PEAK EMPLOYMENT

0.0

0.5

1.0

1.5

2.0

2.5

Numb

er of

Jobs (

Milli

ons)

Q3 2019 Previous peak

Source: Oxford Economics, Q3 2019

ADAMS COUNTY JOB PROFILELEADING THE PACK

Source: Bureau of Labor Statistics, QCEW, June 2019.

195,080 201,843211,791

220,185 227,227

3.2%3.5%

4.9% 4.0%

3.2%

3.0%2.4% 2.5%

2.1%2.0%

0%

1%

2%

3%

4%

5%

6%

0

50,000

100,000

150,000

200,000

250,000

2015 (Dec) 2016 (Dec) 2017 (Dec) 2018 (Dec) 2019 (Jun)

Percent ChangeTotal

Emplo

yees

Adams County Job Growth vs. Denver Metro Adams County

Metro Denver

WAGE COMPARISONS BY COUNTYLOWEST BUT 3RD LARGEST INCREASE

Source: Bureau of Labor Statistics, QCEW, June 2019.

0%

2%

4%

6%

8%

10%

12%

14%

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

Adams Arapahoe Boulder Broomfield Denver Douglas Jefferson

Avg.

Annu

al Wa

ge

Avg. Annual Wage by County vs Growth

2015 2018 2015-2018 % Change

DEMOGRAPHICS

COLORADO POPULATION & NET MIGRATIONPEOPLE WANT TO LIVE HERE—PROVIDING THE NECESSARY LABOR SUPPLY

Source: Colorado Department of Local Affairs, State Demography Office, May 2019.

-40,000

-20,000

0

20,000

40,000

60,000

80,000

100,000

0.0

1.0

2.0

3.0

4.0

5.0

6.0Net Migration

Population Net Migration Zero

Population (Millions)

Source: U.S. Census Bureau, November, 2019.

NET MIGRATION TO & FROM COLORADONUMBERS REPRESENT NET INFLOW/OUTFLOW IN 2018

- Front Range saw 95% of Population growth

- Adams County saw the 4th

largest County increase 2010-2018 (+67,758)

- Adams County is the 5th

largest County in CO, 2018 (511,469)

- Projected to increase 1.9% from 528,857 (July 2020 est.) to 580,775 by 2025

POPULATION FAST FACTSADAMS COUNTY & FRONT RANGE

SOURCE: U.S. BLS, Q4 2016

POPULATION DISTRIBUTION BY GENERATIONDENVER MEDIAN AGE IS 36.2 YEARS VS. 37.7 YEARS NATIONALLY

Source: Colorado State Demography Office, 2019.

0 100 200 300 400 500 600 700 800 900 1,000

Generations Z & Alpha (2000+)

Millennials (1980-1999)

Gen X (1965-1979)

Baby Boomers (1946-1964)

Silent Generation (1928-1945)

Residents by Generation (000s)

Jobs Are People

Source: Elizabeth Garner, Colorado State Demographer

COMMERCIAL REAL ESTATE

MARKET UPDATE

Source: CBRE Research, Q3 2019.

INVENTORYBy Product Type

2.9M SFUNDER CONSTRUCTION

24th MARKET RANK BY RBA

AVERAGE ASKING RENT (FSG)

$28.80

Q3 2019 FUNDAMENTALS

11.5% Direct

Vacancy

DELIVERIES2019 YTD: 973.5K SF2018 Total: 3.3M SF

NET ABSORPTION2019 YTD: 1.5M SF2018 Total: 2.9M SF

METRO DENVER OFFICE MARKET

334 CLASS C14.2 Million SF

359 CLASS A50.7 Million SF

683 CLASS B53.0 Million SF

1,376 TOTAL117.9 Million SF

OFFICEVACANCY – ADAMS COUNTY VS. METRO DENVER

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019

Direct Vacancy (%)

Denver Market Adams County

Source: CBRE Research, Q3 2019; CoStar, Q3 2019.

“AGILE” OR FLEXIBLE OFFICE2.8 MSF / 2.4% OF TOTAL MARKET


WHERE IS DENVER’S “AGILE” OFFICE?

2/3 IN DOWNTOWN

& RINO






AVERAGE ASKING RENT (NNN)

$19.56


6.9% Direct

Vacancy

DELIVERIES2019 YTD: 709.8K SF2018 Total: 1.3M SF

NET ABSORPTION2019 YTD: 625.0K SF2018 Total: 709.9K SF

58 POWER CENTERS23.7 Million SF

50 STRIP/IN-LINE CENTERS2.0 Million SF

401 NEIGHBORHOOD/ COMMUNITY CENTERS

41.8 Million SF

750 TOTAL81.0 Million SF

METRO DENVER RETAIL MARKET

RETAILVACANCY – ADAMS COUNTY VS. METRO DENVER

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019

Direct Vacancy (%)

Denver Market Adams CountySource: CBRE Research, Q3 2019; CoStar, Q3 2019.

THE WORKPLACEMARRIAGETHE HOUSING MARKETPOPULATION GROWTHKALETHE OLYMPICSWORK ETHIC

RETAILHOTELSCHAIN RESTAURANTSTHE INTERNETCEREALCROWDFUNDINGTHE MOVIE BUSINESS

MILLENNIALS ARE RUINING EVERYTHING

Millennial Ben• Still believe in marriage and

mortgages

• Net migration towards the suburbs

• Distinct shopping patterns and preferences

• Convenience is key• Digitally engaged• Amenities and experiences

• Heavily indebted, but stand to inherit an estimated $30tn over the next 30 years

Looking Beyond the Millennial: GEN Z

66%81%

“Shopping in physical stores provides a better overall experience compared with shopping online”

“It is important when buying online for that retailer to have a store nearby”

“I use all online and in-store options for shopping offered by retailers”

63%

Source: ICSC GEN Z Survey, 2018, AT Kearney 2019.

RETAIL CATEGORY SHIFTS (2012-2017)

Source: US Census Bureau.

HIGH GROWTH LOW GROWTH

30%Restaurants

& Bars

26%Furniture & Furnishings

21%Health & Beauty

16%Jewelry

15%Shoes

14%Grocery

8%General

Merchandise

7%Clothing

3%Sporting Goods

‐5%Electronics & Appliances

‐13%Bookstores

‐14%Department

Stores

Source: Apartment Insights, Q3 2019; CoStar, Q3 2019.


25,768 UNITSUNDER CONSTRUCTION


AVERAGE MO. RENT

$1,506


5.2% Vacancy

DELIVERIES2019 YTD: 9,263 UNITS2018 Total: 10,977 UNITS

NET ABSORPTION2019 YTD: 9,009 UNITS2018 Total: 9,739 UNITS

METRO DENVER MULTIFAMILY MARKET

STUDIO/1 BEDROOM133,934 Units

2 BEDROOMS108,127 Units

3+ BEDROOMS17,594 Units

TOTAL259,655 Units

MULTIFAMILYVACANCY – ADAMS COUNTY VS. METRO DENVER

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019

Direct Vacancy (%)

Denver Market Adams CountySource: CoStar, Q3 2019.

DENVER HOUSING MARKET COMPETITIVE WITH WESTERN CITIESMORE AFFORDABLE THAN TECH-HEAVY COASTAL MARKETS

0

20

40

60

80

100

120

140

160

180

200

Inde

x sc

ore

National Association of Realtors’ Affordability Index

Source: Moody’s Analytics, Q3 2019





AVERAGE ASKING RENT (NNN)

$8.02


6.5% Direct

Vacancy

DELIVERIES2019 YTD: 4.4M SF2018 Total: 5.0M SF

NET ABSORPTION2019 YTD: 2.0M SF2018 Total: 4.5M SF

METRO DENVER INDUSTRIAL MARKET

910 MANUFACTURING44.3 Million SF

2,786 WAREHOUSE/DISTRIBUTION157.9 Million SF

764 FLEX/R&D36.7 Million SF

4,656 TOTAL246.4 Million SF

INDUSTRIALVACANCY – ADAMS COUNTY VS. METRO DENVER

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q3 2019

Direct Vacancy (%)

Denver Market Adams County


E-COMMERCE4.4 MSF (Amazon = 2.6 MSF)

3PL Concentration

Ecommerce is expensive – each return is touched 20 times

Food is the largest single retail category – 20% of each paycheck goes to food

The next wave….COLD STORAGE

$2 TRILLION

30

35

40

45

50

55

60

65

Index

ISM Purchasing Managers Index (U.S.) (Value > 50 = Growth)

Source: Moody’s Analytics, Nov. 2019.

Industrial-Using Job Growth –Metro Denver

0

1

2

3

4

5

6

7

2015 2016 2017 2018 YoY YTDSept. '19

Jobs Added (000s)

Wholesale Trade

Transp., Warehousing & Utilities

Manufacturing

ADAMS COUNTY CONSTRUCTION ACTIVITYCONSTRUCTION VALUE

Source: CBRE Econometric Advisors, Supply Track, Q3 2019.

0

50

100

150

200

250

300

350

400

Cons

tructi

on Va

lue, $

Milli

ons

Completed Post 2017

Hotel Multifamily Office Retail Sr. Housing Warehouse

$0

$20

$40

$60

$80

$100

$120

Cons

tructi

on Va

lue, $

Milli

ons

Planning & Underway

Hotel Multifamily Office Retail Sr. Housing Warehouse

$294.3 M$978.6 M

2020 Outlook

• Slower Growth but Avoid a Recession

• Simulative Monetary Policy

• Labor Market Constraints

• Affordability Challenges

• Growth Restrictions (Nationally & Locally)

• CRE & Industry Disruption (Airbnb, e-commerce, driverless cars & trucks, drones, coworking, bitcoin, AI etc.)

THANK [email protected]

December 4, 2019

Adams County Economic Forecast 2020 v3 · 2020 ECONOMIC & REAL ESTATE UPDATE December 4, 2019....

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Transcript of Adams County Economic Forecast 2020 v3 · 2020 ECONOMIC & REAL ESTATE UPDATE December 4, 2019....