Monthly Economic Indicators · 10 startups invited to participate in the inaugural program, MetLife...

Monthly Economic Indicators

August 2019

Energetic Bodies. Energetic Minds.

www.metrodenver.org

Research Sponsor

www.pinnacol.com

Monthly analysis

of 18 key economic

indicators in

Metro Denver

Development Research Partners

www.developmentresearch.net

A CEO's Insights:Innovation as a business unit , August 2019

A recent MIT/Sloan Management Review survey of digital maturity in businesses across industry and around the world uncovered an intriguing divide. Respondents in insurance, finance and entertainment were more likely to say that their organizations would not exist or would be materially weakened as a result of digital transformation than respondents from agriculture and oil and gas.

This finding illustrates a fundamental difference in mindset: between digital disruption as something that is done for a company, or to it. Companies in ag and energy have adapted technologies to improve efficiency out of necessity. Just watch a farmer controlling his irrigation pivots with an iPad in his truck, or a rig operator monitoring emissions from her well pads with remote technology.

But insurers and bankers haven’t faced the same cost pressures or environmental imperatives that these other industries have. The digital transformation in their sectors springs from competitive pressures. And for many companies, that can create a sense of dread rather than possibility. It’s a mindset that, as the authors of the MIT/Sloan report note, is rooted in a belief that “digital disruption is eroding whatever fixed advantage they might have.”

One way to get beyond that fear-based thinking is to approach innovation as a business unit. MIT cites a partnership between MetLife and the Boulder-based accelerator TechStars. MetLife brought TechStars to its North Carolina campus to jumpstart the company’s innovation by creating its own insurance technology accelerator. Of the 10 startups invited to participate in the inaugural program, MetLife developed a partnership with one that provides customized recommendations to seniors for Medicare plans. MetLife isn’t in the Medicare business, so the partnership results in no direct revenue to them. But they get valuable information about a key customer segment. And bringing startups to their campus for intensive accelerator programs fosters an innovator’s mindset.

At my own insurance company, Pinnacol, we’ve established an innovation center that is our own digital transformation incubator. That’s where we developed our Cake Insure digital platform, and it’s now the site of a team working on other transformations to our core business.

While others in the insurance sector may fear what digital disruption will do to them, we embrace what it will do for us. Running toward innovation with intent, rather than away from it in fear, allows you to own your future.

Phil Kalin joined Pinnacol Assurance as CEO in 2013. He has served as the chief executive of both public and privately-backed companies, including large

hospital systems, as well as organizations focused on health care data, technology and education. He has been active nationally on health care topics related

to insurance, data analytics, technology innovation, cost improvement and risk mitigation. Phil is providing an informed opinion on what we see in the Monthly

Economic Indicators.

Metro Denver Economic Development Corporation | August 6, 2019 | Page 1

The Monthly Economic Indicators is a comprehensive analysis of economic conditions in the seven-county Metro Denver area, or the region comprised of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson Counties. There are two metropolitan statistical areas (MSAs) located within the Metro Denver region: the Boulder MSA (Boulder County) and the Denver-Aurora-Lakewood MSA (the Denver MSA) (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties). This report presents recent data and long-term trends for the seven-county region, MSAs, or counties, depending on availability. The analysis includes four main data sections: labor force and employment, the consumer sector, residential real estate, and commercial real estate.

Notable Rankings

• According to CNBC’s “America’s Top States for Business” study, Colorado ranked No. 9. The study ranked all states forbusiness competitiveness using more than 60 metrics across 10 categories, including Workforce, Economy, Quality ofLife, and Cost of Doing Business. Colorado achieved 1,486 out of 2,500 points. Top qualifications for the rankingincluded Colorado’s economic growth in 2018 (+3.5 percent), low unemployment (3.2 percent), and the state rankingNo. 7 in both Quality of Life and Technology & Innovation. Worst categories for the state included Cost of DoingBusiness (No. 37), Infrastructure (No. 35), and Cost of Living (No. 34). Virginia, Texas, and North Carolina placed first,second, and third, respectively.

• According to CBRE’s annual “Scoring Tech Talent” report, Denver ranked No. 8 for best market for tech talent, movingup two spots from last year. The report analyzed 13 metrics including tech talent supply, growth, concentration, cost,completed tech degrees, industry outlook for job growth, and market outlook for both office and apartment rentalgrowth. Greater Denver had the 13th-largest tech talent market and the fifth-highest market for educationalattainment.

• Metro Denver ranked No. 5 in LendingTree’s “Top-ranking metros for profitable businesses” report. Denver ranked asthe fifth-highest metro out of 50 areas with the largest share of profitable businesses, with 69.4 percent of companiesturning a profit, behind Louisville, Kentucky, Indianapolis, and Portland. In the same report, Denver ranked No. 48 inthe share of businesses losing money at 15.35 percent, the third-lowest amount behind Portland and Minneapolis.

• UCHealth’s University of Colorado Hospital in Aurora in partnership with National Jewish Health ranked No. 1 inpulmonology across the nation, according to U.S. News and World Report’s “2019 Best Hospitals” rankings. TheUniversity of Colorado Hospital also ranked as the best hospital in Colorado and was ranked highly for several specialtyareas. National Jewish has ranked No. 1 or No. 2 in all 23 years that U.S. News has ranked pulmonology and servespatients at 25 locations in Colorado. Craig Hospital in Englewood ranked No. 8 for rehabilitation and a number of otherCO hospitals received high marks for various specialties.

National Economic Overview

Gross Domestic Product

• The U.S. Bureau of Economic Analysis (BEA) releasedtheir advanced estimate of real gross domestic product(GDP) for the second quarter of 2019. The estimatereported an increase of 2.1 percent during the secondquarter.

• U.S. GDP reflected positive contributions in federal, state,and local government spending, as well as increasedpersonal consumption expenditures. The level was lowerthan the first quarter results of 3.1 percent, with negativecontributions from decreased inventory investment,exports, and nonresidential fixed investments. The nextestimate for GDP will be released on August 29, 2019.


Interest Rates

• The Federal Open Market Committee (FOMC) of the Federal Reserve decided to lower the federal funds rate to a range of 2 to 2.25 percent. This was the first decrease in the fed funds rate since December 2008.

• Committee members cited strong labor market conditions and inflation running below 2 percent as chief reasons for lowering the rate. Growth of household spending has increased from earlier this year; however, the committee will monitor expected economic conditions relative to its maximum employment objective and low interest rates into the next meeting.

• The next FOMC meeting is September 17-18, 2019.

Policy Watch

National & International

• White house and congressional negotiators reached a deal in July on a two-year budget that would increase spending by $320 billion over existing caps, allowing the government to continue borrowing to most likely avoid a fiscal crisis, but at the expense of adding to the deficit. If ratified, the deal would stop a potential debt default this fall and prevent automatic spending cuts next year, while the government’s deficit approaches $1 trillion a year.

• President Trump announced that the U.S. will impose a 10 percent tariff on an additional $300 billion worth of Chinese imports, set to go into effect September 1st. The new levies would be in addition to the 25 percent tariff already imposed on $250 billion of imports, essentially taxing all Chinese products sent to the U.S. While both sides continue to try and find a compromise to the ongoing trade war, China has continued to stand firm on its trade terms, expressing that they are willing to wait out the trade war indefinitely.

Economic Indexes & Notable Data Releases

National & International

• The U.S. goods and services trade deficit increased to $55.5 billion in May, up from $51.2 billion in April. May exports of $210.6 billion were $4.2 billion more than exports in April, while imports in May of $266.2 billion were $8.5 billion more than imports in April.

• The Conference Board Leading Economic Index (LEI) decreased 0.3 percent in June to 111.5. This month’s fall marks the first decline since last December, primarily driven by weaknesses in housing permits, unemployment insurance claims, and manufacturing. The Conference Board reported that growth is likely to remain slow in the second half of the year.

• According to the Institute for Supply Management’s Manufacturing Index, the Purchasing Managers Index (PMI) was 51.2 percent, a 0.5 percentage point decrease from June. July marked the fourth straight month of slowing PMI expansion. Of the 18 manufacturing industries, nine reported growth, led by wood products, printing & related support activities, and furniture & related products.

• The Non-Manufacturing Index (NMI) by the Institute for Supply Management decreased 1.4 percentage points to 53.7 in July, with economic activity continuing to grow for the 114th month but at a slower pace. The accommodation & food services and the utilities industries reported the largest growth in July, while employment across all non-manufacturing industries grew at a faster rate compared with the prior month.

Local

• The University of Colorado Boulder Leeds School of Business released its third quarter 2019 Leeds Business Confidence

Index. The overall index fell 2.2 points to 50.5, coinciding with the Fed signaling potential cuts in the interest rate,

increased trade tensions, weaker job growth, and growing tensions in the Middle East. Four of the six individual

components of the LBCI remained above 50, but the national economy recorded the lowest confidence of the index for


Q3 2019 and Q4 2019 at 43.1, which is considered negative territory. The state economy component was also in

negative territory at 49.6. The overall outlook from respondents is neutral heading into the third quarter of 2019.

• According to the regional Beige Book by the Kansas City Federal Reserve, economic activity continued to expand

slightly in late May and June, with experts expecting a faster pace of growth moving forward. Consumer spending

continued to rise slightly as sales increased in retail and restaurant sectors, but the growth was offset by declines in

auto sales and tourism. Wages continued to rise at a modest pace, as well as district real estate activity, while

agricultural conditions continued to remain weak due to poor weather during the period.

• There was nearly $500 million in venture capital investments placed in 104 Colorado companies in the second quarter of 2019, the largest number of venture capital deals during any second quarter in the past six years, according to the recent PitchBook Data – National Venture Capital Association report. The Denver-Aurora metro area reported more than $274 million in venture capital funding, while the Boulder MSA reported more than $192 million in venture capital funding. The increases in funding have been reported nationwide, with funding on pace to match the record levels set in 2018.

• RTD’s light-rail ridership declined 13.7 percent in the first five months of 2019 compared with the same time last year. The light-rail system has steadily expanded since 1994, but transit fares rose for the first time in three years in January 2019, one possible explanation for the decline. RTD bus ridership has increased, although overall ridership across RTD’s entire system fell 1.8 percent from early 2018 to 2019.

• Lakewood voters approved an initiative designed to limit growth and development in the city. The initiative specifically calls for limiting residential “growth to no more than (1) percent per year by implementing a permit allocation system for new dwelling units, and by requiring City Council approval of allocations for projects of forty or more units”. The vote comes at a time when many high-growth markets across the country are grappling with how to control development. Lakewood is Colorado’s fifth-largest city.

• The Metro Denver and Boulder areas expect pay increases to average 3.1 percent for the third year in a row, according to an annual compensation survey from the Employers Council. Across the state, employers expect increases to average 3 percent. Finance and real estate sectors are forecasted to have the largest pay increases (+4.3 percent), followed by construction (+3.4 percent). The survey polled 426 Colorado employers, with about half of them from Metro Denver and Boulder.

Labor Force and Employment

• Employment in Metro Denver increased 1.7 percent between June 2018 and 2019, adding 28,300 jobs across all supersectors over-the-year. The Denver-Lakewood-Aurora MSA increased 1.6 percent, or by 24,100 jobs, while the Boulder-Longmont MSA increased by 2.2 percent, or 4,200 jobs, over the period.

• Eight of the 11 supersectors reported increases over-the-year, with the professional and business services increasing the most at 5.3 percent (16,500 jobs), followed by other services (+4 percent) and the transportation, warehousing, and utilities supersector (+2.6 percent).

• The information supersector reported the largest decrease, falling by 0.7 percent, followed by financial activities, which fell 0.6 percent.

• Employment in Colorado rose by 55,000 jobs, an over-the-year growth of 2 percent. National employment levels increased 1.5 percent, or by 2.2 million jobs, between June 2018 and 2019.


Nonfarm Wage & Salary Employment (000s, not seasonally adjusted)

Month of Month of Month of

Year-to-Date

Average

Year-to-Date

Average

Year-to-Date

Average

Annual Growth

Rate

Annual Growth

Rate

Jun-19 May-19 Jun-18 YTD 2019 YTD 2018 % Change 2014 2009

Total 11-County Metro Denver* 1,741.8 1,725.3 1,713.5 1,709.6 1,681.2 1.7% 3.7% -4.3%

Denver-Aurora-Lakewood MSA 1,543.1 1,523.1 1,519.0 1,511.2 1,488.4 1.5% 3.9% -4.2%

Boulder MSA 198.7 202.2 194.5 198.4 192.8 3.1% 2.5% -4.8%

Natural Resources & Construction 117.2 114.9 116.3 114.4 112.2 2.3% 12.1% -16.3%

Manufacturing 89.9 88.7 89.6 88.7 88.3 0.5% 2.2% -10.2%

Wholesale & Retail Trade 237.8 235.4 236.9 235.9 234.8 0.5% 2.9% -5.8%

Transp., Warehousing & Utilities 63.0 62.2 61.4 63.5 60.8 4.8% 3.6% -6.0%

Information 58.7 58.2 59.1 58.2 58.0 0.5% 1.3% -4.4%

Financial Activities 118.3 117.5 119.0 116.2 117.5 -1.4% 1.8% -4.4%

Professional & Business Services 326.0 319.3 309.5 315.7 302.4 4.2% 3.9% -6.2%

Education & Health Services 218.8 219.7 214.7 218.6 213.9 2.3% 4.8% 3.0% Leisure & Hospitality 201.7 193.6 199.0 189.4 188.5 0.4% 4.4% -3.4%

Other Services 67.5 66.8 64.9 66.6 63.5 5.0% 3.7% -1.8%

Government 242.9 249.0 243.1 242.4 241.4 0.4% 1.6% 1.5%

Federal Gov't 30.3 30.1 30.1 30.0 30.0 -0.4% -0.8% 0.6%

State Gov't 58.0 67.1 61.6 64.0 65.6 -1.9% 1.7% 4.0%

Local Gov't 154.6 151.8 151.4 148.4 145.8 1.6% 2.2% 0.8%

Colorado 2,802.9 2,767.6 2,747.9 2,752.3 2,701.7 1.8% 3.5% -4.5%

United States 152,307 151,600 150,062 150,359 147,878 1.7% 1.9% -4.3%

*Includes the Denver-Aurora-Lakewood MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties) and the Boulder MSA (Boulder County).

Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary (r) =revised

Metro Denver Industry Cluster Headlines

Aviation

• PrimeFlight Aviation Services is laying off 439 workers previously under contract with United Airlines at Denver International Airport (DEN). However, PrimeFlight expects that the laid off employees will likely be able to find work with United’s new vendor United Ground Express, a subsidiary of United. United is the largest passenger carrier serving DEN, with 500 daily flights since 2018.

• AMB Aviation, a United Airlines contractor, will lay off 79 employees in September when the company’s cargo handling contract with United expires. Many of the workers laid off are expected to be offered positions at SMCargo, the new company taking over the contract at DEN.

Bioscience – Pharmaceuticals and Biotechnology

• ViewRay Inc., a Cleveland-based medical technology company that provides MRI-guided radiation therapies, is planning

to add 274 high-paying jobs in Metro Denver over the next eight years. The company had 12 workers in the Denver

area as of April and plans to hire jobs such as radiation oncology researchers and software engineers.


• Cerapedics Inc., an ortho-biologics firm, is expanding its Westminster headquarters on Dover Street to accommodate a growing workforce. The company has grown from 16 to 44 employees in Colorado in the past 18 months and plans on increasing its facility from 14,000 to 24,000 square feet.

• Phipps Construction Co. broke ground on a new lab at Colorado State University. The lab will be known as the Center for Vector-Borne Infectious Diseases, and will be a $22 million, 41,000-square-foot research facility that will house the Department of Microbiology, Immunology, and Pathology at CSU.

Energy and Natural Resources – Natural Resources

• Denver-based Whiting Petroleum Corp cut 254 jobs in July, downsizing its work force by a third as it posted a second-quarter loss. Of those affected, 94 were largely based in its Downtown Denver headquarters. Others were let go from field operations in North Dakota, Northeastern Colorado, and elsewhere. Revenues for the company fell $25.7 million, while oil production also fell by around 250,000 barrels of oil during the second quarter.

Broadband and Digital Communications

• Dish Network and Sling TV are expanding their offices in Lower Downtown into a renovated space next to Dish’s office at 1615 17th St. The current offices hold about 200 employees, and the additional space is expected to hold more than 50 new employees. The company has around 4,800 employees in Colorado.

Financial Services – Banking & Finance

• Glint Pay Inc, a British financial company, set up its U.S. operations in Boulder. The company allows customers to deposit funds and exchange them into foreign currencies or to buy portions of gold bars held in Switzerland for a fee. Glint has six employees in the Boulder office and plans to expand the team in the coming months.

Financial Services – Investments

• Fidelity Investments exceeded hiring goals in 2018, adding more than 100 employees in Denver with expectations to add more than 200 new employees this year. Fidelity also got approved to expand its regional office space located at 6501 South Fiddlers Green Circle in Greenwood Village to accommodate the larger workforce. Earlier this year, the company relocated its Downtown Denver office to a 6,000-square-foot office in Union Tower West at 1801 Wewatta St. Fidelity has more than 900 employees across Colorado.

Food and Beverage Production

• Good River Beer Co. will take over the former Renegade Brewing production facility at 918 W. 1st Ave. at the Yard on Santa Fe. The new 15,000-square-foot production facility is expected be open by October, with plans for an additional 2,500-square-foot taproom in the space.

• Bruz Beers started construction on a 1,500-square-foot taproom at the southwest corner of Colfax Avenue and York Street. The new taproom will be their second location, with their original brewing site located in unincorporated Adams County.

• Odell Brewing is opening its third location in Sloan’s Lake at West 17th Avenue and Perry Street. Odell currently has a taphouse in RiNo. Construction will begin this year and the brewery plans to open in the summer of 2020.

Healthcare & Wellness

• RXRevu partnered with UCHealth to deliver a platform that helps doctors prescribe medication covered by a patient’s insurance. The partnership has raised $15.9 million so far and has given doctors a way to check a patient’s insurance to then prescribe medications that are covered and cost-effective. The company currently has 24 employees, and the funding will be used to add more staff and integrate the software into more hospitals.


IT-Software

• TrueCoach, a Boulder-based tech company that makes software for personal training, raised $2 million in funding led by investor Eric Roza. The company currently has 20 employees and is expected to double its workforce by next summer.

• Slack Technologies, which has an office at 1691 Chestnut Place, cited Denver as a huge emerging market for the messaging company with plans for continued growth in the Denver office. The company cited investments in infrastructure and middle-of-the-country geography as main attractors for the Metro Denver area. Slack currently employs 85 workers in Denver and plans to expand to 150 workers in the next seven months. The Denver office is the company’s second-largest across the globe.

• Stateless Inc. moved into a 17,000-square-foot office at 5710 Flatiron Parkway in Boulder, with plans to hire 80 new employees in the next 18 months. The IT infrastructure company connects data between cloud services with a client’s in-house servers through its Luxon platform. The company currently has 50 employees and recently completed an $11.33 million series A funding round.

• Engrain, a real estate-tech firm specializing in interactive mapping technology, raised $1 million in seed funding and is pursuing $5-10 million in Series A funding with plans to hire more people in their Denver Tech Center office. The company currently employs 65 people in the Metro Denver area and is expecting to expand their software capabilities to retail markets and emergency dispatch services.

• Gusto, an HR tech platform, raised $200 million in Series D funding with plans to invest in research and development, specifically developing new healthcare offerings and flexible-pay options for its clients. The company specializes in providing payroll, benefits, and HR service software to small businesses. The company currently employs 600 workers in Denver and plans to expand to 1,000 over the next few years.

• Frontdoor Inc., the parent company of American Home Shield, HSA, Landmark, and OneGuard, is in the process of building out office space near Union Station in Downtown Denver. The new office will host around 100 new employees, with 20 of the available positions already filled. The space is expected to be finished later this year.

• Backbone, a Boulder company that offers a cloud-based solution to help consumer-goods companies design products in a one-stop shop, just completed a $10 million funding round that will allow it to double its staff of 50 people to 100 people by the end of next year. Companies in sectors such as outdoor recreation, where Backbone is a significant player, traditionally have had to use a variety of programs to design their products, as different factories often create different aspects of a single consumer-goods product. Backbone centralizes the data into one place rather than in different applications, making any changes more transparent and easier to keep track of. Backbone has built a client list of more than 100 brands that rely on its software,

Other Industry Headlines

• Hestra, a Swedish glove manufacturer, opened its North American headquarters in a new $5 million facility in Arvada. The 32,000-square-foot facility is on the corner of 54th Drive and Ward Road, and will specialize in handling sales, distribution, and marketing throughout North America for the company. The company plans to increase its staff to 10 this year at the new facility.

• The Bureau of Land Management plans to relocate its headquarters to Grand Junction, bringing 27 jobs to the area. In addition, the BLM will relocate 58 jobs from Washington to the Federal Center in Lakewood. The relocation is expected during the fall of this year.

• Elixinol LLC, a hemp and CBD company, is planning on building a new 22,500-square-foot facility in the Colorado Technology Center in Louisville. The company expects 35 employees to work at the new facility. The company currently occupies a 10,000-square-foot space adjacent to the proposed new building site.


• PointsBet, an Australian sports book operator company, is opening its largest North American office in Denver in light of Colorado’s new legislation proposal to permit sports betting in the state set to be voted on this coming November. The company plans on hiring between 150 and 200 people in the new office with an emphasis on new tech talent.

• Armanino, a San Francisco-based tax and consulting firm, opened its first Denver office at 999 18th St. The company is the 23rd-largest accounting firm in the country based on 2018 revenue and has just over 15 employees in Metro Denver currently. The company hopes to double its employment base in the coming year and intends to expand into a variety of industries, including the cannabis industry.

• Front Range Community College opened its new Center for Integrated Manufacturing in Longmont, a new 27,000 square-foot facility for FRCC’s manufacturing programs which include an existing precision machining technology program, the optics technology program, and two new programs: automation technology and electronics technology. The facility is located at 1351 S. Sunset St.

• Stack Infrastructure, a data center company that started in January 2019, is opening its corporate headquarters at 1600 Broadway in Denver on September 1. The office has capacity for up to 20 employees, where the company plans to hire financial, legal, marketing, and IT talent as it relates to data centers. Stack has about 1 million square feet of data centers under management and 100 MW of power capacity across the U.S. There are plans to add at least an additional 600,000 square feet by the end of the year.

Employment Outlook

• Denver-Aurora MSA employers expect to hire at a slower pace in the third quarter of 2019. Among employers surveyed, 29 percent expect to add workers in the third quarter, which is 6 percentage points lower than the previous quarter and the same pace as the third quarter of 2018. The percentage of companies laying off employees for the third quarter of 2019 remains static at 1 percent, the same as the previous quarter. Of the companies surveyed, 68 percent expect to not change their payroll, while 2 percent of companies are unsure.

• The U.S. employment outlook is positive, with 27 percent of companies surveyed expecting to hire, an increase of 3 percentage points from the prior quarter and the prior year.

• All 13 industries across the U.S. reported double-digit hiring intentions, hitting a 13-year high, with the strongest outlooks coming from the professional & business services industry (+28 percent), leisure & hospitality (+27 percent), and transportation & utilities (+25 percent).


Employment Outlook Survey

Quarter 3 Quarter 2 Quarter 3 YTD YTD Ann Avg Ann Avg

2019 2019 2018 2019 2018 2014 2009

Denver-Aurora-Broomfield MSA Percent of Companies Hiring 29% 35% 29% 29% 28% 21% 11%

Percent of Companies Laying Off 1% 1% 4% 3% 3% 6% 12%

Percent of Companies No Change 68% 63% 65% 68% 66% 71% 74%

Percent of Companies Unsure 2% 1% 2% 1% 3% 2% 3%

United States

Percent of Companies Hiring 27% 24% 24% 25% 23% 19% 15%

Percent of Companies Laying Off 3% 3% 3% 4% 4% 6% 14%

Percent of Companies No Change 69% 72% 71% 71% 72% 72% 68%

Percent of Companies Unsure 1% 1% 2% 1% 2% 3% 5%

Source: Manpower Inc.

Unemployment

• Metro Denver’s not seasonally adjusted unemployment rate rose 0.5 percentage points between May and June. Over-the-year, the rate fell 0.4 percentage points to 2.9 percent between June 2018 and 2019.

• All seven counties in Metro Denver reported over-the-year decreases in the unemployment rate, with each falling 0.4 percentage points over-the-year. However, all counties reported over-the-month increases in unemployment between 0.4 and 0.5 percentage points. Douglas County reported the lowest unemployment rate in June, falling to 2.6 percent.

• Metro Denver added 38,629 people either employed or looking for work between June 2018 and 2019. The labor force rose across all seven counties, ranging from a 1.9 percent increase in Adams County to a 2.7 percent increase in Boulder County.

• Colorado reported an unemployment rate of 3 percent in June, an increase of 0.4 percentage points from May but a decrease of 0.4 percentage points from June 2018. Colorado’s labor force grew 2.3 percent over-the-year, adding 70,306 individuals to the labor force. The national unemployment rate fell 0.4 percentage points over-the-year but rose 0.4 percentage points over-the-month, consistent with the Colorado trends.


Labor Force Statistics (000s, not seasonally adjusted civilian labor force)

Jun 2019 (p) 2019 YTD AVG 2018 YTD AVG 2014 2009

Total Labor

Force Unemploy-ment Rate

Total Labor Force

Unemploy-ment Rate

Total Labor Force

Unemploy-ment Rate

Ann Avg Unemploy- ment Rate

Ann Avg Unemploy-ment Rate

Metro Denver 1,857.6 2.9% 1,828.0 3.0% 1,788.4 3.0% 4.7% 7.3%

Adams County 277.4 3.1% 273.0 3.4% 267.4 3.3% 5.7% 8.5%

Arapahoe County 373.6 3.0% 367.1 3.1% 359.5 3.0% 4.9% 7.3%

Boulder County 199.2 2.7% 197.8 2.7% 192.1 2.7% 4.1% 6.1%

Broomfield County 41.0 2.7% 40.3 2.8% 39.5 2.7% 4.2% 6.9%

Denver County 425.1 2.9% 418.1 3.1% 409.2 3.0% 4.8% 8.1%

Douglas County 197.0 2.6% 193.5 2.7% 189.5 2.6% 4.0% 6.2%

Jefferson County 344.3 2.8% 338.3 2.9% 331.3 2.8% 4.6% 7.1%

Colorado 3,186.1 3.0% 3,134.6 3.2% 3,064.2 3.1% 5.0% 7.3%

United States 164,120 3.8% 162,765 3.8% 161,567 4.1% 6.2% 9.3%

Source: Colorado Department of Labor and Employment, Labor Market Information. (p) =preliminary

• Between May and June, initial unemployment insurance claims in Metro Denver decreased 5 percent. The level in June was 1.7 percent higher than the same time last year. The average year-to-date total claims increased 3.8 percent, the sixth consecutive month of increasing year-to-date monthly claims.

• Colorado reported a 10.2 percent decrease in initial claims between May and June but increased 7.3 percent over-the-year to 1,681 total claims. Year-to-date average monthly claims rose 0.7 percent, after falling for two consecutive months.

Weekly First-Time Unemployment Insurance Claims

Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg 2009 Jun-19 May-19 Jun-18 2019 2018 % Change 2014

Metro Denver 878 924 863 1,044 1,006 3.8% 1,415 2,541

Colorado 1,681 1,872 1,567 1,977 1,964 0.7% 2,657 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. rebounded in July to 135.7, up from 124.3 in June. The Present Situations Index increased by 6.6 points to 170.9, while the Expectations Index increased from 97.6 to 112.2 in July.

• Analysts at The Conference Board stated that consumers were more optimistic about the short-term outlook in July, rebounding after sharp declines in consumer confidence in June driven by the escalation in trade and tariff tensions and uncertainty in the marketplace. The rebound in July is the highest level this year so far, with consumers feeling confident in their financial outlook and current and prospective business and labor market conditions.

• Colorado is included in the Mountain Region Index and the area reported a 3.1 percent decrease in consumer confidence between June and July. Over-the-year, consumer confidence rose 0.1 percent to 134.4 in July. The Present Situation Index rose 0.5 percent over-the-month to 187.4, while the Expectations Index fell 7.3 percent to 99.

Consumer Confidence Index

Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Jul-19 Jun-19 Jul-18 2019 2018 % Change 2014 2009

Mountain 134.4 138.7 134.3 134.0 130.1 3.0% 89.2 49.7

United States 135.7 124.3 127.9 128.3 127.2 0.8% 86.9 45.2

Source: The Conference Board. (p) = preliminary (r) = revised

• According to the Colorado Automobile Dealers Association, new automobile registrations fell 3.3 percent during the first half of 2019, while used vehicle registrations are up 10.8 percent during the period. Nationally, new auto registrations fell 4.1 percent compared with the same time last year.

• National retail sales increased between April and May, with total retail sales rising 7.3 percent above the previous month’s sales. All 13 supersectors reported growth over-the-month, led by the miscellaneous store retailers that increased by 17.1 percent, followed by electronics and appliance stores (+9.6 percent).

• Sales activity increased by 3.2 percent over-the-year, with the largest rise in sales reported in the non-store retailers supersector (+11.7 percent), followed by food services and drinking places (+5.1 percent). Four of the 13 supersectors reported over-the-year decreases in sales, with sporting goods, hobby, book, and music stores decreasing by 5.3 percent, followed by electronics and appliance stores (-4 percent), and building materials and garden equipment and supplies stores (-3.2 percent).


National Retail Sales ($millions)

Source: U.S. Census Bureau.

Price Changes

• The U.S. Consumer Price Index (CPI) rose 1.6 percent between June 2018 and 2019. Six of the eight components increased during the period, with the greatest increases in housing (+3 percent), medical care (+2 percent), and food and beverage (+1.9 percent). Apparel reported the largest decrease of 1.3 percent over-the-year, followed by transportation that fell 0.7 percent.

• The CPI for the Denver-Aurora-Lakewood area rose 1.6 percent, with six of the eight components increasing between May 2018 and May 2019. The greatest increases were in other goods and services (+4.1 percent), medical care (+3.1 percent), and transportation (+2.8 percent). Recreation posted no change and apparel decreased by 5.2 percent over the period.

• According to the AAA Daily Fuel Gauge Report, the national average fuel price for July increased 0.2 percent from the prior month to $2.72 per gallon. The average fuel price decreased 5.2 percent over-the-year. The Metro Denver average fuel price decreased from $2.63 per gallon to $2.54, a decrease of 3.4 percent from the prior month. Gas prices in Metro Denver decreased 6.8 percent over-the-year, falling by $0.19.

Stock Market

• All four stock market indices increased between June and July for the second consecutive month. NASDAQ reported the largest over-the-month increase (+2.1 percent), followed by Bloomberg Colorado (+1.6 percent) and the S&P 500 (+1.3 percent). NASDAQ also reported the largest over-the-year increase, rising by 6.6 percent, followed by Bloomberg Colorado (+6.4 percent) and the S&P 500 (+5.8 percent). DJIA reported the smallest increases, rising by 1 percent over-the-month and 5.7 percent over-the-year. Dow Jones industrials crossed 27,000 for the first time in history in July, after falling below the threshold to close out the month. The S&P 500 briefly rose above 3,000 during the month.

Month of Month of Month of YTD Total YTD Total YTD Total Annual Growth

Annual Growth

May 2019 Apr. 2019 May 2018 2019 2018 % Change 2014 2009

Total Retail Sales 547,255 510,176 530,082 2,479,672 2,405,363 3.1% 4.3% -7.4%

Motor Vehicles 113,030 104,198 108,914 506,852 494,420 2.5% 6.4% -14.5%

Furniture and Home 9,984 9,271 9,910 46,011 46,302 -0.6% 4.6% -14.2%

Electronics & Appliance 7,626 6,956 7,942 37,113 38,794 -4.3% 0.5% -9.5%

Building Materials 37,857 34,656 39,115 154,982 152,023 1.9% 5.5% -13.3%

Food and Beverage 66,923 62,737 64,958 314,159 306,134 2.6% 4.4% -0.2%

Health and Personal Care 30,579 29,538 29,460 146,426 140,499 4.2% 6.2% 2.5%

Gasoline Stations 47,255 44,127 46,292 204,838 201,997 1.4% -2.0% -22.3%

Clothing & Accessories 23,210 21,597 23,764 101,444 101,250 0.2% 2.3% -5.2%

Sporting Goods 6,276 6,043 6,625 29,098 31,271 -6.9% 1.0% -4.1%

General Merchandise 61,344 56,653 60,018 278,251 273,023 1.9% 2.3% -1.0%

Miscellaneous Store 12,550 10,718 12,297 51,833 52,088 -0.5% 3.1% -8.1%

Non-Store Retailers 62,648 59,989 56,082 296,298 268,387 10.4% 8.7% -2.5%

Food Service & Drinking 67,973 63,693 64,705 312,367 299,175 4.4% 6.1% -0.9%


Stock Market Indexes

Month of Month of Month of YTD Return YTD Return Ann Avg

Return Ann Avg

Return

Jul-19 Jun-19 Jul-18 2019 2018 2014 2009

Bloomberg Colorado 586.5 577.4 551.3 27.3% 10.8% -1.6% 46.2%

S&P 500 2,980.4 2,941.8 2,816.3 18.9% 4.8% 11.4% 23.5%

NASDAQ 8,175.4 8,006.2 7,671.8 23.2% 11.1% 13.2% 43.9%

DJIA (Dow Jones) 26,864.3 26,591.9 25,415.2 15.2% 2.3% 7.6% 18.8%

Sources: Bloomberg.com; Yahoo! Finance.

Travel & Tourism

• The Colorado Department of Transportation (CDOT) is adding a new bus service, called ‘Snowstang’, to at least two ski areas beginning in December. Loveland and Arapahoe Basin will be added, and Copper Mountain has expressed interest in the new regional bus network. The ride to the ski areas will cost $25 round-trip. The bus network will also add a route to Estes Park that will cost $10.

• The average hotel occupancy rate in Metro Denver decreased 2 percentage points over-the-year, falling to 86.3 percent in the month of June. The average hotel room rate rose 0.6 percent to $162.84 during the period. This was an 11.8 percent increase from the previous month.

• Aurora’s newly-constructed Gaylord Rockies Resort and Convention Center ranked 33rd this year in top meeting destinations in the U.S. The 1,501-room hotel and resort is part of a growing trend of secondary cities using more focused marketing through lower costs to win over business meetings. Denver ranked 14th in the survey, slipping from their 11th spot in 2018.

• Sonder, a San Francisco-based hospitality startup, will begin renting out 32 units at 2450 S. University Blvd. near the University of Denver, as well as another 20 units at 3206 Osage St. and 20 units at 3022 Zuni St. Sonder signs leases for blocks of residential units and rents them out to travelers on a short-term basis. The company also agreed to rent 93 units in a new complex that is expected to be built at the former La Loma restaurant site in Jefferson Park.

Metro Denver Hotel Statistics

Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual

Jun-19 May-19 Jun-18 2019 2018 % Change 2014 2009

Percent of Hotel Rooms Occupied 86.3% 77.6% 88.3% 72.7% 72.5% 0.2% 75.8% 59.0%

Average Hotel Room Rate $162.84 $145.60 $161.85 $141.19 $140.52 0.5% $124.37 $106.85

Source: Rocky Mountain Lodging Report.

• Denver International Airport (DEN) reported increases in cargo operations. Through April, the amount of cargo passing through DEN increased 10.3 percent over-the-year, reaching 207.5 million pounds. DEN expects to break records in 2019, amid similar rises in passenger numbers. Analysts say the growth in cargo is an important indicator of the state’s economy, with the airport’s annual economic impact for Colorado estimated to be more than $26 billion.

• Spokespeople for Denver International Airport (DEN) reported that more than 6 million passengers passed through the airport in May, an increase of 9.6 percent from the previous year, or an additional 529,861 passengers. In addition, the May level was 13.5 percent higher than the previous month.

Denver International Airport Passengers

Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual

May-19 Apr-19 May-18 2019 2018 % Change 2014 2009

Number of Airline Passengers 6,041,856 5,321,719 5,511,995 26,317,789 24,917,756 5.6% 53,472,514 50,167,485

Source: Denver International Airport, Traffic Statistics.


Residential Real Estate

• Ubuntu Partners Real Estate is proposing to build a 22-story, 314-unit condominium project in Arapahoe Square in Downtown Denver, currently a parking lot located at 838 Park Avenue West. The project would include ground level retail with four stories of above-ground parking. The units are expected to range from $365,000 to $750,000 in price.

• Longmont City Council voted to reverse a decision to send the preliminary plat for a proposed housing project in Longmont back to the Planning and Zoning Commission for further review. The 66-acre Mountain Brook subdivision property is planned for several hundred housing units, including 110 single-family detached homes, 149 townhomes, eight attached duplex units, and 25 detached multifamily units.

• X Denver apartment complex is under construction at 3100 N. Inca St. The 12-story building will have 251 units and is expected to be complete in the summer of 2020. Property Markets Group also proposed another 12-story building with 192 units on the adjacent half-acre lot on Inca St.

• Pando Holdings purchased 1.27 acres of land at 2039 19th St. for $6.25 million. The company plans to develop a 12-story apartment building with approximately 205 units, 185 of which will be studio apartments (around 425 square feet each). The rest will be four-bedroom furnished apartments that will be rented by the bedroom in order to create a co-living development.

• Stapleton’s Moline apartments, one of the first income-restricted developments to benefit from Denver’s Affordable Housing Fund, was completed and has already received 150 applications. Moline Development expects all 180 units to be fully leased by the end of August, with affordable rents for one, two, or three-bedroom units. Denver Economic Development and Opportunity stated that 1,423 units have already received city financing and are under construction across 18 sites across Denver, and 458 more are expected to break ground over the next year.

• Mile High Development and Brinshore Partnership proposed a six-story income-restricted apartment building that would replace two warehouses at 1271 and 1275 Sherman St. in Capitol Hill. The proposal calls for 103 units restricted for those earning up to 80 percent of the area median income. The companies hope to break ground June 2020, but the project plans are awaiting city approval.

• A new residential redevelopment is planned for the former Silver Saddle motel property on Arapahoe Road in Boulder. The plans call for 46 attached units, with 19 of the units being permanently affordable, at the 5-acre site which is adjacent to the September School.

• Insignia Homes submitted plans for a new six-story, 44-unit apartment project at 1122 Albion in Denver’s Hale neighborhood. The company purchased the lot for $1.06 million in March and will pursue city approval to develop on the property.

• Formativ, a development company, plans to build a five-story, 26-unit residential condo building at 2750 Blake St. The proposed 80,000-square-foot project would include four to eight residential units on the four upper levels and 32 parking spaces according to the plans submitted. The company purchased the land for $13.8 million in April 2017, which also included a 45,000-square-foot warehouse lot at 2763 Blake St that is being developed into Lot Twenty Eight, a mixed-use office and entertainment space.

• New luxury condos are planned for the La Plaza commercial development along Evergreen Parkway. New plans call for 10 to 15 condos that will replace two lots within the development and require re-zoning to develop into residential housing. The four office buildings currently on the property will continue to operate.


Home Resales

Metro Denver

• Home sales in Metro Denver decreased 1.5 percent between May and June and decreased 4.7 percent over-the-year.

• Unsold homes on the market were 7.1 percent higher in June than in May and 28 percent higher than June 2018. There were 2,084 more unsold homes on the market in June 2018 compared with the same time last year.

• The average sales price for single-family homes increased 1.9 percent over-the-year to $533,122 but fell 0.5 percent between May and June. The average sales price for condominiums increased 2.2 percent over-the-year to $315,637.

Previously-Owned Home Sales Activity

Month of Month of Month of YTD Total YTD Total YTD Total Ann Total Ann Total


Home Sales (Closed) 5,655 5,743 5,937 27,173 26,855 1.2% 54,068 42,070

Unsold Homes on Market 9,520 8,891 7,436 9,520 7,436 28.0% 6,744 19,762

Average Sales Price-Single Family $533,122 $535,613 $523,435 $516,801 $510,744 1.2% $363,604 $264,803

Average Sales Price-Condo $315,637 $318,986 $308,877 $311,202 $298,934 4.1% $224,997 $159,628

Median Sales Price-Single Family $449,900 $449,900 $439,900 $306,000 $219,000

Median Sales Price-Condo $285,000 $280,000 $272,500 $180,000 $135,000

Source: Colorado Comps LLC; Denver Metro Association of Realtors; REcolorado.

National

• According to the National Association of Realtors (NAR), total existing-home sales fell 1.7 percent to a seasonally adjusted annual rate of 5.27 million in June, with two of the four major U.S. regions reporting declines in sales. Sales decreased 2.2 percent nationally over-the-year from 5.39 million in June 2018.

• Total housing inventory at the end of June increased to 1.93 million, up from 1.91 million existing homes available in May. Housing inventory remained unchanged from the level a year ago. Unsold inventory is at a 4.4-month supply, up from the 4.3-month supply recorded in both May 2019 and June 2018.

• Properties remained on the market for an average of 27 days in June, up from 26 days in May and in June of 2018. Of the homes sold in June, 56 percent were on the market for less than a month.

Home Prices

• NAR data shows that the median existing-home price for all housing types reached an all-time high of $285,700 in June, up 4.3 percent from the same time last year. This marks the 88th straight month of year-over-year gains. The median price in the Northeast increased 4.8 percent over-the-year to $321,000. In the Midwest, the median price increased 6.7 percent over-the-year to $230,400. The median price in the South was up 4.9 percent to $248,600, while the median price in the West rose 2.3 percent to $410,400 during the period.

• A separate NAR report revealed that the median price in the Boulder MSA ($603,600) during the first quarter of 2019 was 1.9 percent higher over-the-quarter and 2.6 percent higher over-the-year. The Denver-Aurora MSA ($446,600) was 1.9 percent higher than the fourth quarter and 1.2 percent above the year-ago level.


• The national median sales price during the first quarter of 2019 decreased 1.2 percent over-the-quarter to $254,800 but was 3.9 percent higher than the previous year’s level.

Median Sales Price of Existing Single-Family Homes ($000s)

Quarter 1 Quarter 4 Quarter 1 YTD Avg YTD Avg YTD Avg Median Median

2019 (p) 2018 (r) 2018 2019 2018 % Change 2014 2009

Boulder MSA $603.6 $592.3 $588.5 $603.6 $588.5 2.6% $390.7 $345.5

Denver-Aurora MSA $446.6 $438.3 $441.5 $446.6 $441.5 1.2% $310.2 $219.9

United States $254.8 $258.0 $245.3 $254.8 $245.3 3.9% $208.9 $172.1

Source: National Association of REALTORS. (p) =preliminary (r) =revised

• Of the 178 MSAs included in the first quarter 2019 report, the Boulder MSA reported the sixth-highest median price, while the Denver-Aurora MSA median price was the 11th-highest.

• According to the S&P/Case-Shiller home price index, Denver housing prices appreciated in May, increasing 0.6 percent over-the-month to 222.76. Over-the-year, housing prices increased 3.6 percent, slightly slower growth compared to last month’s over-the-year growth rate of 3.8 percent. National housing prices rose 3.4 percent over-the-year to 209.66.

• Las Vegas reported the largest over-the-year growth rate for the third straight month, growing by 6.4 percent, followed by Phoenix (+5.7 percent) and Tampa (+5.1 percent). Denver ranked 10th out of the 20 cities in over-the-year growth, down from the previous month’s ranking of No. 8.

• Seattle reported the only decrease in home prices, falling by 1.2 percent over-the-year. San Francisco (+1 percent) and San Diego (+1.3 percent) reported the slowest growth.

Foreclosures

• Foreclosures in Metro Denver increased 16.4 percent between June of 2018 and 2019, rising by 28 homes foreclosed on during the period. Six of the seven counties reported an increase in foreclosures compared with last year. Boulder County increased by 6 foreclosures over-the-year, an increase of 120 percent, followed by Jefferson County (+45.5 percent) and Douglas County (+14.3 percent). Broomfield County reported a decrease of one home foreclosed on during the year, a decrease of 33.3 percent. Jefferson County reported the largest absolute increase, rising by 10 foreclosures over-the-year.

• Between May and June, Boulder County (+37.5 percent), Arapahoe County (+7.3 percent), and Denver County (+2.4 percent) reported increases in foreclosures. Broomfield County reported a 60 percent decrease over-the-month, followed by Douglas County (-33.3 percent) and Adams County (-23.4 percent).


Real Estate Foreclosures

Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total


Total Metro Denver* 199 220 171 1,396 1,356 2.9% 5,328 26,434 Adams County 36 47 33 312 290 7.6% 1,200 5,646 Arapahoe County 59 55 54 344 332 3.6% 1,314 6,243 Boulder County 11 8 5 80 68 17.6% 253 1,382 Broomfield County 2 5 3 27 22 22.7% 59 315 Denver County 43 42 40 281 266 5.6% 1,087 6,141 Douglas County 16 24 14 140 131 6.9% 437 2,680 Jefferson County 32 39 22 212 247 -14.2% 978 4,027

*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.

New Home Sales

• Sales of new single-family homes in June were at a seasonally adjusted annual rate of 646,000, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. This represented a 7 percent increase from the revised May estimate of 604,000.

• Home sales increased 4.5 percent over-the-year, with increases in the West region (+19.4 percent) and the South region (+9.5 percent). The Northeast and Midwest regions reported over-the-year decreases of -50 percent and -17.6 percent, respectively.

New Home Construction National

• Builder confidence for newly built single-family homes rose one point to 65 in July, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This marks the sixth consecutive month that sentiment levels have held at a steady range in the low- to mid-60s. Builders reported solid demand for single-family homes. However, issues with labor shortages and rising construction costs are making it challenging to build homes at affordable price points relative to buyer incomes.

• According to the Census Bureau, the seasonally adjusted annual number of nationwide residential building permits decreased 5.2 percent over-the-month in June to 1.23 million permits and decreased 4.6 percent over-the-year.

• Single-family detached building permits across the U.S. reported an over-the-month increase of 1.6 percent but reported a 3.5 percent decrease over-the-year to 823,000 total permits in June.

• Single-family attached units increased 31.4 percent over-the-month and increased 27.8 percent over-the-year, reaching 46,000 total permits. Multi-family units reported decreases in permits, falling 20 percent over-the-month and 9.9 percent over-the-year to 363,000 units.


• The Northeast region reported the only increases, rising by 26 percent over-the-month and 1.7 percent over-the-year to 121,000 units. The South region reported the largest over-the-year decrease, falling by 7.6 percent, followed by the West region (-2.7 percent) and the Midwest region (-1.2 percent).

Metro Denver

• Residential building permits for Metro Denver totaled 1,871 permits, increasing by 26.4 percent, or by 391 permits, over-the-year.

• Single-family detached units reported a decrease of 9.9 percent over-the-year, falling by 110 permits during the period. Single-family attached units fell from 65 a year ago to 38, decreasing by 27 permits. Multi-family units reported the only increase, growing by 528 units over-the-year, a growth rate of 174.3 percent.

• The number of residential units permitted in Metro Denver increased 5.8 percent (+103 permits) from May to June, due to an additional 193 multi-family units permitted during the month. Single-family detached units fell by 125 homes, while single-family attached units increased by 35 units during the period.

Residential Building Permits

Month of Month of Month of YTD Total YTD Total YTD Total Total Total


Single-Family Detached Units 1,002 1,127 1,112 5,466 6,647 -17.8% 7,396 4,037 Single-Family Attached Units 38 3 65 105 178 -41.0% 399 224 Multi-Family Units 831 638 303 4,030 5,319 -24.2% 9,145 5,296 Total Units 1,871 1,768 1,480 9,601 12,144 -20.9% 16,940 9,557

Source: U.S. Census Bureau.

Apartment Rental Market

• The apartment vacancy rate throughout Metro Denver fell 0.4 percentage points between the first quarter and second quarter of 2019. Over-the-year, the rate decreased 1 percentage point to 5 percent vacancy. Vacancy rates ranged from 3.6 percent in Boulder/Broomfield Counties to a high of 7.6 percent in Douglas County.

• The average monthly rental rate of apartments in Metro Denver increased 2.6 percent over-the-quarter to $1,520. All six submarkets reported over-the-quarter increases in the rental rate, led by Denver County (+5 percent) and Boulder/Broomfield Counties (+4 percent). The Boulder/Broomfield submarket reported the highest rate, totaling $1,680. All counties also reported over-the-year increases, led by Denver County (+3.2 percent), followed by Jefferson County (+3.1 percent), and Arapahoe County (+2.5 percent). The Metro Denver rental rate increased 2.4 percent over-the-year, marking the slowest increase for a second quarter since 2011 while supply and demand remain balanced and vacancy rates remain low.

• Apartment sales reached nearly $1 billion in the second quarter of 2019 in Metro Denver, bringing the year-to-date volume of sales to more than $2 billion. This was a 13 percent increase in sales compared with the first two quarters of 2018. Equity Residential was the most active buyer, spending a total of $565 million in apartment complexes so far with plans to reach $1.5 billion over the next few years.


Apartment Statistics

Quarter 2 Quarter 1 Quarter 2

YTD Average

YTD Average

YTD Average Ann Avg Ann Avg

2019 2019 2018 2019 2018 % Change 2014 2009

Apartment Vacancy Rate 5.0% 5.4% 6.0% 5.2% 6.1% -0.9% 4.6% 8.1%

Average Monthly Rental Rate (all units) $1,520 $1,481 $1,484 $1,500 $1,452 3.3% $1,126 $877

Source: Denver Metro Apartment Vacancy and Rent Survey.

Commercial Real Estate

• Endeavor Real Estate Group has spent $42 million on sites near Broadway and Interstate 25. The purchases include 380,000 square feet on the east side of the lot and an additional 560,000 square feet on the west side. Construction is scheduled to begin the first quarter of 2020, and will include a 290-unit, five-story apartment building and a six- or seven-story office building totaling 180,000 square feet.

• A new mixed-use project called Timber 2 is planned for the S*Park development in Boulder at the former Sutherland lumberyard site on Bluff Street, east of 30th Street. Plans submitted to the Boulder City Council call for 85 residential units and approximately 1,976 square feet of non-residential space on the ground floor. Of the 85 units, 33 are planned for efficiency units, or homes smaller than 475 square feet. The S*Park development will eventually include 272 multi-family units, 100,000 square feet of office space, 40,000 square feet of retail space, and a 2-acre park.

• A new 100,000-square-foot office building is proposed for development in the Colorado Tech Center business park in Louisville. Plans call for 32 individual executive office condominiums at 1411 S. Arthur Ave. The Louisville Planning Commission is set to review the project proposed by owner CTC Gateway LLC in October.

• A local developer is planning to build a new 83,411-square-foot flex industrial building in the Colorado Technology Center business park in Louisville. The site, located at 1875 Taylor Ave., was purchased by W.W. Reynolds Co. in 2018 for $1.25 million. Plans do not specify a tenant yet, but the company is optimistic on the flex/industrial market in the area.

• Hyatt Hotels broke ground on The Thompson Denver, a Thompson Hotels brand at the location of RTD’s former Market Street Station in downtown Denver. The hotel brand will be an 11-floor, 216-room facility with 8,000 square feet of meeting and event space. The project is expected to be completed in the first half of 2021.

• Denver-based Sebastian Partners announced a new project called Avelon, a master-planned community in Aurora made up of hotels, apartments stacked over retail, about 1,100 single-family residential lots, and 40 acres of commercial space including a grocery store and several restaurant options. The planned community is bordered by East 56th Avenue to the south, Picadilly Road to the west, East 64th Avenue to the north, and a future road near E-470 to the east. The project is envisioned to be anchored by an amphitheater with a retractable roof, allowing for year-round concerts and events. Permitting for the project would begin in 2020, pending site plan approvals and securing a deal with a music programmer.

• Confluence Companies submitted a $72.3 million development proposal to Castle Rock to construct a seven-story building consisting of 124 condominiums, 17,881 square feet of retail, and 11,921 square feet of office space directly adjacent to the town hall building. The project, called Encore, would provide more than 300 covered, public parking spaces and another nearly 300 spaces pledged for residential, retail, and office use. Encore would also include a civic plaza between it and the town hall, along with a public dog park. Encore must first get approval of its site development plan by the design review board and final approval from council, which likely would not occur until September.


Office Market

• Newmark Knight Frank released its second quarter 2019 analysis, finding that Denver’s office market continued to

expand for the 38th consecutive quarter, posting 414,002 square feet of net absorption during the second quarter,

with year-to-date net absorption of 922,033 square feet. Eight of Denver’s nine submarkets reported positive net

absorption, with the Downtown and Midtown submarkets posting the largest at 179,729 square feet and 106,963

square feet, respectively.

• According to data from CoStar, the national office market reported net absorption of 23.9 million square feet during

the second quarter of 2019. A total of 237 new buildings delivered nearly 19.2 million square feet of new office space

to the market, while vacancy rates hovered around 9.4 percent for the fourth straight quarter. The average lease rate

continued to increase, rising 0.9 percent to $28.51 per square foot during the period.

• Amidst sharp increases in home prices in Denver, office space remains relatively cheap in Denver. The Denver price to purchase 100,000 square feet of commercial Class A office space was estimated to be $25.4 million. Compared to 15 top central business districts, this price places towards the middle of the pack comparable to Chicago and Charlotte. Minneapolis, Atlanta, and Philadelphia reported more affordable office space.

• The Metro Denver office market reported generally positive trends in the second quarter of 2019. According to Costar

Realty data, while the average direct vacancy rate increased 0.1 percentage points over-the-quarter, the rate

decreased 1.1 percentage points over-the-year to 8.9 percent. The average lease rate rose 1.2 percent over-the-year to

$26.95 per square foot.

• Office construction in Metro Denver has slowed compared with the prior two years, with over 850,000 square feet of

space completed across 16 buildings by the end of the second quarter of 2019. In contrast, 2.9 million square feet had

been completed at the same time last year. New office buildings were completed in six of the seven Metro Denver

counties, with 56 percent of the space added in the City and County of Denver. The largest building completed was The

Hub (279,317 square feet), a Class A office building located in RiNo.

• There was over 3.1 million square feet of space spread across 36 buildings that were under construction at the end of

the second quarter of 2019, a 16.4 percent decrease over-the-year from 3.72 million square feet under construction in

the second quarter of 2018. The largest project under construction was the Block 162 Tower, which will be adding

566,050 square feet of office space in downtown Denver.

Office Market Statistics

Quarter 2 Quarter 1 Quarter 2 Quarter 2 Quarter 2 Quarter 2

2019 2019 2018 2017 2016 2015

Number of Buildings 6,420 6,410 6,388 6,347 6,304 6,263

Existing Square Feet (millions) 193.9 193.2 191.5 187.6 184.4 181.9

Vacant Square Feet (direct, millions) 17.2 17.1 19.2 18.3 16.5 17.5

Vacancy Rate (direct) 8.9% 8.8% 10.0% 9.8% 8.9% 9.6%

Vacancy Rate (with sublet) 9.7% 9.7% 10.8% 10.7% 9.5% 10.1%

Avg. Lease Rate (direct, per sq. foot, full service) $26.95 $26.74 $26.64 $26.19 $25.32 $24.00 New Construction Completed (year-to-date) 0.85 MSF,

16 Bldgs 0.48 MSF,

5 Bldgs 2.88 MSF,

21 Bldgs 1.96 MSF,

21 Bldgs 0.46 MSF,

10 Bldgs 0.30 MSF,

7 Bldgs Currently Under Construction 3.11 MSF,

36 Bldgs 3.35 MSF,

40 Bldgs 3.72 MSF,

37 Bldgs 4.69 MSF,

41 Bldgs 3.95 MSF,

34 Bldgs 2.93 MSF,

26 Bldgs

Source: CoStar Realty Information, Inc. MSF=Million Square Feet


Industrial & Flex Market

• According to the second quarter 2019 report from Newmark Knight Frank, Denver’s industrial market continued to

report positive growth for the 13th consecutive quarter, while rental rates held largely steady and sales continued to

push the price-per-square-foot to historic highs. Five of Denver’s seven submarkets posted positive net absorption,

which totaled 1.5 million square feet across all submarkets.

• According to CoStar data, the national industrial market reported positive net absorption of 25.8 million square feet

during the second quarter of 2019. Vacancy rates increased 0.2 percentage points from the previous quarter, reaching

5 percent during the period while rental rates rose 1.7 percent to $7.93 per square foot. An additional 357 buildings

delivered 53.9 million square feet during the quarter.

• Costar reported that the industrial market’s average lease rate increased 1.9 percent between the second quarters of

2018 and 2019. The direct vacancy rate increased 0.5 percentage points to 4.5 percent during the period.

• There was 2.55 million square feet of industrial space completed across 21 buildings as of the end of the second

quarter of 2019, a record amount of space added by this point compared with prior years. Major completed projects

included Nexus at DIA (540,931 square feet) and Building 23 at 18300 E 40th Ave in Aurora (419,060 square feet).

Adams County accounted for over 1.8 million square feet and 71 percent of the recently completed square feet.

• There was 4.31 million square feet across 33 buildings under construction in the second quarter of 2019, with the

largest project being the First Aurora Commerce Center (555,840 square feet). As with completed space, most of the

space currently under construction is in Adams County, accounting for 77 percent of square footage under

construction.

Industrial Market Statistics


2019 2019 2018 2017 2016 2015






Avg. Lease Rate (direct, per square foot, NNN) $8.15 $8.24 $8.00 $7.60 $7.42 $6.63 New Construction Completed (year-to-date) 2.55 MSF,

21 Bldgs 1.08 MSF,

12 Bldgs 1.34 MSF,

11 Bldgs 1.93 MSF,

22 Bldgs 2.07 MSF,

11 Bldgs 0.89 MSF,


33 Bldgs 4.43 MSF,

29 Bldgs 6.33 MSF,

37 Bldgs 3.26 MSF,

24 Bldgs 3.46 MSF,

23 Bldgs 0.86 MSF,

3 Bldgs


• Vacancy rates fell in the Metro Denver flex market, decreasing 0.7 percentage points over-the-year. The average lease

rate for the flex market decreased by $0.09, down 0.7 percent to $12.08.

• There was 89,304 square feet completed across 4 buildings as of the second quarter of 2019, including The Collective

flex space in Boulder County (31,000) and Phase 3 at 2300 E 76th Ave in Adams County (30,000). Eight buildings

offering 443,966 square feet of space were under construction at the end of the quarter. The largest projects are the

Bioscience 3 building at the Fitzsimons Innovation Campus in Aurora, adding 117,000 square feet of flex space, and a

152,761-square-foot flex building at 16205 Sheridan Parkway in Broomfield.


Flex Space Statistics


2019 2019 2018 2017 2016 2015







4 Bldgs 0.21 MSF,

3 Bldgs 0.35 MSF,

7 Bldgs 0.46 MSF,

9 Bldgs 0.1 MSF,

3 Bldgs 0.32 MSF,


8 Bldgs 0.31 MSF,

8 Bldgs 0.32 MSF,

9 Bldgs 0.14 MSF,

4 Bldgs 0.31 MSF,

7 Bldgs 0.07 MSF,

1 Bldg


Retail Market

• Net absorption for national retail space during the second quarter of 2019 was 3.9 million square feet, according to CoStar data. Vacancy rates increased by 0.1 percentage points to 4.5 percent, consistent with the last eight quarters that have remained static around 4.4 to 4.5 percent. The national rental rate increased 1.9 percent to $18.23 per square foot, while 609 new buildings added 10 million square feet of retail space during the quarter.

• The Metro Denver retail market reported an increase in the average lease rate of 2.4 percent, up to $18.97 per square foot in the second quarter of 2019. The direct vacancy rate increased 0.1 percentage points to 4.4 percent across the 12,555 buildings in the retail sector.

• There were 49 buildings and 467,451 square feet completed in Metro Denver as of the second quarter of 2019. The largest projects completed were Summit Thornton in Adams County (49,980) and Emich Volkswagen in the City and County of Denver (45,000).

• There was 1.15 million square feet of retail space across 68 buildings under construction during the second quarter of 2019, the largest project being the Vista Highlands in Broomfield totaling 96,500 square feet. The City and County of Denver has the most retail development under construction, accounting for 15 of the 68 buildings.

Retail Market Statistics


2019 2019 2018 2017 2016 2015







49 Bldgs 0.08 MSF,

14 Bldgs 0.53 MSF,

48 Bldgs 0.86 MSF,

45 Bldgs 0.64 MSF,

44 Bldgs 0.34 MSF,


68 Bldgs 1.04 MSF,

60 Bldgs 1.59 MSF,

66 Bldgs 1.43 MSF,

73 Bldgs 1.04 MSF,

45 Bldgs 0.78 MSF,

32 Bldgs



Monthly Economic Indicators

Positive Changes

16,500 28,300 28,400

29% 29% 29%

2.9% -0.4 percentage points 3.0%

-5.0% 1.7% 3.8%

7.3% 3.2% 3.1%

134.4 0.1% 134.0


13.5% 9.6% 5.6%

586.5 6.4% 27.3%

26,864.3 5.7% 15.2%

5,655 -4.7% 27,173

$446,600 1.2% $446,600

199 16.4% 1,396

1,871 26.4% 9,601

Permits increased 5.8% from

May to JunePermits up June 2018 to 2019

YTD permits down 20.9%

through June 2019

Foreclosures

Down 9.5% from May to June Up from June 2018 to 2019 Up 2.9% YTD through June 2019

Residential Building Permits (Total)

Home Sales (closed)

Sales down 1.5% between May and June Sales down from June 2018 to 2019 YTD sales up 1.2% through June 2019

Median Home Price

(Denver-Aurora MSA)Up 1.9% from 4Q 2018 to 1Q 2019 Price up from 1Q 2018 to 1Q 2019 YTD price 1.2% higher through 1Q 2019

Bloomberg Colorado Index

Index up 1.6% from June to July Index up from July 2018 to 2019 YTD return up through July 2019

Dow Jones Industrial Average

Index up 1% from June to July Index up from July 2018 to 2019 YTD return up through July 2019

Hotel OccupancyIncreased 8.7 percentage points from May

to June

Occupancy decreased from June 2018 to

June 2019YTD occupancy up from last year

Denver International Airport Passengers

Passengers up from April to May Passengers up from May 2018 to 2019YTD passengers increased through May

2019

Total National Retail Sales

National sales increased from April to MayNational sales increased from May 2018

to 2019YTD sales rose through May 2019

Mountain Region Consumer Confidence Index

Index down 3.1% from June to July Index up from July 2018 to 2019 YTD average up 3% through July 2019

Unemployment RateUnemployment up 0.5 percentage points

between May and June

Unemployment down from June 2018 to

2019No change from 2018 YTD average

Initial Unemployment Insurance Claims

Claims decreased from May to June Claims increased from June 2018 to 2019YTD average claims increased through

June 2019

Nonfarm Employment GrowthEmployment up 1.0% from May to June

Employment up 1.7% from June 2018 to

2019YTD employment up 1.7% through June

% Companies Hiring

(Denver Area) Companies hiring fell 6 percentage points

from 2Q 2019 to 3Q 2019

Companies hiring had no change from 3Q

2018 to 3Q 2019

YTD average up 1 percentage point

compared with 2018

Monthly/Quarterly Direction Year-Over-Year Direction Year-to-Date Direction

11 of 18 11 of 18 12 of 18



Vacancy decreased 0.4

percentage points from 1Q

2019 to 2Q 2019

Vacancy decreased from 2Q

2018 to 2Q 2019

YTD average down 0.8

percentage points from last

year

9.7% -1.1 percentage points -1.1 percentage points

No change in vacancy rate from

1Q 2019 to 2Q 2019

Vacancy rate down from 10.8%

one year ago

Vacancy rate down from 10.8%

one year ago

4.8% +0.6 percentage points +0.6 percentage points

Vacancy rate increased from 1Q

2019 to 2Q 2019

2Q 2019 vacancy up from 4.2%

one year ago

2Q 2019 vacancy up from 4.2%

one year ago

4.5% -0.0 percentage points -0.0 percentage points

Vacancy rate increased 0.1

percentage point from 1Q 2019

to 2Q 2019

2Q 2019 vacancy the same as

one year ago

2Q 2019 vacancy the same as

one year ago

Office Vacancy Rate (with Sublet)

Industrial Vacancy Rate (with Sublet)

Retail Space Vacancy Rate (with Sublet)

Apartment Vacancy Rate

Economic and Demographic Research Industry Studies Fiscal and Economic Impact Analysis Real Estate Economics 10184 West Belleview Avenue Suite 100 Littleton, Colorado 80127 www.DevelopmentResearch.net 303.991.0070

Monthly Economic Indicators · 10 startups invited to participate in the inaugural program, MetLife...

Documents

Transcript of Monthly Economic Indicators · 10 startups invited to participate in the inaugural program, MetLife...