Patty SilversteinPresident, Development Research Partners

Economist, Metro Denver EDC

Cycles:2018 Economic Forecast for Metro Denver

January 31, 2018

© Can Stock Photo / kgtoh

In Partnership with:Prepared by:

Employment Gains/Losses by Year

-120-100

-80-60-40-20

020406080

100

Thou

sand

s of J

obs

Recession Colorado Metro DenverSource: U.S. Bureau of Labor Statistics.

2017e=DRP estimate; 2018f=DRP forecast

2018fCO +50,500

Metro Denver +31,400

Employment growth varies across the state

-0.3%

1.1%1.9%2.0%

3.2%3.9%

1.9%1.5%

-2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

Grand JunctionPueblo

Colorado SpringsMetro Denver

GreeleyFort Collins

ColoradoU.S.

Nonfarm Job Growth Rates by Metro Area, preliminary 2017

Source: U.S. Bureau of Labor Statistics, Current Employment Statistics.

2016 Jobs Relative to Pre-Recession Peak Recession Years: 2007-2009

Source: Colorado Division of Local Government, State Demography Office.

Key Metro Denver and Northern ColoradoIndustry Clusters

• Aerospace• Aviation• Beverage Production• Bioscience

• Medical Devices & Diagnostics

• Pharmaceuticals & Biotechnology

• Broadcasting & Telecommunications

• Energy• Fossil Energy• Cleantech

• Financial Services• Banking & Finance• Investments• Insurance

• Healthcare & Wellness

• IT/Software

Metro Denver and Northern ColoradoIndustry Clusters, 2015-2016

Source: Development Research Partners.Full reports at www.metrodenver.org

Consumer Activity Cycles

© Can Stock Photo / Kzenon

© Can Stock Photo / photograffics

Metro Denver Annual Change in Population

-10,0000

10,00020,00030,00040,00050,00060,00070,000

1990 1995 2000 2005 2010 2015 2020 2025 2030

2018 Population = 3.22 MillionNet Migration Natural Increase

Source: Colorado Division of Local Government, State Demography Office.

Percentage of In-Migration by those ages18-34 years (roughly, the Millennials)

0%

10%

20%

30%

40%

50%

60%

Atlanta Austin Dallas Denver Phoenix Portland Salt LakeCity

Seattle

Source: U.S. Census Bureau, 2016 American Community Survey.

Consumers Are Confident & Spending

-15%

-10%

-5%

0%

5%

10%

15%

0

20

40

60

80

100

120

140

160

Reta

il Tr

ade

Grow

th R

ate

Cons

umer

Con

fiden

ce In

dex

Metro Denver Retail Trade Growth Mountain Region Consumer Confidence

Sources: Colorado Department of Revenue; The Conference Board.2017e=DRP estimate; 2018f=DRP forecast

Metro Denver ranked #14 and Boulder #7for highest median home price in 3Q 2017

$197 $172 $173 $166 $177 $197 $209 $224 $236 $247 $260$219 $220 $232 $231 $252 $281 $310

$354 $384 $413 $433$360 $346 $358 $353 $384 $372 $391

$454$512

$563$602

$0

$100

$200

$300

$400

$500

$600

$700

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018f

Median Home Prices (in thousands)

United States Metro Denver Boulder

Source: National Association of REALTORS.2017e= DRP estimate; 2018f=DRP forecast

Apartment Vacancy and Rental Rates

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

3%

5%

7%

9%

11%

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f

Monthly Rental Rate

Vaca

ncy

Rate

Metro Denver Vacancy Rate

Source: Denver Metro Apartment Vacancy & Rent Survey.2018f=DRP forecast

Multi-family represented 52% of new construction in 2017 (30+ year average = 28%)

0

5,000

10,000

15,000

20,000

25,000

30,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018f

Metro Denver Building Permits*Multi-Family (5+ units)

* The Census Bureau tracks building permits by the number of housing units in the structure.Source: U.S. Census Bureau, Building Permits.

2017e = DRP estimate; 2018f=DRP forecast

Commercial Real Estate Cycles

© Can Stock Photo / photostocker

© Can Stock Photo / joreks

Cycle Monitor – Dr. Glenn Mueller,Black Creek Group

4Q 2017

Vacancy Rate: 9.8%

Full Service Rent: $26.24

Completed: 3.0 MSF

Under Construction: 5.1 MSF

Source: CoStar Group

Source: Black Creek Group, Cycle Monitor, Third Quarter 2017 Analysis.

Denver Office at 7 for past five quarters,up from 4 during 3Q 2014

4Q 2017

Vacancy Rate: 3.9%

NNN Rent Direct: $7.61

Completed: 5.3 MSF

Under Construction: 5.8 MSF

Source: CoStar Group

Source: Black Creek Group, Cycle Monitor, Third Quarter 2017 Analysis.

Denver Industrial moved to 13after being at 11 or 12 since 1Q 2014

4Q 2017

Vacancy Rate: 4.3%

NNN Rent Direct: $17.95

Completed: 1.6 MSF

Under Construction: 1.5 MSF

Source: CoStar Group

Source: Black Creek Group, Cycle Monitor, Third Quarter 2017 Analysis.

Denver Retail moved to 11after being at 10 for past six quarters

New Commercial Real Estate Added in Metro Denver

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f

Mill

ions

of S

quar

e Fe

etOffice Industrial Retail

Source: CoStar Realty Information

Influences on Metro Denver’s Economic Cycles

Challenges• Hard to find workers• Rising interest rates• Rising inflation rate• Affordable housing

funding, availability• Infrastructure needs

> funding• Anti-growth

initiatives

Opportunities• Continued job growth• Tax Cuts and Jobs Act

influence in CO• Confident consumers• Some tempering in

residential markets• Active commercial real

estate market• Technology driving

major changes

Questions?

Development Research Partners10184 West Belleview Avenue, Suite 100

Littleton, Colorado 80127(303) 991-0070

www.DevelopmentResearch.net

Patricia Silverstein, PresidentPatty@DevelopmentResearch.net

Thank you!Wishing you a prosperous 2018!

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