Economic indicators in the Denver South[1] region improved through the fourth quarter of the year with rising employment, falling unemployment rates, and an improving real estate market. Employment in the Denver South region increased 3.3 percent in the third quarter of 2015 compared with the prior year, representing 6,990 additional jobs. Employment in 11 of the 13 supersectors increased over-the-year, with the construction sector reporting the largest over-the-year increase (+9.3 percent) and the mining and logging sector falling the furthest (-4.1 percent). Unemployment rates fell throughout the region, ranging from a 0.7 percentage point decline in Douglas County to a 1 percentage point decline in Arapahoe County.
Consumer confidence in the Mountain Region increased between the fourth quarters of 2014 and 2015, rising 13.8 percent. Retail trade sales improved significantly in the region between the first quarters of 2014 and 2015, with all four market areas recording over-the-year growth in sales. Highlands Ranch recorded the largest increase in sales during the period, rising 12.6 percent, while Lone Tree recorded the smallest increase in sales, rising 2.7 percent.
Real estate indicators were mixed during the fourth quarter of 2015. The region reported declines in foreclosures during the fourth quarter, increases in apartment vacancy rates, and increases in average home sales prices. Condominium and townhome sales in the area rose 14.2 percent during the fourth quarter 2015 compared with the previous year, while single-family detached home sales rose 20.1 percent. The average apartment rental rate increased in all six Denver South submarkets, with rents ranging from $1,156 in the City and County of Denver-Far Southeast submarket to $1,466 in the Douglas County-North submarket.
Trends in the commercial real estate markets (office, industrial, flex, and retail) were largely improved in the Denver South region in the fourth quarter compared with the same time in 2014. The flex market reported the largest increase in the average lease rate, rising 14.4 percent to $11.11 per square foot. The office market posted an increase in the vacancy rate, but continued to record growth in the average lease rate. The industrial market reported the largest decline in the vacancy rate during the fourth quarter, falling 2.4 percentage points to 3.7 percent.
Denver South EDP Economic Headlines
Rankings
· Forbes released a list of the easiest and hardest cities to find a job and Denver ranked as the third easiest city to find a job. The company used job-listing data from Indeed.com to rank the cities. The report stated that Denver has 96 jobs posted for every 1,000 residents. San Jose, Calif. was ranked the easiest city to find a job and Raleigh, N.C. ranked second, while Miami, Fla. and Los Angeles, Calif. were ranked the hardest cities to find a job.
· WalletHub ranked the Denver-Aurora-Lakewood metropolitan statistical area (MSA) as the fourth best market for science, technology, engineering, and mathematics (STEM) professionals. The company ranked the 100 largest metropolitan areas in the country based on criteria including STEM-employment growth, research and development spending, tech startup density, and housing affordability. The San Jose-Sunnyvale-Santa Clara, Calif. MSA ranked first followed by the Austin-Round Rock, Texas MSA and the Seattle-Tacoma-Bellevue, Wash. MSA.
· The Denver-Aurora-Lakewood MSA was ranked the fourth best city for young entrepreneurs by NerdWallet. The company analyzed 181 MSAs in the United States and ranked each metro area based on criteria including small business financing, local business environment, and local economy. NerdWallet reported that 40.8 percent of the Denver-Aurora-Lakewood MSA residents had a bachelor’s degree or higher and that the region received $14.6 million in small business loans per 100,000 residents.
· Denver was ranked the eighth most future-ready city in the country on the Dell Future Ready Economies Model. Dell commissioned IHS Economics to develop the criteria used to gauge a city’s future growth readiness, which were the ability to attract people who are engaged in and open to lifelong learning that drives innovation, businesses that thrive in collaborative environments, and infrastructure that provides platforms for people to engage, collaborate, learn, and innovate. San Jose, Calif. was ranked first followed by San Francisco, Calif. and Washington, DC.
· WalletHub ranked the Denver-Aurora-Lakewood MSA as the 57th best place for women-owned businesses. The company ranked the country’s largest 100 metropolitan areas on criteria including finance and resource accessibility, cost of living, corporate taxes, and entrepreneurial activity. Of the criteria categories, Denver was ranked ninth for female entrepreneurship, 35th for business climate for women, and 61st for overall new-business friendliness. The Nashville-Davidson-Murfeesboro, Tenn. MSA ranked first followed by the Chattanooga, Tenn.-Ga. MSA, the Columbus, Ohio MSA, and the Memphis, Tenn.-Miss.-Ark. MSA.
Company Announcements
· Zillow Group Inc. plans to add 150 positions to its operations in Centennial. The company will hire business consultants and customer care consultants.
· Intermap Technologies Corp., a Douglas County-based mapping technology company, received a $175 million multi-year contract. The company will build a geospatial data analysis system for an unidentified foreign government, called the Orion Platform. The company plans to double the size of its workforce at its Douglas County headquarters.
· Sky Ridge Medical Center opened a dedicated pediatric emergency room. The 11-bed facility is staffed 24/7 with pediatric-specialist doctors, nurses who are pediatrics-trained, and emergency medical technicians. The department will house a suite of pediatric specialists including orthopedists, surgeons, and gastroenterologists.
· Zvelo Inc., a Greenwood Village-based online security and data company, closed $2.75 million in royalty-debt financing from Cypress Growth Capital. The company plans to hire engineers and sales employees to help the company combat online advertising malware and fraud.
· Sprint Corp., the mobile phone carrier, laid off 247 employees in Metro Denver. The job cuts were concentrated in Arapahoe and Douglas counties but the company did not state which positions were eliminated.
· Englewood-based Sports Authority announced it will close up to 140 of its 450 stores as part of a reorganization plan. At least three stores will be closed in Metro Denver including its flagship Sports Castle store at 1000 Broadway, a store in Greenwood Village at 9000 E. Peakview Avenue, and an outlet of its S.A. Elite brand at 1750 29th Street in Boulder. The company also laid off 100 employees at its corporate office. Further, the company announced plans to close its Denver distribution warehouse by the end of April and lay off 72 employees at the site.
Employment Activity
Employment in the Denver South region rose 3.3 percent between the third quarters of 2014 and 2015, generating an additional 6,990 jobs over-the-year. The largest supersector by total employment is professional and business services (54,320 employees) and the sector reported a 0.3 percent increase in employment during the same period or adding 139 new jobs. The construction sector reported the largest over-the-year percentage increase, rising 9.3 percent to 11,010 jobs or adding nearly 940 positions over-the-year. The financial activities supersector (+7 percent) created the most jobs during the period, generating over 2,440 new positions. The other services sector reported the smallest increase in employment between the third quarters of 2014 and 2015, rising 0.1 percent to 5,030 employees. Two sectors recorded over-the-year declines in employment consisting of mining and logging (-4.1 percent) and wholesale trade (-1.1 percent).
· Metro Denver reported a 3.6 percent increase in employment to over 1.5 million workers between the third quarters of 2014 and 2015. Twelve of the 13 supersectors reported growth over-the-year, with mining and logging (-5.5 percent) recording the only decline. The largest percentage increase occurred in the education and health services sector (+5.1 percent) and the smallest increase occurred in the information supersector (+1.4 percent).
Manpower Employment Outlook Survey
Hiring expectations in the U.S. increased through the second quarter of 2016. The percentage of employers planning to increase employment levels rose 2 percentage points between the first and second quarters of 2016 at the national level, while the Metro Denver level was unchanged over-the-quarter. Companies planning to increase staffing levels during the second quarter held steady at 23 percent in Metro Denver. The majority of Metro Denver companies intend to maintain staff levels through the second quarter of the year, with the level rising 4 percentage points above the prior quarter’s level and 3 percentage points above the prior year’s level.
Labor Force and Unemployment
The average unemployment rates in the Denver South region continued to decline between the fourth quarters of 2014 and 2015. Douglas County reported the smallest decline in the unemployment rate, falling 0.7 percentage points over-the-year to 2.6 percent, but reported the lowest unemployment rate of the four submarkets. The largest over-the-year decreases occurred in Arapahoe County (3.1 percent) and the City and County of Denver (3.1 percent), with the unemployment rate falling 1 percentage point and 0.9 percentage points, respectively. Centennial recorded an unemployment rate of 3 percent, a decline of 0.8 percentage points between the fourth quarters of 2014 and 2015.
· Of the seven Metro Denver counties, Douglas County tied with Boulder County and the City and County of Broomfield for the fifth largest over-the-year decline in the unemployment rate. Arapahoe County tied with Adams County for the largest decline in the unemployment rate, while the City and County of Denver reported the third largest decline.
· Metro Denver reported a 0.9 percentage point decline in the unemployment rate to 3 percent in the fourth quarter of 2015 compared with the prior year’s level. The unemployment rate declined by 0.8 percentage points in Colorado, dropping to 3.3 percent. The United States recorded a 0.7 percentage point decline in the national unemployment rate over-the-year, falling to 4.8 percent.
Consumer Activity
Consumer Confidence
The Conference Board’s National Consumer Confidence Index increased through the fourth quarter of 2015, rising 3.5 percent over-the-year to 96 for the U.S. index. However, the U.S. index recorded a 2.3 percent decrease in consumer confidence between the third and fourth quarters of 2015. The fourth quarter 2015 level is the highest fourth quarter national consumer confidence level since the fourth quarter of 2006 when the index was at 106.8.
The Mountain Region index, which includes Colorado, also increased compared with the fourth quarter of 2014. The Mountain Region index rose to 104.3, an over-the-year increase of 13.8 percent. Similar to the national index, the mountain index also fell over-the-quarter, declining 10.8 percent. The mountain region continued to record high levels of consumer confidence, signaling strong expectations for the local economy.
Lodging
Hotel and lodging in the Denver South region continued to report mixed trends through the fourth quarter of the year. The South and Southeast Denver markets ended the fourth quarter with a year-to-date hotel occupancy rate of 73.8 percent, 0.4 percentage points lower than the previous year’s level. Nonetheless, the market’s average rental rate was $123.13 per night year-to-date, $9.61 higher than the same period a year prior.
· Metro Denver ended the fourth quarter with a year-to-date hotel occupancy rate of 75.9 percent, 0.1 percentage points higher than last year. The average room rate for Metro Denver was $133.65 per night year-to-date, $9.28 per night higher than the same period a year prior.
Retail Trade Sales
Retail trade sales in the Denver South region reported strong growth through the first quarter of 2015, as all four municipalities in the region reported over-the-year increases. Highlands Ranch recorded the largest increase in sales over-the-year, rising 12.6 percent to over $246 million. Lone Tree recorded the smallest over-the-year increase in sales, rising 2.7 percent to $345.6 million. Greenwood Village ($230.8 million) and Centennial ($526 million) also reported significant growth between the first quarters of 2014 and 2015, increasing 10.1 percent and 9.8 percent, respectively. Metro Denver reported an 8.8 percent increase in retail trade sales during the same period, generating an additional $1 billion in sales.
Residential Real Estate
Home Sales
Between the fourth quarters of 2014 and 2015, home sales in the Denver South region rose in both the condominium/townhouse (+14.2 percent) market and in the single-family detached (+20.1 percent) market. There were 53 additional condominiums and townhomes sold (427 total) and there were 173 additional single-family detached homes (1,035 total) sold in the fourth quarter. The average sales price for condominiums/townhomes ($291,770) rose 15.8 percent, while the average sales price for single-family detached ($469,310) rose 9.2 percent over-the-year.
· Metro Denver reported a 2.2 percent increase in condominium/townhome sales (3,842 sales) between the fourth quarters of 2014 and 2015 and a 2.3 percent increase in single-family detached home sales (10,549 sales). The average sales price of a condominium/townhouse rose 12.5 percent over-the-year and the single-family detached average sales price rose 9.3 percent.
Residential Building Permits
The five principal areas for the Denver South region reported building permits for 3,328 units during the fourth quarter of 2015, an increase of 37.4 percent over-the-year. Unincorporated Douglas County reported an 11 percent decline in permits over-the-year, issuing 54 fewer permits during the fourth quarter 2015. The City and County of Denver reported the most permits (2,837 total), an increase of 51 percent over-the-year. Centennial reported a decline in the number of units permitted, falling from 29 permits during the fourth quarter of 2014 to nine permits during the fourth quarter of 2015. Greenwood Village (+567 percent) reported 17 additional permits, while Lone Tree (+35 percent) recorded six additional permits. Metro Denver reported a 33 percent increase in building permits, representing 1,292 additional permits over-the-year. (Note: Permit counts are for entire cities, not just the portion included in the Denver South region.)
Foreclosures
Foreclosure activity in the Denver South region declined during the fourth quarter of 2015. Arapahoe County reported the second largest decline in foreclosures of the seven Metro Denver counties, falling 18.9 percent in the fourth quarter of 2015 compared with the previous year. For the fourth quarter, Arapahoe County reported 176 total foreclosures. Douglas County reported a 3.5 percent decrease in foreclosures over-the-year, falling to 83 filings in the fourth quarter of 2015. Foreclosure filings in the City and County of Denver fell 14.9 percent during the same period. Metro Denver recorded a drop in foreclosure activity, declining 8.7 percent to 802 filings for the fourth quarter. (Source: Colorado Division of Housing and county public trustees.)