MONTHLY ECONOMIC INDICATORS - Metro Denver ...A CEO's Insights: Innovative thinking about innovation...

ACTIVITY AND TRENDSIMPACTING OUR

REGIONAL ECONOMY

MONTHLY ECONOMICINDICATORS

JANUARY

2020

DevelopmentResearch Partners

RESEARCHSPONSOR

https://www.pinnacol.com/

http://www.metrodenver.org/

https://www.pinnacol.com/

http://developmentresearch.net/

A CEO's Insights: Innovative thinking about innovation

Innovation is essential for business success – and one of the most challenging imperatives for any CEO. Here are three articles from the past year that got me thinking differently about the topic.

• In search of innovation: Hunting for the right kind of white space. Taddy Hall describes the need to pivot from “thewhite space in the market to the white space in people’s lives.” Some innovations have failed because theyresponded to a perceived market opening but not to human behaviors. Witness the Amazon Fire: What behaviorsindicated that anyone wanted a 3D phone that helped them shop? Hall suggests looking for “the hacks,compensating behaviors, frustrations and unfulfilled aspirations that clutter personal and professional lives” andinnovating around those. For example, Spotify responded to the friction of having to purchase individual musictracks on iTunes by creating a subscription model. Simple and successful (though it did take them 13 years toturn a profit). In my company, we hunt for the right kind of white space through human-centered design. As wemap the journeys of our agents, policyholders and injured workers, we find many of those “compensatingbehaviors and frustrations” Hall describes. Then we target interventions to eliminate those friction points. Theresulting changes aren’t always disruptive leaps. But even a small improvement can be innovative when itsurprises your customer with a transformative experience.

• Understanding the future through the eyes of a child: 29 insane predictions and why it matters. The nugget for meon this list is the notion that the workforce of tomorrow needs to be “distraction-proof.” That hits home for all of us,who after years of email, texts and social media messages have attention spans that have devolved to those ofgnats. We all know the value that emerges when we have the rare luxury of focusing. Unfortunately, as authorThomas Frey points out, “Training someone to have extreme focus, with the ability to block out all bright shinyobjects, is not only a tall order; it’s also a topic that virtually no one is teaching.” How can you create anenvironment in your company that is, at least occasionally, distraction-proof? And what can you achieve whenyou do? We did a version of this at Pinnacol two years ago when we sent some of our brightest minds to anoffsite innovation lab to develop a mobile-first online platform for workers’ comp insurance. Because they didn’thave to juggle other projects or even be on our email system, they could concentrate on delivering one singleproduct. And they did so: three months ahead of schedule, they launched our award-winning, industry-leadingCake Insure.

• Finally, here’s one that may seem counter-intuitive: Innovation should be a top priority for boards. So why isn't it?Have you ever stopped to think that a dearth of innovation expertise on your board might be holding yourcompany back? The authors surveyed more than 5,000 board members of companies around the world andfound that understanding the technological and innovation challenges companies face was way down on theirlists, as was the amount of time they spent discussing such issues. Companies are more likely to seek out boardmembers with industry, strategy and financial expertise than with tech or innovation backgrounds. But what if weall had directors who could use their own experience as disruptors to help us think about how to effectivelytransform our businesses?The creative spark doesn’t have to come from the C-suite or the production floor – itcan come from the boardroom, too.

January 2020

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.

PHIL KALIN To read previous blogs, visit: metrodenver.org/blogs

http://www.metrodenver.org/blog

https://musebycl.io/index.php/musings/search-innovation-hunting-right-kind-white-space?_lrsc=77a728ad-eeca-4fb5-9925-c5fe98a4a3d6

https://futuristspeaker.com/predictions/understanding-the-future-through-the-eyes-of-a-child-29-insane-predictions-and-why-it-matters/

https://hbr.org/2018/09/innovation-should-be-a-top-priority-for-boards-so-why-isnt-it

Metro Denver Economic Development Corporation | January 7, 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 Embroker, a digital insurance company, Denver ranked first for cities with the lowest startup costs. The study analyzed the 50 largest metropolitan areas for job growth, yearly median rent, energy cost, median base salary, state filing fees, and marginal corporate income tax. Denver’s yearly median salary of $61,325 outpaces the national average, and the city ranked the highest for being a second office location due to the lowest median office rent for startups across all 50 MSAs.

• Forbes ranked Colorado ninth for the best states for business in their 2019 ranking. The study looked at business costs, labor supply, regulatory environment, economic climate, and growth prospects to determine the ranking. Colorado’s top rankings were first for labor supply, second for economic climate, and fourth for growth prospects. The state’s lowest ranking was 39th for business costs.

• Denver, Boulder, and Colorado Springs ranked in the top 20 Tech Towns in the U.S., according to the Tech Town Index by CompTIA, the trade association for IT companies and professionals. The Tech Town Index analyzes factors including cost of living and number of IT job postings to rank cities that have the most opportunities for tech workers. Denver ranked No. 9, down from No. 8 last year. Boulder ranked No. 14, up from No. 19 last year, and Colorado Springs ranked No. 16, up from No. 20 last year. The study found Denver has a projected 11 percent growth for IT jobs over the next 5 years, and the average IT salary is $9,442 higher than the national average.

• Denver ranked No. 12 for top cities where companies are planning to expand their tech teams, according to human resource consulting firm Robert Half. The study surveyed over 2,800 “IT decision makers” across 28 cities and found that 70 percent of tech leaders surveyed in Denver are expanding their teams, 92 percent plan to bring on project-based professionals, and 95 percent are confident in their company’s prospects for growth.

• SmartAsset, the personal finance tech company, found that Longmont, Greeley, and Denver ranked in the top 10 ‘Boomtowns’ in the U.S. The report looked at 500 of the largest cities across seven metrics including population change, unemployment rate, GDP growth rate, business growth, housing growth, and change in household income. Longmont ranked first, Greeley ranked fifth, and Denver ranked seventh in the study. The report noted the three Colorado cities ranked in the top 10 for low unemployment and high five-year housing growth.

• According to SmartAsset’s Most Livable Mid-Sized Cities – 2019 Edition report, five cities in Metro Denver took the top five spots. The report looked at economic factors including median household income, unemployment rate, average commute time, and more to determine the ranking. Arvada ranked first, followed by Centennial, Westminster, Highlands Ranch, and Thornton. The report cited a strong job market and livable wages with low incidences of poverty for the Metro Denver cities.

• Colorado ranked No. 2 in “The Best and Worst States to Live In” by 24/7 Wall Street. Colorado ranked No. 7 for 10-year population increase, No. 7 for lowest poverty rate, No. 7 for longest life expectancy (80.5 years), and No. 15 for lowest unemployment in 2018. The report factored in three measures: life expectancy at birth, bachelor’s degree attainment, and poverty, to create an index using the Human Development Index (HDI) model.

• According to the 2019 Bicycle Friendly State rankings by the League of American Bicyclists, Colorado ranked No. 7 for the most bicycle friendly state. Colorado was one of six states that took five “bicycle friendly actions,” ranking highest in the legislation and enforcement action category by earning an “A.” The report factored in four other categories:


infrastructure and funding, education and encouragement, policies and programs, and evaluation and planning. Colorado received a “B” in each of those four categories.

• Denver ranked No. 42 out of the top 50 MSAs in the nation for annual cost of commuting, according to a study by Clever, a real estate and investing company. The study analyzed data from the American Community Survey, Bureau of Labor Statistics, and U.S. Department of Transportation to rank the most populous cities based on time to commute, annual maintenance and fuel costs, and overall cost of commute. Denver had an average time to commute of 31.34 minutes, the sixth-longest commuting times, with an annual cost of commute of $9,056.

• Colorado drivers were ranked sixth worst in the country, according to an annual analysis from Car Insurance Comparison. This was down from 15th worst in 2017 and 2018. The study looked at 3,000 data points compiled from the National Highway Traffic Safety Administration to determine rankings. This was the first year Colorado ranked in the top 10 worst driver states. Colorado’s best rank was No. 25 for the rate of drunk driving violations, while the worst rank for the state was the third-worst state for “failure to obey” violations.

National Economic Overview

Gross Domestic Product

• The U.S. Bureau of Economic Analysis (BEA) released their third estimate of real gross domestic product (GDP) for the third quarter of 2019. Real GDP increased at an annual rate of 2.1 percent, consistent with the second estimate and up 0.2 percentage points from the advanced estimate.

• The BEA cited positive contributions from personal consumption expenditures, federal government spending, and residential investments, offset by negative contributions from nonresidential fixed investment and an increase in imports.

• The BEA released GDP data for 2018 by county and found

that the GDP for Metro Denver grew 3.5 percent from 2017 to 2018, the same growth rate as the state. Denver County

reported the largest growth in GDP of 4.5 percent in 2018, followed by Adams County (+4.3 percent) and Jefferson

County (+3.6 percent). Broomfield County reported negative growth in GDP during the period, falling 3.8 percent.

Denver County’s growth rate was ranked 14th in the state, while Washington County ranked first, Jackson County

ranked second, and Kit Carson County ranked third.

Interest Rates

• In their meeting on December 10-11, the Federal Open Market Committee (FOMC) of the Federal Reserve maintained the federal funds rate that was set in October to a range of 1.5 to 1.75 percent.

• The Committee cited continued strength in the labor market, low unemployment, and increasing household spending, offset by low business fixed investment and exports, as reasons for keeping the rate at the target range. The decision remains consistent with the Committee’s goal to sustain economic growth and maintain a strong labor market while it continues to monitor global developments and inflation pressures to assess future changes to the federal funds rate. Still, trade uncertainties continue to cause low business investment and softening of foreign demand for U.S.-made products, especially in manufacturing and agriculture.

• The next FOMC meeting is January 28-29, 2020.


Policy Watch

National & International

• The U.S. and China agreed on a phase one trade deal that will cut tariffs on $360 billion of goods by half in return for

commitments by China to purchase American agriculture, increase American companies’ access to the Chinese market,

and tighten protection for intellectual property rights. According to analysts, the trade dispute that has continued for

over 17 months has already affected supply chains, shifting further from China to Southeast Asia, while business

investment has slowed substantially due to the uncertainty. Manufacturing and agriculture industries were hit hardest

with the tariffs, who are looking for a reprieve from the dispute.

• Nancy Pelosi and the White House reached an agreement to ratify the U.S.-Mexico-Canada Agreement (USMCA) that

will replace the North American Free Trade Agreement (NAFTA). Critics of the old NAFTA agreement citing that free

trade and flow of goods allowed company outsourcing, especially in the manufacturing, farming, and energy industries,

while the new deal is said to be more protectionist and labor friendly. The agreement requires that 40 to 45 percent of

cars eventually be made in Canada or the U.S. and keeps an estimated $1.8 billion worth of cross-border agricultural

trade from Colorado duty free. The pact still needs to be approved in the Senate before it may be ratified; however, the

passage appears to be guaranteed given its widespread support from both sides.

• Britain elected Boris Johnson and his Conservative Party amidst the January 31 deadline for Britain to leave the

European Union. The Conservative Party won 365 out of 650 seats, giving the party its highest vote total since Margaret

Thatcher. The majority allows Johnson to pursue Brexit on his terms, negotiating with the EU for years to come on the

terms of the soon-to-be new relationship.

Local

• As of Jan 1, 2020, the minimum wage for Colorado is $12.00 per hour. The tipped wage is $8.98 per hour, and the city-

wide minimum wage in Denver is $12.85 per hour. The new state law will increase the minimum wage to $14.77 in

2021 and up to $15.87 in 2022. The minimum wage will increase in 26 states and the District of Columbia in 2020.

• The State of Colorado collected an estimated $428.3 million more in revenue than it may retain, as determined by the

TABOR Amendment that was passed by voters in 1992. These dollars will be returned to voters in two ways. First, local

governments will be reimbursed for the net amount of property tax revenue lost due to exemptions for seniors and

disabled veterans, an estimated $154.2 million. The remaining dollars will be returned to taxpayers via a temporary

income tax rate reduction from 4.63 percent to 4.5 percent for the 2019 tax year. Taxpayers will automatically receive

this reduction when they file their 2019 taxes.

Economic Indexes & Notable Data Releases

National & International

• The U.S. goods and services trade deficit decreased to $47.2 billion in October, down $3.9 billion from September, revised. Exports in October were $0.4 billion less than in September at $207.1 billion, while imports in October totaled $254.3 billion, $4.3 billion less than September imports.

• The Conference Board Leading Economic Index (LEI) was unchanged in November at 111.6, following a 0.2 percent decline in both October and September. Strength in residential construction, financial markets, and consumers’ outlook offset weaknesses in manufacturing and labor markets. The Conference Board predicts economic growth is likely to stabilize around 2 percent in 2020.


• According to the Institute for Supply Management’s Manufacturing Index, the Purchasing Managers Index (PMI) was 47.2 percent in December, a decrease from the level in November of 48.1 percent. Although this month marks the 128th consecutive month of economic growth, the reading is the lowest reading since June 2009 and was the fifth consecutive month that the PMI contracted. Global trade remains the most significant issue across industries, but the new phase-one trade agreement between the U.S. and China could improve several industry sectors. Only three of the 18 manufacturing industries reported growth in December, led by food, beverage, and tobacco products. Transportation equipment was the weakest industry in the month. Overall, companies continue to remain cautious and prices increased for the first time since May 2019, but sentiment was marginally positive regarding near-term growth.

• The Non-Manufacturing Index (NMI) by the Institute for Supply Management fell 0.8 percentage points to 53.9 in November, marking the 118th consecutive month of economic growth in the non-manufacturing sector. Twelve non-manufacturing industries reported growth in November, while five reported contractions. Respondents noted they hope for a resolution on tariffs and continue to be constrained by the tight labor market.

• The U.S. yield curve, which shows the difference between short-term and long-term interest rates, reached its steepest level since October 2018, avoiding further scares of a recession. The yield curve was negative for two weeks in August 2019, one signal of a potential recession, before rebounding to close out 2019 positive.

• According to Census Bureau estimates, U.S. population growth grew by 0.48 percent from 2018 to 2019, the lowest annual growth rate since 1918. There were 10 states that recorded over-the-year population loss. The 2010s decade also reported the slowest 10-year population growth since the first census was taken in 1790. Four states reported population loss, and there was an absolute decline in the under-18 population during the decade. Analysts for the Census say that some of the reasons for the stagnation is the decrease in the number of new immigrants and that millennials are delaying having children.

Local

• The Colorado Business Economic Outlook from the University of Colorado Boulder predicted that Colorado’s economy

will slow in 2020, with job gains dropping to its lowest level since 2011. The findings did not conclude the state will dip

into a recession in 2020. The report predicts a 1.4 percent increase in total employment, with positive gains in every

sector except information. The recent bill that raises the minimum wage to $12 an hour is likely to constrain growth in

several sectors, while national political and trade uncertainties and global commodity price fluctuations continue to

weigh on business investment and industries reliant on exports, such as Colorado cattle ranchers and farmers.

• The University of Colorado Boulder Leeds School of Business released its first quarter 2020 Leeds Business Confidence

Index. The Index improved entering 2020, rising to 50.8. This was an increase of 0.7 points from the same time last

year. Five of the six individual components of the LBCI were above 50. Panelists were most optimistic about industry

sales expectations and most concerned about the national economy. The positive sentiments coincided with improved

trade relations, stable interest rates, and a strong labor market, with ongoing negative sentiments regarding political

uncertainty with the 2020 election and ongoing trade disputes.

• According to the regional Beige Book by the Kansas City Federal Reserve, economic activity held steady in October and

early November, with mixed conditions across sectors. Consumer spending fell slightly due to lower sales in the auto,

restaurant, and tourism sectors. Manufacturing continued to weaken but manufacturers expected activity to stabilize

in the coming months. The agriculture sector remained weak and credit conditions worsened as farm income and loan

repayment rates fell. Employment remained steady as wages continued to expand at a modest pace, but business

owners cited ongoing shortages of qualified labor. Energy also continued to fall in the region and the outlook for

drilling and business activity softened.

• The Environmental Protection Agency reclassified Colorado as a “serious” violator of federal air quality laws. The

reclassification requires that Colorado must reduce pollution by 2021. The state health department plans to issue

permits for any industrial operation that emits more than 50 tons of pollution a year, down from the current permitting


threshold of 100 tons, so that the state can get below 75 parts per billion of ozone pollution, the federal limit. Along

the Front Range, Colorado air monitors have measured ozone pollution to be around 79 parts per billion.

Labor Force and Employment

• Employment in Metro Denver increased 2.4 percent between November 2018 and 2019, adding 40,300 jobs across all supersectors over-the-year. Employment in the Denver-Lakewood-Aurora MSA increased 2.4 percent, adding 35,900 jobs, while the Boulder-Longmont MSA increased 2.2 percent, or by 4,400 jobs, during the period.

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

Nov-19 Oct-19 Nov-18 YTD 2019 YTD 2018 Change 2014 2009

Total 11-County Metro Denver* 1,748.9 1,746.5 1,708.6 1,724.3 1,693.7 1.8% 3.7% -4.3%

Denver-Aurora-Lakewood MSA 1,546.0 1,544.1 1,510.1 1,525.0 1,499.7 1.7% 3.9% -4.2%

Boulder MSA 202.9 202.4 198.5 199.3 194.0 2.7% 2.5% -4.8%

Natural Resources & Construction 118.5 118.4 114.0 116.2 113.8 2.1% 12.1% -16.3%

Manufacturing 89.9 89.6 88.9 89.2 88.7 0.6% 2.2% -10.2%

Wholesale & Retail Trade 240.5 235.7 241.4 236.4 236.1 0.1% 2.9% -5.8%

Transp., Warehousing & Utilities 65.8 64.2 65.2 63.6 61.9 2.7% 3.6% -6.0%

Information 59.8 60.2 58.3 58.9 58.3 1.0% 1.3% -4.4%

Financial Activities 121.5 121.2 116.1 118.5 117.7 0.6% 1.8% -4.4%

Professional & Business Services 322.3 326.5 314.6 319.9 307.3 4.1% 3.9% -6.2%

Education & Health Services 226.7 225.0 216.8 220.6 214.7 2.8% 4.8% 3.0% Leisure & Hospitality 187.4 190.5 186.0 191.9 190.6 0.7% 4.4% -3.4%

Other Services 66.7 66.4 65.3 66.6 64.1 3.9% 3.7% -1.8%

Government 249.8 248.8 242.0 242.5 240.6 0.8% 1.6% 1.5%

Federal Gov't 30.1 30.2 29.9 30.1 30.1 0.2% -0.8% 0.6%

State Gov't 67.9 68.2 65.3 63.8 64.4 -1.0% 1.7% 4.0%

Local Gov't 151.8 150.4 146.8 148.6 146.1 1.7% 2.2% 0.8%

Colorado 2,808.5 2,798.6 2,750.4 2,774.5 2,721.6 1.9% 3.5% -4.5%

United States 153,624 153,002 151,375 151,229 148,881 1.6% 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

• Ten of the 11 supersectors reported increases over-the-year. Financial activities reported the largest increase, rising 4.7 percent, followed by education and health services (+4.6 percent) and natural resources and construction (+3.9 percent). Wholesale and retail trade reported the only decrease over-the-year, falling 0.4 percent.

• Employment in Colorado increased 2.1 percent, adding 58,100 jobs over-the-year. Nationally, employment increased 1.5 percent during the period, rising by over 2.2 million jobs.

• According to data from the Bureau of Labor Statistics, the average weekly wage increased by nearly four percent or more in every county in Metro Denver between the second quarters of 2018 and 2019. Broomfield County reported the largest increase in the average weekly wage, rising 12.8 percent during the period, followed by Douglas County


(+6.4 percent) and Boulder County (+5.8 percent). Arapahoe County reported the smallest increase in the average weekly wage of 3.6 percent. Throughout Colorado, the average weekly wage increased 4.9 percent.

Metro Denver Industry Cluster Headlines

Aerospace

• Booz Allen Hamilton opened its third office in the state in Aurora and plans to expand its workforce after winning

contracts for satellite ground systems and related space technologies. The company will hire 20 to 30 workers in the

fields of advanced data science, intelligence analysis, and agile software development. The company expects to employ

about 200 workers across Metro Denver by the end of the expansion.

• According to a report in the Gazette and comments from Representative Doug Lamborn of Colorado Springs, the Fiscal

Year 2020 National Defense Authorization Act defense budget will contain money for the Space Force, including $148

million to build a Combined Space Operations Facility at Schriever Air Force Base in Colorado Springs.

• Liteye Systems, a counter-drone company based in Colorado, opened a 55,000-square-foot facility in the Highfield

Business Park near Centennial Airport. The company added 21 jobs in 2019 and plans to hire an additional 20 in the

near future. The company has contracts with the U.S. Department of Defense worth millions and is responsible for

more than 1,000 defeats against enemy drones by ISIS and the Taliban.

Aviation

• ATP Flight School LLC, a Florida-based group of pilot training operations, opened a new school at Rocky Mountain

Metropolitan Airport in Broomfield. The company currently has operations at Centennial Airport. Students at ATP will

have access to a fleet of Cessna 172 aircraft for training.

Bioscience – Pharmaceuticals and Biotechnology

• Eli Lilly & Co., an Indianapolis-based pharmaceutical company, announced it would merge its Lilly Research

Laboratories with Loxo to create Loxo Oncology at Lilly. The new division will focus on cancer research. The company

has an office in Boulder focused on drug development, employing 30 workers with expectations to continue to grow its

presence in the area.

• miRagen Therapeutics Inc., a Boulder-based blood-cancer and lung-disease drug manufacturer, plans to cut 18 jobs as

it shifts away from its blood cancer research. The planned cuts will allow the company to continue operating through

4Q 2020.

• Life sciences companies in Colorado raised a combined $12.1 billion in 2019, with $11.4 billion coming from the

acquisition of Boulder-based Array BioPharma by Pfizer. Other Colorado biotech companies raised $750 million in 2019,

in large part by Clovis Oncology which raised $175 million and Inscripta which raised $125 million. There were more

than 40 Colorado companies that received federal grants from the National Institutes of Health, the U.S. Air Force, and

the Small Business Administration this year.

Energy and Natural Resources – Natural Resources

• Jagged Peak Energy will cut all 92 jobs in its Denver headquarters after being acquired by Austin-based Parsely Energy

Inc. The rounds of layoffs will occur in February and March, following the acquisition deal being closed on January 10.


Energy and Natural Resources – Renewable Resources

• Lightning Systems, a Loveland electric vehicles company, raised $41 million in a round of funding led by BP Ventures

and expects to grow the business from 50 employees to 80 by the end of 2020. The funding will go towards nearly

tripling the size of its manufacturing facility at 815 14th St. in Loveland to 100,000 square feet in January. The company

builds electric powertrains for commercial vehicles such as cargo vans, trucks, and buses.

Food and Beverage Production

• Molson Coors invested in the Blue Moon Brewing facility in RiNo to increase production capacity by 50 percent. The

investment will allow Blue Moon to increase its brewery capacity from 3,009 barrels to 4,500. Blue Moon has reported

solid quarterly earnings for Coors and continues to drive innovation and sales in the RiNo neighborhood.

• Five Colorado cities made the list for the top 50 cities for beer drinkers in the U.S., according to SmartAsset’s Best Cities for Beer Drinkers report. Denver ranked fifth, Fort Collins ranked 18th, Colorado Springs ranked 24th, Boulder ranked 30th, and Loveland ranked 48th. The report looked at cities based on number of breweries and breweries per capita, average number of beers per brewery, bars per capita, and average price for a domestic beer in each city.

IT-Software

• Brightwheel, an education-tech company specializing in software for preschools, opened its largest office in Denver’s

RiNo district. The company has grown its Denver presence from 5 employees in April 2018 to 40 today, with room in

the new office to hold up to 80 employees.

• TrackVia, a Denver-based tech company that specializes in simple custom software, plans to expand to more than 100

employees in the next 12 months, up from 72 currently. The company will also move into a new space in Downtown

Denver that will be triple the size of its existing space.

• Gtmhub, a global software company, recently made Denver its North American headquarters after closing on a $9

million Series A round of funding. The company specializes in pulling data from analytics tools like Salesforce and

Google Analytics to automate insights. There are currently 10 employees in Denver, with plans to hire another 30 over

the next six months.

• Denver tech company CyberGRX closed a funding round of $40 million with plans to expand its sales team. The

cybersecurity company provides risk assessments to vendors, suppliers, and subsidiaries, with over 50,000 companies

within its network. The company has grown from 10 employees to 100 in Denver in the past four years.

• San Francisco-based tech company Iterable closed on a $60 million Series D funding round after opening its Denver

office. The company plans to grow its team in Denver to 400 in 2020, mainly working in customer success and sales.

The CRM platform helps clients reach their customers and maintain engagement through messaging.

• Salesforce will move into a new office at 1225 17th St. in late 2020. The company has about 250 employees in Denver

and plans to double its workforce over eight years. Salesforce currently leases space in WeWork inside the Wells Fargo

Center. Salesforce provides cloud-based customer relationship management services.

Other Industry Headlines

• Chicago-based 4Front, a global sports business analytics and consulting company, opened its newest office in the

Denver Tech Center. The company currently employs 51 people, five of which are in the DTC office. It expects to grow

the Denver base to 10 or 15 in the next year.


• Stellar Group, a design and engineering company, opened a new office at 4845 Pearl East Circle in Boulder. The office

will serve as Stellar’s food and beverage division that will design and build food processing plants, refrigerated

warehouses, and distribution centers. The office is scheduled to open by April 2020 and will have up to 15 employees in

the next few years.

Employment Outlook

• The Manpower Employment Outlook Survey revealed that 26 percent of employers surveyed in the Denver-Aurora MSA will hire more employees in the first quarter of 2020, an increase of 9 percentage points from the previous quarter and 4 percentage points above the level from the same time last year. Employers surveyed reported they are optimistic to hire in eight of the 13 supersectors between January and March. The rise in hiring was offset by an estimated 4 percent of companies surveyed planning to reduce payrolls, while 70 percent of companies surveyed expect to maintain current staff levels.

• The U.S. employment outlook fell slightly, with 22 percent of companies surveyed expecting to hire, a decrease of 1 percentage point from the same time last year.

• Employers in all 13 industries across the U.S. expect to add workers during the upcoming quarter, with leisure and hospitality (+30 percent), construction (+22 percent), and professional and business services (+22 percent) anticipating the largest workforce gains.

Employment Outlook Survey

Quarter 1 Quarter 4 Quarter 1 YTD YTD Ann Avg Ann Avg

2020 2019 2019 2020 2019 2015 2010

Denver-Aurora-Broomfield MSA Percent of Companies Hiring 26% 17% 22% 26% 22% 22% 13%

Percent of Companies Laying Off 4% 4% 6% 4% 6% 3% 10%

Percent of Companies No Change 70% 79% 72% 70% 72% 73% 73%

Percent of Companies Unsure 0% 0% 0% 0% 0% 3% 5%

United States

Percent of Companies Hiring 22% 22% 23% 22% 23% 22% 15%

Percent of Companies Laying Off 5% 5% 5% 5% 5% 5% 10%

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

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

Source: Manpower Inc.


Unemployment

• Unemployment in Metro Denver fell 1 percentage point over-the-year to 2.4 percent in November 2019.

• All seven counties in Metro Denver reported over-the-year decreases in the unemployment rate, ranging from a fall of 0.9 percentage points in Boulder, Broomfield, and Douglas Counties to a 1.1-percentage-point decrease in Adams County. Adams County reported the highest unemployment rate in November of 2.6 percent, while Boulder County reported the lowest unemployment rate of 2.1 percent during the period.

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

November 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 1,851.4 2.4% 1,838.2 2.7% 1,803.0 3.1% 4.7% 7.3%

Adams County 276.9 2.6% 274.6 3.1% 269.7 3.4% 5.7% 8.5%

Arapahoe County 371.7 2.5% 369.2 2.8% 362.4 3.2% 4.9% 7.3%

Boulder County 199.9 2.1% 198.5 2.4% 193.6 2.8% 4.1% 6.1%

Broomfield County 40.9 2.3% 40.5 2.5% 39.8 2.9% 4.2% 6.9%

Denver County 423.2 2.5% 420.4 2.8% 412.5 3.1% 4.8% 8.1%

Douglas County 196.3 2.2% 194.7 2.5% 191.1 2.8% 4.0% 6.2%

Jefferson County 342.5 2.3% 340.3 2.6% 334.0 3.0% 4.5% 7.1%

Colorado 3,181.4 2.5% 3,155.3 2.9% 3,092.7 3.2% 5.0% 7.3%

United States 164,386 3.3% 163,496 3.7% 162,035 3.9% 6.2% 9.3%

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

• Metro Denver added 31,000 people either employed or looking for work between November 2018 and 2019, an increase of 1.7 percent. The labor force rose in all seven counties, with the largest growth reported in Broomfield County (+1.9 percent). Boulder County reported the lowest over-the-year growth rate of 1.5 percent.

• Colorado reported an unemployment rate of 2.5 percent in November, a decrease of 1 percentage point from the same time last year. Colorado added 47,996 people to the labor force from November 2018 to 2019, an increase of 1.5 percent. National unemployment was 3.3 percent in November, 0.2 percentage points below the level from November 2018.

Weekly First-Time Unemployment Insurance Claims

Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg 2009 Nov-19 Oct-19 Nov-18 2019 2018 % Change 2014

Metro Denver 1,238 960 1,118 1,004 971 3.4% 1,415 2,541

Colorado 2,622 2,096 2,344 1,951 1,901 2.7% 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.


• Initial unemployment insurance claims in Metro Denver increased 10.7 percent between November 2018 and 2019, rising by 120 claims during the period. The average year-to-date total claims in Metro Denver increased 3.4 percent, the 11th consecutive month of increasing year-to-date monthly claims.

• Colorado reported 2,622 unemployment claims in November, an 11.9 percent increase from the same time last year. Year-to-date average monthly claims rose 2.7 percent, the sixth consecutive month of increasing average monthly claims.

Consumer Sector

Sentiment & Spending

• The Consumer Confidence Index for the U.S. decreased to 126.5 in December, down 0.1 percent from the same time last year.

• Analysts at The Conference Board stated that consumers’ assessment of current conditions improved but expectations declined mainly due to a softening in their short-term outlook regarding jobs and financial prospects. The expectations on the job market were mixed, with an increase in consumers claiming jobs are “plentiful” and an increase in those claiming jobs are “hard to get.” The percentage of consumers expecting business conditions will improve over the next six months increased slightly, but the percentage of consumers expecting an improvement regarding their short-term income declined.

• Colorado is included in the Mountain Region Index and the area reported an 8.1 percent increase in consumer confidence between December 2018 and 2019. The Present Situations Index was 189.5, and the Expectations Index was 117.2 in December, representing an over-the-year increase of 6.2 percent regarding the current situation and an increase of 10 percent regarding the future.

Consumer Confidence Index

Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Dec-19 Nov-19 Dec-18 2019 2018 % Change 2014 2009

Mountain 146.2 128.4 135.3 135.6 134.3 1.0% 89.2 49.7

United States 126.5 126.8 126.6 128.2 130.1 -1.5% 86.9 45.2

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

• Retail sales activity increased 3.9 percent over-the-year, with nine of the 13 supersectors reporting increases during the period. Non-store retailers reported the largest over-the-year increase of 14 percent, followed by miscellaneous store retailers (+6.2 percent) and motor vehicles and parts dealers (+ 5.8 percent). Gasoline stations reported the largest over-the-year decrease of 4.2 percent, followed by electronics and appliance stores (-3.5 percent) and clothing and clothing accessories stores (-0.6 percent).

• Sales growth for Black Friday and Cyber Monday reached nearly 20 percent this year as consumers continued to increase spending. Online retail sales on Black Friday reached a record $7.4 billion, and Cyber Monday was the largest online shopping day in U.S. history, reaching $9.4 billion. Brick-and-mortar stores reported solid sales as well, with major retailers like Walmart and Target posting the largest sales numbers due to their large inventories and expedited logistics and shipping methods to compete with online stores like Amazon. According to Mastercard, U.S. retail sales between November 1 and Christmas Eve rose 3.4 percent from the same time last year, with e-commerce sales


accounting for nearly 15 percent of the total. Department store sales decreased during the holiday period by 1.8 percent from the same time last year, and clothing store sales rose by just 1 percent.

• New light-vehicle registrations were down 3.4 percent for the period from January to November of 2019 compared with the same time last year, steeper than the 2.1 percent decline reported nationally, according to the Colorado Automobile Dealers Association. Automobiles are a key measure of consumer confidence, and customers continue to move towards more affordable vehicle purchases. Sedans have reported the largest decreases, with Fiat registrations down 56.4 percent, Chrysler sales down 35.9 percent, and Mitsubishi down 30.5 percent.

National Retail Sales ($millions)

Source: U.S. Census Bureau.

Price Changes

• The U.S. Consumer Price Index (CPI) rose 2.1 percent over-the-year to 257.2 in November. Six of the eight components increased during the period, with the greatest increases in medical care (+4.2 percent), housing (+2.9 percent), and other goods and services (+2.4 percent). Apparel reported the largest over-the-year decrease, falling 1.6 percent, and transportation fell 0.1 percent.

• The CPI for the Denver-Aurora-Lakewood area rose 2.8 percent over-the-year to 271.1. All eight components reported increases between November 2018 and 2019, with the largest increases in apparel (+6.7 percent), housing (+3.7 percent), and medical care (+3.6 percent). Education and communication reported the slowest over-the-year increase of 0.1 percent.

• According to the AAA Daily Fuel Gauge Report, the national average fuel price for December was $2.59 per gallon, up 14.8 percent from the same time last year. The Metro Denver average fuel price increased 22.5 percent over-the-year to an average of $2.62 per gallon, an increase of $0.48. The average fuel price in Metro Denver was $0.03 higher than the average fuel price throughout the U.S.

Stock Market

• All four stock market indices increased between December 2018 and 2019. The NASDAQ Index reported the largest over-the-year increase of 35.2 percent, followed by Bloomberg Colorado (+31.8 percent), S&P 500 (+28.9 percent), and DJIA (+22.3 percent). The S&P 500 and the NASDAQ Index had the best annual performance since 2013, while the Bloomberg Colorado Index growth in 2019 was the best showing since 2010.

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

Annual Growth

Oct. 2019 Sep. 2019 Oct. 2018 2019 2018 % Change 2014 2009

Total Retail Sales 525,865 498,792 506,360 5,102,473 4,934,789 3.4% 4.3% -7.4%

Motor Vehicles 105,215 100,776 99,487 1,045,037 1,007,406 3.7% 6.4% -14.5%

Furniture and Home 9,922 9,791 9,693 95,360 95,124 0.2% 4.6% -14.2%

Electronics & Appliance 7,581 7,658 7,860 75,710 78,868 -4.0% 0.5% -9.5%

Building Materials 33,320 30,622 33,344 320,525 318,675 0.6% 5.5% -13.3%

Food and Beverage 65,148 62,620 63,038 640,617 622,047 3.0% 4.4% -0.2%

Health and Personal Care 30,500 28,374 29,981 292,966 283,240 3.4% 6.2% 2.5%

Gasoline Stations 44,671 43,021 46,609 430,082 431,891 -0.4% -2.0% -22.3%

Clothing & Accessories 21,341 19,719 21,473 209,122 209,872 -0.4% 2.3% -5.2%

Sporting Goods 6,164 6,150 5,897 61,532 63,275 -2.8% 1.0% -4.1%

General Merchandise 58,255 54,231 57,558 568,589 560,131 1.5% 2.3% -1.0%

Miscellaneous Store 12,330 11,066 11,614 110,510 107,277 3.0% 3.1% -8.1%

Non-Store Retailers 65,796 61,399 57,717 610,558 541,806 12.7% 8.7% -2.5%

Food Service & Drinking 65,622 63,365 62,089 641,865 615,177 4.3% 6.1% -0.9%


Stock Market Indexes

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

Return Annual Avg

Return

Dec-19 Nov-19 Dec-18 2019 2018 2014 2009

Bloomberg Colorado 607.2 589.4 460.6 31.8% -7.4% -1.6% 46.2%

S&P 500 3,230.8 3,141.0 2,506.9 28.9% -6.7% 11.4% 23.5%

NASDAQ 8,972.6 8,665.5 6,635.3 35.2% -3.9% 13.2% 43.9%

DJIA (Dow Jones) 28,538.4 28,051.4 23,327.5 22.3% -6.1% 7.6% 18.8%

Sources: Bloomberg.com; Yahoo! Finance.

Travel & Tourism

• The average hotel occupancy rate in Metro Denver increased 1.2 percentage points over-the-year to 64.6 percent in the month of November. The average hotel room rate rose 2.1 percent to $133.12 per night, an increase of $2.68 during the period.

Metro Denver Hotel Statistics

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

Nov-19 Oct-19 Nov-18 2019 2018 % Change 2014 2009

Percent of Hotel Rooms Occupied 64.6% 79.3% 63.4% 76.1% 75.6% 0.5% 75.8% 59.0%

Average Hotel Room Rate $133.12 $158.15 $130.44 $148.27 $146.00 1.6% $124.37 $106.85

Source: Rocky Mountain Lodging Report.

• Spokespeople for Denver International Airport (DEN) reported that nearly 6.1 million passengers passed through the airport in October, an increase of 6.5 percent from the previous year, or an additional 372,020 passengers.

• Forbes ranked Denver No. 11 on their list of the 25 best places to visit in 2020. The list cited the city’s proximity to nature and other tourist destinations like Red Rocks Amphitheatre as key reasons to visit, as well as Denver’s growth in the last 5 years in neighborhoods like RiNo and LoDo. Vail ranked No. 24 on the list.

Denver International Airport Passengers

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

Oct-19 Sep-19 Oct-18 2019 2018 % Change 2014 2009

Number of Airline Passengers 6,076,659 5,960,686 5,704,639 57,931,999 53,996,017 7.3% 53,472,514 50,167,485

Source: Denver International Airport, Traffic Statistics.

Residential Real Estate

• Plans were submitted to the City of Castle Pines for an additional 1,500 homes to be included in The Canyons

development. The development is a 3,343-acre stretch of land first approved in 2009. The original plan included 2,500

dwelling units before being approved for an additional 1,000 multi-family units in 2018. North Canyons LLC, the project

owner, asked to build an additional 1,500 housing units, bringing the total to 5,000. The proposal also calls for 167.5

acres of parkland and 21.18 acres for future school sites.

• A new neighborhood district will take the place of CDOT’s former campus at 4201 Arkansas Ave. Virginia Village will

include 840 new homes, businesses, a hotel, and a park. Of the 840 units, 150 will be affordable housing for those

making 60 percent of the area’s median income. Kentro Group, the developers for the project, expect a 1-acre park and

at least 200 jobs within the neighborhood.


• TRI Pointe Homes plans to build 451 homes across five communities throughout Metro Denver. The developer will add

46 townhomes to the Sterling Ranch community in Douglas County, 74 duplexes in the Terrain community in Castle

Rock, 71 homes in the Adonea community in Aurora, 50 homes at Reunion in Commerce City, and 92 townhomes at

Candelas in Arvada. Tri-Pointe is the seventh-largest homebuilder in Metro Denver.

• The X Company, a new apartment brand in Denver, proposed their third apartment project called X Denver 3. The

project site is located at 2100 Arapahoe St. and will feature a 22-story tower with 410 apartment homes as well as

6,100 square feet of ground floor retail and 20,000 square feet of co-working space. The project design is currently

under review with no timeframe as to construction or completion.

• R Cap Blake Street LLC purchased the industrial site at 3930 Blake St. with plans to develop a 16-story building with 253

apartments and ground-floor retail space. The project has no estimated timeline yet.

• An architect working on behalf of Transwestern proposed two new residential projects near 38th and Blake St. in RiNo.

The first project calls for a 10-story, 151-unit building and the second project calls for an eight-story, 229-unit building.

The two developments will include a combined 7,800 square feet of retail space and 183 parking spaces.

• Construction began on Hilltop Reserve, a senior living complex located at 525 S Holly St. The 345,000-square-foot

complex will include 124 independent living units, 56 assisted living units, and 25 memory care units. Ascent Living is

co-developing the property with Focus Property Group, who will also manage the property once complete. Hilltop is

expected to open in the summer of 2021.

• Boston-based Navem Partners and local partner Joe Jundt plan to redevelop a former restaurant property into a 15-

story apartment building at 3753 Wynkoop St. The plans call for 186 apartments and 53 parking spaces, called

Wynkoop Tower. Construction is set to begin in 2020.

• The Denver City Council approved a housing contract that will support the development of 92 affordable

condominiums at the La Tela project at 6th Ave. and Inca St. The project will include 64 studio homes, 24 two-bedroom

homes, and four three-bedroom homes, and will be developed by Elevation Community Land Trust. All of the units will

be income-restricted for households earning up to 80 percent of the area median income.

• The Urban Land Conservancy (ULC) finalized plans for a 58-home development in partnership with Thrive Home

Builders. The 6-acre plot of land is located at W 96th Ave. and Federal Blvd. in Westminster. Two-thirds of the

townhomes will be affordable for those earning 80 percent of the area’s median income or below. ULC plans to break

ground in early 2021 with the first occupancy expected in late 2021 to early 2022.

• United Development Companies bought a 10.3-acre parcel of land from the Diocese of Colorado Springs at 5761

McArthur Ranch Road in Highlands Ranch and plans to rezone the property for a residential project. The company plans

to build 54 alley loaded homes and open space that will include a community park and trails.

• Colorado-based general contractor Taylor Kohrs will build a new low-income housing tax credit project in Capitol Hill

called Emerson Flats. The project will have 5 stories and 21 units, with one-, two-, and three-bedroom floorplans

designed for low income families. No timetable on construction has been given.

Home Resales

Metro Denver

• Home sales in Metro Denver totaled 4,046 in November, 6.9 percent higher than the number of homes sold in November 2018.


• Unsold homes on the market were 7.2 percent lower in November compared with the same time last year, representing 542 fewer homes available for purchase during the period.

• The average sales price for single-family homes rose 6.5 percent over-the-year to $519,486, an increase of $31,611 from the previous year. The average sales price for condominiums increased 4.1 percent over-the-year, an increase of $12,524.

• According to the Market Trends Report from the Denver Metro Association of Realtors, new listings for single-family

homes plunged about 33 percent in November compared to last month, while new condo listings fell 30.5 percent

during the period. The report noted that sellers seem to be holding off on listing their homes until the spring, for a

mixture of reasons including the possibility of a recession, political uncertainty, and trade uneasiness.

Previously-Owned Home Sales Activity

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

19-Nov 19-Oct 18-Nov 2019 2018 % Change 2014 2009

Home Sales (Closed) 4,046 5,079 3,785 52,808 49,467 6.8% 54,068 42,070

Unsold Homes on Market 6,988 8,557 7,530 6,988 7,530 -7.2% 6,744 19,762

Average Sales Price-Single Family $519,486 $513,509 $487,875 $518,960 $506,593 2.4% $363,604 $264,803

Average Sales Price-Condo $314,478 $308,235 $301,954 $310,977 $300,329 3.5% $224,997 $159,628

Median Sales Price-Single Family $435,000 $437,500 $410,000 $306,000 $219,000

Median Sales Price-Condo $280,000 $275,000 $266,500 $180,000 $135,000

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

National

• Total existing-home sales fell 1.7 percent from October to November to a seasonally adjusted annual rate of 5.35 million, according to the National Association of Realtors (NAR). Overall sales were up 2.7 percent from the same time last year, which registered 5.21 million in November 2018. The Northeast region reported the only over-the-year decline in total home sales, falling 1.4 percent to 700,000 in November. The West, South, and the Midwest reported over-the-year increases of 4.8 percent, 3.7 percent, and 1.5 percent, respectively.

• Properties remained on the market for 38 days in November, up from 36 days in October but down from 42 days in November 2018. Of the homes sold in November, 45 percent were on the market for less than a month.

Home Prices

• NAR data showed the median existing-home price for all housing types was $271,300 in November, up 5.4 percent from the same time last year. The November reading marks 93 straight months of year-over-year gains. The median home price increased in all four regions, with the largest over-the-year increases in the West (+7.1 percent), the Midwest (+5.9 percent), and the South (+4.8 percent). The West also reported the highest median home price of $410,700 in November.

• A separate NAR report revealed that the median price in the Boulder MSA increased 1.2 percent over-the-year to $611,400 in the third quarter of 2019. The Denver-Aurora MSA rose 3.5 percent over-the-year to a median home price of $465,700 during 3Q 2019, while the national median home price increased 5.1 percent to $280,200 during the period.


• Median home price increases have slowed dramatically in Metro Denver, according to estimates by major residential organizations such as Zillow and the Denver Metro Association of Realtors (DMAR). Home prices have increased at an annual rate of about 11.2 percent since 2010 according to Redfin, far outpacing wage gains. In 2019, price increases have been up about 1.7 percent. DMAR cited a change in attitude that sellers have as price expectations decrease, while buyers are becoming less desperate to buy.

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

Quarter 3 Quarter 2 Quarter 3 YTD Avg YTD Avg YTD Avg Median Median

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

Boulder MSA $611.4 $625.3 $604.2 $613.4 $607.9 0.9% $390.7 $345.5

Denver-Aurora MSA $465.7 $471.4 $450.1 $461.2 $451.5 2.2% $310.2 $219.9

United States $280.2 $279.5 $266.5 $271.5 $259.9 4.5% $208.9 $172.1

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

• According to the S&P/Case-Shiller Home Price Index, Denver housing prices rose 3.3 percent from October 2018 to 2019, up from the previous month’s over-the-year growth rate of 3 percent. National housing prices increased 3.3 percent over-the-year to 212.43, continuing the trend of an average 3.3 percent over-the-year growth rate over the past six months.

• Phoenix reported the largest over-the-year growth rate of 5.8 percent, followed by Tampa (+4.9 percent) and Charlotte (+4.8 percent). Denver ranked No. 8 out of the 20 cities in over-the-year growth, up from No. 11 during the previous two months.

• San Francisco reported the only decrease in the home price index, falling 0.4 percent over-the-year. Chicago reported the lowest positive growth rate of 0.5 percent, followed by New York that rose 0.8 percent over-the-year.

Foreclosures

• Foreclosures in Metro Denver increased 5.3 percent between October of 2018 and 2019, rising by 14 foreclosure filings during the period. Three of the seven counties reported increases in filings compared with last year, with the largest increase reported in Boulder County which rose by 7 filings, or 77.8 percent, over-the-year. Jefferson County reported the largest absolute increase in filings during the period, rising by 21 filings (+51.2 percent), while Denver County increased by 1 filing. Broomfield County reported the largest percent decrease, falling by 40 percent or by 2 filings, followed by Arapahoe County (-18 percent) and Douglas County (-3.7 percent).


Real Estate Foreclosures

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

Oct-19 Sep-19 Oct-18 2019 2018 % Change 2014 2009

Total Metro Denver* 278 198 264 2,318 2,311 0.3% 5,328 26,434 Adams County 63 61 64 543 529 2.6% 1,200 5,646 Arapahoe County 50 37 61 548 551 -0.5% 1,314 6,243 Boulder County 16 11 9 126 106 18.9% 253 1,382 Broomfield County 3 4 5 41 37 10.8% 59 315 Denver County 58 53 57 486 461 5.4% 1,087 6,141 Douglas County 26 12 27 209 235 -11.1% 437 2,680 Jefferson County 62 20 41 365 392 -6.9% 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

• New home sales in the U.S. increased 16.9 percent over-the-year to a seasonally adjusted annual rate of 719,000 in November, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development.

• Three of the four regions reported over-the-year increases in home sales. The West region reported the largest increase of 47.9 percent, followed by the South (+9 percent) and the Northeast (+6.7 percent). The Midwest reported the only over-the-year decrease, falling 1.4 percent.

New Home Construction National

• Builder confidence for newly-built single-family homes increased 5 points to 76 in December, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). This is the highest reading since June of 1999. The report cited low mortgage rates and a strong labor market as continuing the housing rebound that began in the spring. Supply-side constraints still exist, such as land availability and labor, and higher development costs are hurting affordability of homes, but the 50-year low for the unemployment rate and increased wage growth continues to move the HMI upward.

• According to the Census Bureau, the seasonally adjusted annual number of nationwide residential building permits totaled over 1.47 million permits in November, an increase of 11.5 percent over-the-year.

• Single-family detached building permits across the U.S. increased 8.6 percent over-the-year, rising to 921,000 permits in November. Single-family attached units decreased 2.6 percent over-the-year to a total of 38,000 permits. Multi-family units reported an 18.4 percent increase from the same time last year to a total of 515,000 permits.

• All four regions reported over-the-year increases in total permits. The Northeast region reported the largest gain of 35.9 percent, followed by the Midwest region (+17 percent) and the West (+14.1 percent). The South region reported the most modest increase over-the-year, rising 4.8 percent to 736,000 permits, the most units permitted of the four regions.


Metro Denver

• Residential building permits in Metro Denver totaled 1,465 permits in November, a decrease of 34 percent, or 755 permits, from the same time last year.

• Single-family detached units reported an over-the-year decrease of 9.4 percent, falling by 84 permits during the period. Single-family attached units rose 4 percent over-the-year, rising by just one permit. A decrease in multi-family permitting drove the decline, with permits falling 51.6 percent, or 672 fewer permits in November compared with the same time last year.

Residential Building Permits

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

Nov-19 Oct-19 Nov-18 2019 2018 % Change 2014 2009

Single-Family Detached Units 808 856 892 10,235 11,410 -10.3% 7,396 4,037 Single-Family Attached Units 26 7 25 183 374 -51.1% 399 224 Multi-Family Units 631 1,435 1,303 7,455 9,471 -21.3% 9,145 5,296 Total Units 1,465 2,298 2,220 17,873 21,255 -15.9% 16,940 9,557

Source: U.S. Census Bureau.

Apartment Rental Market

• The apartment vacancy rate throughout Metro Denver fell 0.8 percentage points over-the-year to 4.7 percent vacancy. Vacancy rates ranged from 3.8 percent in the Boulder/Broomfield submarket to a high of 6.6 percent in Douglas County.

• All six submarkets reported over-the-year increases in the average monthly rental rate, led by Jefferson County (+6 percent) and Douglas County (+4.8 percent). The Boulder/Broomfield submarket reported the highest rental rate in 3Q 2019 at $1,673 per month, while Adams County reported the lowest rental rate at $1,423 per month. Over-the-year, rental rates in Metro Denver increased 2.8 percent to $1,506 per month.

Apartment Statistics

Quarter 3 Quarter 2 Quarter 3

YTD Average

YTD Average

YTD Average Ann Avg Ann Avg

2019 2019 2018 2019 2018 % Change 2014 2009

Apartment Vacancy Rate 4.7% 5.0% 5.5% 5.0% 5.9% -0.8% 4.6% 8.1%

Average Monthly Rental Rate (all units) $1,506 $1,520 $1,465 $1,502 $1,456 3.2% $1,126 $877

Source: Denver Metro Apartment Vacancy and Rent Survey.

Commercial Real Estate

• Broe Real Estate Group proposed an eight-story, 75,000-square-foot office building with ground-floor retail at 200

Clayton St. as a part of a larger redevelopment project spanning 200, 210, and 216 Clayton St. A second phase of

construction could deliver an additional 125,000 square feet of office space. Construction is expected to take 18

months on the first phase.


• Construction will soon begin on a four-story medical office building at Parker Adventist Hospital. The space will be used

for internal medicine; OB/GYN; ear, nose and throat; and expanded medical oncology offices, and will be just under

82,000 square feet. Construction is expected to finish in 2021.

• SunCap Property Group and Colony Industrial partnered to close on 33 acres at the intersection of Clayton St. and E

74th Ave. in Adams County. The groups plan to develop a three-building industrial project called North Central Logistics

Center. The development will consist of 640,995 square feet of speculative industrial space. Construction is expected to

be completed in early 2021.

• Ferguson Enterprises will start construction on a 450,000-square-foot warehouse/distribution facility at Prologis Park

70 near E-470 and E 19th Ave. The building will serve as distribution for plumbing, HVAC, and appliance companies,

where about 190 employees will work once complete in spring 2021.

• Corum Real Estate Group, a Denver-based commercial property manager and developer, acquired two parcels of land

to develop two commercial projects on by the end of 2020. Gateway Central 64 will consist of two industrial

warehouses, one 157,100 square feet and the other 63,880 square feet and will be located at 2101 W 64th Ave. in

Adams County. Elevate at Central Centennial will also consist of two buildings, one 132,300 square feet and the other

56,000 square feet, located at 7172 South Revere Parkway and 12358 E Easter Ave. in Centennial. Construction is set to

begin early 2020.

• Central Connection, a new industrial park, will take the place of Center Greenhouse near E 73rd Ave. between

Washington Street and Gilpin Way in Adams County. The park will consist of a 153,258-square-foot building and a

41,280-square-foot building. The project should take approximately 12 months to complete.

• Sandstone Business Complex LLC plans to build a roughly 50,000-square-foot indoor sports facility and four flex

buildings across Highway 119 from the Sandstone Ranch Community Park and baseball complex in eastern Longmont.

The flex buildings will total 56,200 square feet. The developer hopes to break ground in early 2020.

• An Austin-based hotel operator NTV Holdings LLC bought the three-story, 11,056-square-foot building at 2235

Arapahoe St. in Denver to renovate into a hostel. The company expects to have about 100 beds and a mix of shared

and private rooms, as well as a restaurant and coffee shop, and is looking to open in early 2021.

• Denver-based Central Street Capital announced plans to develop a five-story, 70-room hotel called Hotel Perenne at

2500 18th St. The plans also call for about 3,000 square feet of restaurant space on the ground floor. The company

hopes to begin construction in the second quarter of 2020 and open in mid-2021.

Office Market

• The Metro Denver office market reported decreasing vacancy rates and increasing lease rates between the fourth

quarters of 2018 and 2019. The direct vacancy rate fell 0.3 percentage points from the previous year to 9 percent

vacancy. The average lease rate increased 1.4 percent, or by $0.38, to $26.92 per square foot.

• Office construction in Metro Denver slowed compared with the previous year, with new office space under

construction falling 12.1 percent at the end of 2019 to over 3.6 million square feet of office space. There were 43

buildings under construction in the fourth quarter, down by 3 buildings from 4Q 2018. The largest building under

construction was the Block 162 Tower, which will be adding 607,987 square feet of space in downtown Denver.

• There were 26 office buildings that were completed in Metro Denver in 2019, adding over 1.56 million square feet of

office space to the region. The largest office building completed was The Hub, a 279,317-square-foot Class A office

building located in RiNo. Fifty-nine percent of the new office space was located in the City and County of Denver.


Office Market Statistics

Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter 4

2019 2019 2018 2017 2016 2015

Number of Buildings 6,469 6,465 6,443 6,400 6,357 6,321

Existing Square Feet (millions) 195.2 195.0 193.7 189.4 186.3 184.7

Vacant Square Feet (direct, millions) 17.6 17.8 18.1 18.1 17.0 17.4

Vacancy Rate (direct) 9.0% 9.1% 9.3% 9.6% 9.1% 9.4%

Vacancy Rate (with sublet) 9.8% 9.9% 10.2% 10.4% 9.9% 10.0%

Avg. Lease Rate (direct, per sq. foot, full service) $26.92 $27.01 $26.54 $26.52 $25.68 $24.65 New Construction Completed (year-to-date) 1.56 MSF,

26 Bldgs 1.34 MSF,

23 Bldgs 3.83 MSF,

33 Bldgs 3.00 MSF,

38 Bldgs 1.36 MSF,

28 Bldgs 2.08 MSF,

27 Bldgs Currently Under Construction 3.62 MSF,

43 Bldgs 3.21 MSF,

36 Bldgs 4.12 MSF,

46 Bldgs 5.11 MSF,

43 Bldgs 5.91 MSF,

45 Bldgs 3.18 MSF,

33 Bldgs

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

Industrial & Flex Market

• The average lease rate for the industrial market increased 4.3 percent between the fourth quarters of 2018 and 2019,

rising by $0.34 to $8.28 per square foot. The direct vacancy rate increased 1 percentage point to 4.9 percent vacancy

during the period.

• There was 6.08 million square feet of industrial space completed across 47 buildings at the end of the fourth quarter of

2019, a record year for industrial space added in Metro Denver in a single year. Some of the largest completed projects

included the First Aurora Commerce Center (555,840 square feet) and the Nexus at DIA (540,931 square feet). Adams

County accounted for 78 percent of the new industrial space added in 2019, totaling 4.74 million square feet.

• There was 5.79 million square feet across 37 buildings under construction in the fourth quarter of 2019. The largest

projects under construction were the Shamrock Foods, which will contribute 900,000 square feet of space to the

market, and the Stafford Logistics Center which will add 594,138 square feet of space.

Industrial Market Statistics


2019 2019 2018 2017 2016 2015






Avg. Lease Rate (direct, per square foot, NNN) $8.28 $8.33 $7.94 $7.74 $7.42 $6.98 New Construction Completed (year-to-date) 6.08 MSF,

47 Bldgs 5.44 MSF,

38 Bldgs 5.75 MSF,

34 Bldgs 5.32 MSF,

45 Bldgs 4.51 MSF,

30 Bldgs 1.37 MSF,


37 Bldgs 3.89 MSF,

30 Bldgs 4.6 MSF, 35 Bldgs

4.97 MSF, 25 Bldgs

2.33 MSF, 29 Bldgs

2.97 MSF, 17 Bldgs


• The direct vacancy rate in the Metro Denver flex market fell 0.1 percentage points over-the-year to 5.5 percent

vacancy. The average lease rate rose 5.3 percent, or by $0.63, to $12.62 per square foot.

• There was 458,550 square feet of flex space completed across 11 buildings in 2019. The largest building was a flex

building at 16205 Sheridan Pkwy. in Broomfield, totaling 152,761 square feet of flex space. There was 362,231 square


feet of space across 4 buildings under construction in 4Q 2019, with the largest project being the J.P. Morgan Chase

Data Center that will add 250,000 square feet of flex space to Arapahoe County.

Flex Space Statistics


2019 2019 2018 2017 2016 2015






Avg. Lease Rate (direct, per square foot, NNN) $12.62 $12.60 $11.99 $12.10 $11.43 $10.72 New Construction Completed (year-to-date) 0.46 MSF,

11 Bldgs 0.24 MSF,

8 Bldgs 0.44 MSF,

8 Bldgs 0.56 MSF,

12 Bldgs 0.24 MSF,

6 Bldgs 0.50 MSF,


4 Bldgs 0.61 MSF,

6 Bldgs 0.43 MSF,

9 Bldgs 0.18 MSF,

8 Bldgs 0.39 MSF,

8 Bldgs 0.22 MSF,

4 Bldgs


Retail Market

• The retail market in Metro Denver reported a decrease in the average lease rate of 3.5 percent, down $0.67 to $18.45 per square foot in the fourth quarter of 2019. The direct vacancy rate increased 0.7 percentage points over-the-year to 4.6 percent.

• There were 97 buildings and 945,559 square feet completed in Metro Denver in 2019. The largest projects completed were the Kohl’s in Boulder County (55,000 square feet) and the Summit Thornton in Adams County (49,980 square feet). Of the 97 buildings completed, 77 were small spaces of 10,000 square feet or less.

• There was 1.31 million square feet of retail space across 72 buildings under construction during the fourth quarter of 2019. The largest project was a building at 1601 Market St. in Denver, adding 88,500 square feet of retail space, followed by a King Soopers in Arapahoe County that will add 78,464 square feet to the region. The City and County of Denver had the most retail developments under construction, accounting for 22 of the 72 buildings and 39 percent of the retail space.

Retail Market Statistics


2019 2019 2018 2017 2016 2015






Avg. Lease Rate (direct, per square foot, NNN) $18.45 $18.43 $19.12 $18.15 $16.48 $15.93 New Construction Completed (year-to-date) .95 MSF,

97 Bldgs .51 MSF, 60 Bldgs

1.59 MSF, 113 Bldgs

1.62 MSF, 101 Bldgs

1.32 MSF, 90 Bldgs

1.16 MSF, 66 Bldgs

Currently Under Construction 1.31 MSF, 72 Bldgs

1.62 MSF, 78 Bldgs

0.97 MSF, 53 Bldgs

1.46 MSF, 60 Bldgs

1.19 MSF, 51 Bldgs

0.94 MSF, 43 Bldgs



Monthly Economic Indicators

Positive Changes

2,400 40,300 30,600

26% 26% 26%

2.4% -1.0 percentage points 2.7%

29.0% 10.7% 3.4%

5.4% 3.9% 3.4%

146.2 8.1% 135.6

64.6% 1.2 percentage points 76.1%

1.9% 6.5% 7.3%

607.2 31.8% 31.8%

28,538.4 22.3% 22.3%

4,046 6.9% 52,808

$465,700 3.5% $461,233

278 5.3% 2,318

1,465 -34.0% 17,873

Permits decreased 36.2% from

October to November

Permits down November 2018

to 2019

YTD permits down 15.9%

through November 2019

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

10 of 18 13 of 18 13 of 18

Nonfarm Employment GrowthEmployment up 0.1% from October to

November

Employment up 2.4% from November

2018 to 2019

YTD employment up 1.8% through

November

% Companies Hiring

(Denver Area) Companies hiring rose 9 percentage

points from 4Q 2019 to 1Q 2020

Companies hiring rose 4 percentage

points from 1Q 2019 to 1Q 2020

YTD average up 4 percentage points

compared with 2019

Unemployment RateUnemployment up 0.1 percentage points

between Oct. and Nov.

Unemployment down from November

2018 to 2019

Down 0.3 percentage points from 2018

YTD average

Initial Unemployment Insurance ClaimsClaims increased from October to

November

Claims increased from November 2018 to

2019

YTD average claims increased through

November 2019

Total National Retail SalesNational sales increased from September

to October

National sales increased from October

2018 to 2019YTD sales rose through October 2019

Mountain Region Consumer Confidence IndexIndex up 13.9 percent from November to

DecemberIndex up from December 2018 to 2019

YTD average up 1% through December

2019

Hotel OccupancyDecreased 14.7 percentage points from

October to November

Occupancy increased from November

2018 to November 2019YTD occupancy up from last year

Denver International Airport Passengers

Passengers up from September to October Passengers up from October 2018 to 2019YTD passengers increased through

October 2019

Bloomberg Colorado Index

Index up 3% from November to December Index up from December 2018 to 2019 YTD return up through December 2019

Dow Jones Industrial AverageIndex up 1.7% from November to

DecemberIndex up from December 2018 to 2019 YTD return up through December 2019

Up from October 2018 to 2019 Up 0.3% YTD through October 2019

Residential Building Permits (Total)

Home Sales (closed)Sales down 20.3% between October and

NovemberSales up from November 2018 to 2019

YTD sales up 6.8% through November

2019

Median Home Price

(Denver-Aurora MSA)Down 1.2% from 2Q 2019 to 3Q 2019 Price up from 3Q 2018 to 3Q 2019 YTD price 2.2% higher through 3Q 2019

Foreclosures

Up 40.4% from September to October


4.7% -0.8 percentage points 5.0%

Vacancy decreased 0.3

percentage points from 2Q

2019 to 3Q 2019

Vacancy decreased from 3Q

2018 to 3Q 2019

YTD average down 0.9

percentage points from last

year

9.8% -0.4 percentage points -0.4 percentage points

Vacancy rate down 0.1


2019 to 4Q 2019

4Q 2019 vacancy down from

10.2% one year ago

4Q 2019 vacancy down from

10.2% one year ago

5.2% +1.1 percentage points +1.1 percentage points

Vacancy rate decreased 0.1


2019 to 4Q 2019

4Q 2019 vacancy up from 4.1%

one year ago


one year ago

4.7% +0.6 percentage points +0.6 percentage points

Vacancy rate increased 0.2


2019 to 4Q 2019


one year ago


one year ago

Apartment Vacancy Rate

Office Vacancy Rate (with Sublet)

Industrial Vacancy Rate (with Sublet)

Retail Space Vacancy Rate (with Sublet)

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

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