August 2007
Strong tourism, consumer spending, and commercial real estate activity bolster economic growth
Strong tourism activity and consumer spending are positive forces in the region, and robust commercial real estate activity continues despite ongoing weakness in the residential sector, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for August 2007.
Metro Denver hosted two major events in July – the Major League All-Star Soccer Game and a Microsoft event organized for the company’s global business partners. The soccer game was expected to have an economic impact of just under $5 million, and impact estimates for the Microsoft event hit $20 million. Metro Denver’s business owners also look forward to this year’s custom Electronic Design & Installation Association’s Expo, an event that brought 30,000 attendees to the area last fall.
Fourth quarter 2006 figures from the Quarterly Census of Employment and Wages (QCEW) show a statewide employment increase of 2.4% between 2005 and 2006.
The Metro Denver area saw 2% job growth over the year as employment in each of the seven counties increased. Job growth was strongest in Douglas County (+5.6%) and Adams and Broomfield Counties (+3.4% each).
“Wage increases accompanied employment growth in all seven counties as well,” stated Patty Silverstein, chief economist for the Metro Denver EDC. “Both are signs of healthy economic growth.”
According to QCEW, Metro Denver wage patterns varied across the seven counties. Broomfield County’s annual average wage grew the fastest with an 8.2% increase that brought wages from $51,688 in 2005 to $55,918 in 2006. Overall, the Metro Denver average wage increased 4.9% to $48,723. The statewide average wage increased 4.6%, to $43,508.
Metro Denver’s existing home market also varied. Growth in home sales slowed from a 15.5% gain between April and May to a 0.9% gain between May and June. In a typical seasonal pattern, unsold inventory levels ticked up to 30,256 in June from 29,110 in May. Still, inventories are about five percent below last year’s levels on a year-to-date basis.
Metro Denver’s commercial real estate market is fairing quite well, however. Solid market fundamentals support significant construction activity. For the second consecutive quarter, more than two million square feet of new office space was under construction. The number of buildings soon to be added to the marketplace increased from 76 in the January-March period to 88 in the April-June period.
A midyear report released by the Frederick Ross Company also shows strong activity in Metro Denver’s office market. Vacancy rates stood at 15.8% in mid-2007, down from 19.1% in mid-2006. The Southeast Suburban sector saw the sharpest decline in vacancy rates, from almost 20% in mid-2006 to 16.1% in the middle of this year. Metro Denver saw strong investment in office property – almost 11 million square feet traded in the first half of 2007.
The Frederick Ross Company’s mid-year industrial report shows a market that has recovered from – and grown beyond – the 2001 downturn. Mid-2007 vacancies stood at 6.2%, down from 7.9% in mid-2006. The 2007 vacancy rate is the lowest the market has seen since year-end 2000, when the vacancy rate was just below 5%. The Metro Denver market for industrial warehouse space has tightened, and all of the region’s sectors have vacancy rates below the 10% level. Warehouse construction activity has increased to meet the demand, and 2007 investment totals are on track to break a 2004 record.
Recent economic data for Metro Denver reveal that 10 of the 18 indicators moved in a positive direction for the month, compared to nine positive indicators last month. On an annual basis, 14 indicators were positive, compared to 13 indicators last month.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.