May 2008
National business confidence has widely declined as the U.S. economy struggles to avoid a downturn. Metro Denver’s diverse and dynamic industry base, however, continues to draw interest even as business activity slows nationwide, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for May 2008.
Broomfield-based Range Fuels raised the nation’s largest amount of venture capital ($130 million) in the first quarter of 2008, according to the MoneyTree survey by PricewaterhouseCoopers and the National Venture Capital Association. Aurora-based Taligen Therapeutics and three medical device manufacturers – SomaLogic, Lanx, and IntelliDx – drew a combined $82 million in first quarter investments and helped bring Colorado’s total first quarter capital to $297.7 million. According to the report, first quarter investments in Colorado companies reached the largest amount since 2001.
"Free exchange of ideas among our research universities and national laboratories and the business community breeds company success," stated Patty Silverstein, chief economist for the Metro Denver EDC. "The high-concentration of talent in Colorado makes the state an easy mark for venture capital investment."
Additionally, Colorado ranked eighth in the nation for 2007 NASA contract funding, according to the federal space agency. Colorado contracts totaled $354.6 million last year, and major recipients included Lockheed Martin, Ball Aerospace, and the University of Colorado (CU). Agency spokespeople note that CU receives the nation’s largest amount of NASA university research funding and currently holds more than 300 active grants.
Metro Denver’s commercial real estate markets are also attracting investors, and the first quarter report by CB Richard Ellis ranks the region’s office lease rates third-lowest among the nation’s 15 most competitive markets. The report also notes Metro Denver’s office market began 2008 at a steady pace. The vacancy rate was essentially unchanged at 12.5 percent, but the availability rate increased with a gain in sublease space. Still, average lease rates rose to $20.44 from $20.04 per square foot in the fourth quarter.
However, the CB Richard Ellis report states Metro Denver’s industrial market could weaken through 2008. Vacancy rates declined to 6.4 percent compared to 7.1 percent in first quarter 2007, but vacancy could increase as more businesses postpone new lease commitments until the economy strengthens.
Employment in the Metro Denver region increased by 10,400 jobs between February and March, but year-to-date job growth dipped slightly to 1.9 percent from two percent in the prior month. Ongoing difficulties in credit and mortgage markets contributed to a 2.5 percent year-to-date decline in Metro Denver financial services employment. In manufacturing, the region’s only other supersector to report losses, job counts through March were down one percent from the same months in 2007. Among the remaining nine supersectors, year-to-date job growth ranged from one percent in information to 3.9 percent in education and health services.
Year-to-date job growth rates in the Denver-Aurora and Boulder MSAs measured 1.9 percent and 1.8 percent, respectively. The education and health services industry reported the strongest year-to-date growth of the Denver- Aurora supersectors (+4 percent), while natural resources and construction reported the largest gains (+6.2 percent) in Boulder. Statewide job growth reached two percent year-to-date, and national job gains measured 0.6 percent. Overall, recent employment figures reflect slowing job growth in Metro Denver, Colorado, and the nation.
Colorado had the nation’s third-highest concentration of high-tech workers in 2006, according to the Cyberstates 2008 study by the American Electronics Association (AeA). Colorado maintained a high ranking despite five consecutive years of tech-centered job losses, and the state’s tech workers earned the fifth-highest wages in the nation. AeA analysts say the state’s high-tech job losses are concentrated in telecommunications, where downsizing and consolidation have continued even past the tech-led recession in 2001. Overall, Colorado tech workers represented 83 of every 1,000 private sector laborers in 2006.
Recent indicators also reflect strong fundamentals that keep Metro Denver’s economy in balance. Vacancy rates for the region’s commercial real estate are stable or declining over-the-year, retail sales receipts remain healthy, and Denver International Airport continues to handle large numbers of passengers. Overall, data for 10 of 18 economic indicators showed positive monthly trends, compared to seven positive indicators in the prior release. Six indicators showed positive annual trends in May, compared to seven positive indicators in April.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.