monthly economic indicators · 2019. 3. 12. · disruption we were seeing in our industry, we came...

Monthly Economic Indicators

March 2019 www.metrodenver.org

Research Sponsor:

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Monthly analysis

of 18 key economic

indicators in

Metro Denver

Development Research Partners

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A CEO's Insights:Thriving in a Dynamic EconomyFinding The Next Great Idea, March 2019

I recently read an article that compared the CEO’s role in this era of disruptive transformation to both a martial arts master and the leader of a jazz band. I like those images because they convey not only flexibility but speedy reflexes and keen awareness of what’s happening around you.

Being CEO means being the visionary-in-chief, focusing simultaneously on what’s happening inside your company and the broader landscape. While everybody else has their heads down managing their P&Ls, people and products, you are the one person ideally situated to lift up your head, look around and come up with the next great idea that will enable your company to grow and thrive.

But how do you come up with those new ideas? It’s not enough to just read the trades and track what your competitors are doing. Transformative change comes from cross-pollination and looking at the world through different lenses.

One thing I spend a lot of time doing is talking with CEOs from different industries. I’ve got a pretty good sense of what’s happening in my own sector, insurance. But what’s happening in retail? Manufacturing? Telecomms? Oil and gas? Banking? Construction? Restaurants? What changes are taking place in different sectors, and how are my counterparts adapting to or leading those changes? What excites them, and what keeps them up at night? What are their customers and employees doing and saying? These interactions give me ideas about how we can better serve our customers in these and other industries, as well as about how to make things better for my own employees.

I also enjoy learning from the younger employees in our company about how they’re managing their lives. When I see them using Venmo to exchange money with friends, and Sofi to refinance their student loans, it brings the transformation of financial services to life far better than any magazine article could. They get music and groceries and dates in ways that perfectly illustrate the term “digital natives.” Instant gratification is non-negotiable for them, and they not only expect best-in-class experiences, they don’t hesitate to let the world know when a vendor or service provider gives them anything less.

Another way to look at the world differently is to scare yourself. My executive team and I did this a few years ago. Based on the disruption we were seeing in our industry, we came up with scenarios about the different ways new entrants and disrupters could eat our company’s lunch. Then we analyzed ways to beat them at their own game, and the cost (financial, human and opportunity) of each of those strategies. We emerged with a clear direction for evolving our own business model that resulted in a digital subsidiary, Cake Insure, that has set the bar for digital direct sales and servicing of workers’ comp policies for small businesses.

Keeping one foot planted in your current reality while simultaneously pivoting to what’s next isn’t easy. But it’s exhilarating. And it’s the only way to thrive in a time of exponential change.

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.

Metro Denver Economic Development Corporation | March 5, 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 Brookings Institution used recently released migration data from the U.S. Census Bureau to identify major metros that

attracted the most 25- to 34-year-olds for the period of 2012 through 2017. Denver ranked second, after Houston andbefore Dallas. At a state level, Colorado ranked third, with Texas and Washington capturing the top two spots.

The U.S. Green Building Council released its annual list of Top 10 States for Leadership in Energy and EnvironmentalDesign (LEED), and Colorado ranked No. 6 on the 2018 list, up from No. 10 in 2017. Colorado has made the top 10 everyyear since the rankings were introduced in 2010. The increase in ranking was due to the efforts of private businessesand building owners that resulted in the certification of nearly 40 more buildings in the state in 2018 than in theprevious year.

Seven Colorado hospitals have been named to the Healthgrades “America’s Best Hospitals” list for 2019. The analysisused for the rankings looked at clinical outcomes across many common inpatient conditions and procedures, includingheart attacks, pneumonia, sepsis, and stroke. Good Samaritan Medical Center in Lafayette and Lutheran MedicalCenter in Wheat Ridge also ranked in the top 50 best hospitals in the country.

Cherry Hills Village ranked No. 3 on a list of the wealthiest towns in the U.S. Bloomberg evaluated inflation-adjustedhousehold data for all U.S. places, as defined by the Census, with a minimum of 2,000 households and ranked thembased on average household income. Nearly 6,250 U.S. places met the criteria.

National Economic Overview Gross Domestic Product

The U.S. Bureau of Economic Analysis (BEA) released theinitial estimate of real gross domestic product (GDP) forthe fourth quarter of 2018. The estimate showed thatGDP increased at an annual rate of 2.6 percent throughthe fourth quarter, which was 0.8 percentage pointsbelow the third quarter rate of 3.4 percent.

The increase in real GDP in the fourth quarter reflectedpositive contributions from personal consumptionexpenditures, nonresidential fixed investment, exports,private inventory investment, and federal governmentspending. Those were partly offset by negativecontributions from residential fixed investment, and stateand local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

Interest Rates

The Federal Open Market Committee (FOMC) of the Federal Reserve maintained interest rates at 2.25-2.5 percent in itsJanuary meeting and signaled that it would likely leave rates alone in coming months given economic pressures andmild inflation. The committee continues to view changes in the target range for the federal funds rate as its primarymeans for adjusting the stance of monetary policy.


The Fed maintained its policy of allowing up to $50 billion in assets to roll off its balance sheet, but also is prepared toadjust any of the details for completing balance sheet normalization based on economic and financial conditions.

The next FOMC meeting is March 19-20.

Economic Indexes & Notable Data Releases National & International

The U.S. goods and services trade deficit was $49.3 billion in November, down $6.4 billion from $55.7 billion inOctober, revised. November exports were $209.9 billion, $1.3 billion less than October exports. November importswere $259.2 billion, $7.7 billion less than October imports. Year-to-date, the goods and services deficit increased $51.9billion, or 10.4 percent, from the same period in 2017. Exports increased $157.1 billion or 7.3 percent. Importsincreased $208.9 billion or 7.9 percent.

The Conference Board Leading Economic Index (LEI) for the U.S. was unchanged in January , remaining at 111.3(2016=100), following a 0.1 percent decline in December and a 0.1 percent increase in November. In January, thestrengths in the financial components were offset by the weaknesses in the labor market components. The U.S. LEI hasnow been flat essentially since October 2018. The Conference Board forecasts that U.S. GDP growth will likelydecelerate to about 2 percent by the end of 2019.

The Institute for Supply Management’s Manufacturing Index registered 56.6 percent in January, an increase of 2.3percentage points from the December reading of 54.3 percent. Demand expansion improved with the New OrdersIndex reading returning to the high 50s while inputs, expressed as supplier deliveries, inventories, and imports,continued to improve. Of the 18 manufacturing industries, 14 reported growth in January, with the highest rates ofgrowth reported in Textile Mills, Computer and Electronic Products, and Plastics and Rubber Products. The overalleconomy grew for the 117th consecutive month.

The Institute for Supply Management’s Non-Manufacturing Index (NMI) registered 56.7 percent for January, which is1.3 percentage points lower than the December reading of 58 percent. The non-manufacturing sector’s growth ratecooled off in January as respondents were concerned about the impacts of the government shutdown, but the sectorremained mostly optimistic about overall business conditions. Of the 11 industries to report growth in January, thelargest gains were reported in Transportation and Warehousing, Health Care and Social Assistance, Mining, andAccommodation and Food Services. The sector grew for the 108th consecutive month.

The national debt has passed a new milestone, topping $22 trillion for the first time. The Treasury Departmentreported that the debt figure has been accelerating since the passage of Trump’s $1.5 trillion tax cut in December 2017and action by Congress last year to increase spending on domestic and military programs. The Congressional BudgetOffice projects that this year’s deficit will be $897 billion, a 15.1 percent increase over last year’s imbalance of $779billion. In the coming years, the CBO forecasts that the deficit will keep rising, and will top $1 trillion annually beginningin 2022 and never drop below $1 trillion through 2029.

Debt among 18 to 29-year-old Americans exceeded $1 trillion at the end of 2018, according to the New York FederalReserve Consumer Credit Panel. That is the highest debt exposure for the youngest adult group since late 2007.Student loans make up the majority of the $1 trillion owed by this cohort, totaling $379 billion. Mortgage debt is thesecond largest category, totaling $363 billion.

Local

The University of Colorado Boulder Leeds School of Business released its first quarter 2019 Leeds Business ConfidenceIndex. The overall index fell to 50.1, its lowest point since 2011, as business leaders expressed caution ahead of 1Q2019, consistent with the signals observed in the financial markets and expressed by the Federal Reserve. Five of thesix individual components of the LBCI remained in positive territory (above 50), but national economy expectations fellsharply below 50 in 1Q 2019. Panelists were most optimistic about industry sales expectations, but remained most


concerned about the national economy as it recorded its slowest confidence of the index components ahead of 1Q 2019 on the heels of the bear stock market, rising interest rates, trade concerns, and uncertainty surrounding a government shutdown.

According to the regional Beige Book by the Kansas City Federal Reserve, economic activity in the Tenth District, whichincludes Colorado, was roughly flat in December and early January, as growth in several sectors was offset by aslowdown in others. Moving forward, expectations were mostly positive for growth in the months ahead. Residentialreal estate activity declined modestly, while overall activity in the commercial real estate sector rose slightly.Employment and employee hours rose across most industries in the District, and additional gains were anticipated inthe months ahead. Wages expanded at a modest pace and were expected to grow at a similar pace moving forward.

Colorado buyers registered 211,653 new light cars and trucks in 2018, slightly above the 211,132 registered in 2017.That 0.2 percent gain in Colorado compared with a 0.9 percent decline recorded nationally. Car sales in the state weredown 14.9 percent to 50,553 in 2018 from 2017. Light truck sales, which includes SUVs, rose 6.2 percent to 161,100.

Labor Force and Employment The Colorado Department of Labor and Employment is currently conducting its annual benchmark revision to the employment data series. Data for January 2019 and revisions to 2018 data will be available mid-March.

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 Dec-18 Nov-18 Dec-17 2018 2017 % Change 2013 2008

Total 11-County Metro Denver* 1,712.8 1,708.7 1,676.3 1,693.2 1,650.5 2.6% 3.6% 1.0% Denver-Aurora-Lakewood MSA 1,514.7 1,510.4 1,483.9 1,499.9 1,461.7 2.6% 3.7% 1.0% Boulder MSA 198.1 198.3 192.4 193.3 188.8 2.4% 2.3% 0.9%

Natural Resources & Construction 113.5 114.6 110.9 112.9 107.6 4.9% 9.7% -1.5%Manufacturing 91.8 90.4 88.4 90.1 87.5 3.0% 1.6% -2.3%Wholesale & Retail Trade 245.5 245.5 240.0 239.7 234.0 2.4% 2.6% 0.1%Transp., Warehousing & Utilities 65.0 61.9 62.0 60.8 58.0 4.8% 5.1% 0.3%Information 58.2 58.4 57.0 58.3 55.3 5.4% 1.6% -1.7%Financial Activities 115.4 114.6 116.6 116.4 115.6 0.7% 3.6% -2.2%Professional & Business Services 310.6 311.8 300.9 306.7 298.1 2.9% 4.3% 2.1%Education & Health Services 218.4 217.2 212.4 215.1 209.8 2.6% 4.2% 4.3%Leisure & Hospitality 191.8 190.9 189.6 194.5 187.4 3.8% 3.9% 1.4%Other Services 64.0 63.2 62.6 62.8 62.8 -0.1% 2.1% 2.7%Government 238.6 240.2 235.9 235.9 234.4 0.6% 1.9% 2.6% Federal Gov't 29.7 29.5 30.2 29.9 30.7 -2.4% -1.2% -0.7% State Gov't 69.0 68.8 66.6 64.7 62.9 2.9% 2.7% 3.7% Local Gov't 139.9 141.9 139.1 141.2 140.8 0.3% 2.2% 3.0%

Colorado 2,780.0 2,760.3 2,704.7 2,731.2 2,658.6 2.7% 3.0% 0.8% United States 151,190 151,244 148,530 149,041 146,624 1.6% 1.6% -0.5%

*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


Employment in Metro Denver increased 2.2 percent between December 2017 and December 2018, adding an additional 36,500 jobs over-the-year. The Denver-Aurora-Lakewood MSA added 30,800 jobs, an increase of 2.1 percent, while the Boulder MSA (+3 percent) added 5,700 jobs.

Ten of the 11 supersectors recorded growth over-the-year. The transportation, warehousing, and utilities supersector and the manufacturing supersector reported the highest rates of growth over-the-year, rising 4.8 percent and 3.8 percent, respectively. Professional and business services added the most jobs between December 2018 and the previous year, adding 9,700 workers.

The financial activities supersector reported the only decline over-the-year, falling 1 percent or by 1,200 jobs.

Employment in Colorado rose 2.8 percent between December 2018 and the same time last year, adding 75,300 jobs. National employment levels increased during the same period, adding almost 2.7 million jobs, an increase of 1.8 percent.

Metro Denver Industry Cluster Headlines

Aerospace

Ball Aerospace has been contracted to provide spacecraft and mission integration support for a new NASA mission that seeks to explore the origins of the universe. The two-year, $242 million mission is expected to launch in 2023.

The Navy is relocating its Strategic Systems Programs (SSP) from California to Jefferson County. The SSP is responsible for the strategic weapons system aboard the fleet ballistic missile (FBM) submarines, and Lockheed Martin has been the Navy’s prime contractor for this program since 1955. Lockheed Martin is relocating portions of its production for the Navy’s FBM program from Sunnyvale to its Waterton campus as the Navy wants its SSP Program Management Office to be co-located with their contractor. The relocation project is projected to bring 55 military, civilian, and contractor jobs to the county.

Westminster-based Maxar Technologies will be laying off more than 200 workers across its family of companies as part of a restructuring effort. The cuts will be spread across Maxar and its subsidiaries, which include DigitalGlobe, Canadian space robotics firm MDA, and Silicon Valley satellite and equipment maker SSL. The cuts will include a number of positions in Colorado, according to officials, though Maxar did not disclose how many.

Bioscience

Nuventra, a consulting firm for the pharmaceutical biotech industry, is moving into a larger location in Broomfield that will be completed in March. The company currently has about 100 employees in four locations across the U.S., with seven employees in Broomfield. Nuventra focuses on clinical pharmacology and helps companies think about how to best develop their drugs and understand how drugs interact with the body.

Sandoz Inc. has announced another round of layoffs as it closes its facility at 2555 W. Midway Blvd. in Broomfield. About 116 employees will be affected, made up of technicians, chemists, and administrative assistants. The company expects one more wave of layoffs in 2019, which will result in the permanent closure of its Broomfield facility.

Energy and Natural Resources

Platte River Power Authority has signed a power purchase agreement with GCL New Energy and DEPCOM Power to move ahead with plans to install 20 megawatts of new solar power capacity at its Rawhide Energy Station north of Fort Collins. The proposed array will include a 2 MWh battery storage system, and construction could begin in the summer and conclude in early 2020.

Tri-State Generation and Transmission Association is adding its fifth utility-scale wind farm in Colorado. Tri-State plans to install a 100-megawatt wind farm in eastern Colorado, which will boost its total power from wind in Colorado to 471 megawatts. Nearly one-third of Tri-State’s power comes from renewable sources.


Resolute Energy Corp. will cut 57 positions March 1 due to the company’s pending merger into Denver-based CimarexEnergy Co., resulting in an 80 percent reduction in the company’s staff. Layoffs include accountants, financial analysts,geologists, engineers, and landmen.

Financial Services

WorldRemit, a London-based fintech remittance company, is expanding in Denver, which is the company’s NorthAmerica headquarters. The company added 4,500 square feet to its 11,000 square foot office at 600 17th Street andwill continue hiring to expand its Denver office this year.

Food and Beverage Production

Aurora-based organic food technology company MycoTechnology raised $30 million in Series C funding. The moneyraised during this round of funding will be used towards a new 86,000-square-foot facility. It will also be used for newstate-of-the-art labs, customer experience center, and corporate headquarters. The company added 50 jobs during thelast 12 months and plans to add an additional 15 employees in 2019.

Conagra Brands Inc. will permanently close the Boulder office of Pinnacle Foods, Inc., parent company to BoulderBrands, and let go of 100 workers. Conagra is also discontinuing the Boulder Brands name, and its products will beavailable under the Conagra brand umbrella. The closure will affect all employees and the office is expected to close onDecember 31. Layoffs will begin May 24 and continue through March 2020.

Aviation-themed FlyteCo Brewing recently opened at 4499 W. 38th Avenue. The brewery signed a 10-year lease in2017 for the space just west of Tennyson Street. The brewery installed a 15-barrel brewing system and fourfermenters, which will supply the brewery’s rotating menu of about 12 beers.

Lariat Lodge Brewing, located in Evergreen, is opening a second location in Littleton. The new 18,000-square-footbrewpub will be more than triple the size of the Evergreen location. The brewery signed a 10-year lease and will starthiring its Littleton staff, including chefs and upper management, within a few weeks.

Honnibrook Craft Meadery opened a tasting room at 2276 Manatt Court in Castle Rock. The meadery is stocked withthree 2,000-liter white wine tanks and a 15-barrel brewing tank. The owners plan to serve mead mostly out of thetasting room but will also start distribution locally.

52eighty Distilling began production at 10488 W. Centennial Road in Littleton in August and opened its 800-square-foottasting room at the beginning of December. The distillery offers two varieties of whiskey and two varieties of vodka.They also have a gin and a single-malt whiskey currently aging, and plan to launch a barrel-aging program soon.

Leopold Bros. of Denver was named No. 9 among America’s best whiskey distilleries, published by Esquire magazine.Leopold Brothers moved to Denver in the mid-2000s and sources its ingredients from around the state.

Healthcare & Wellness

Kaiser Permanente Colorado, the largest insurer in the state, is laying off about 200 additional employees. The latestround of layoffs, which follows 200 job cuts in November, is the result of Kaiser restructuring operations after recordingmillions of dollars in losses. Kaiser has more than 7,000 employees in Colorado, along with 217,000 workersnationwide. Those affected by the layoffs will receive severance and other benefits.

IT-Software

Webroot, a Broomfield-based cybersecurity company, was recently acquired by Boston-based Carbonite. Carbonite willkeep its headquarters in Massachusetts, along with Webroot’s office and workforce staff in Colorado, which includes350 employees at the company’s headquarters in Broomfield.

Brandzooka, a media advertising platform, is planning to grow from 15 employees to 85 during 2019. The company hasalready doubled in size in January. Since it was founded in 2015, Brandzooka has averaged 500 percent growth year-over-year.


Randori, a Denver-based cybersecurity startup, raised $9.75 million in October to build its 18-person team, and expectsto add a few more employees this year. The company chose Denver as its headquarters due to its quality of life andstrong talent pool.

Strava, the sports-tech company that provides a fitness app and social network for endurance athletes, has signed alease for nearly 20,000 square feet at 1444 Wazee Street that will ultimately accommodate 150 employees. Strava hasbeen building its 30-person team at a Galvanize campus downtown since announcing its plans to grow a Denver hub inJanuary 2018 and expects to have about 57 employees by the end of 2019.

Guild Education, a Denver tech startup that works with Fortune 1000 companies to help their employees in fast food,retail, and entry-level manufacturing industries earn high school and college diplomas, and skilled trades certificates,has leased and plans to expand to the 36th floor of Republic Plaza in downtown Denver this year to accommodatenearly 500 total employees. The company, which tripled in size last year to 240 employees, plans to add another 240employees in 2019, primarily in tech and engineering positions.

Denver-based startup Würk raised $11 million in funding to facilitate further expansion of its human resources andpayroll services platform designed for cannabis companies. With the funding, Würk plans to expand its managementplatform, adding dedicated human resource, payroll, and tax experts to its offered services. The company currently has42 employees and plans to hire an additional 20 to build out the product.

Other Industry Headlines

General contractor and engineering company Kiewit Corporation plans to build a new regional headquarters in LoneTree. The facility is expected to eventually house up to 1,100 employees, including about 200 new hires in the nextyear. The new facility will be located next to the Sky Ridge light rail station.

Functional Remedies LLC, a Superior-headquartered hemp oil product maker, has expanded its lab and productionfacility to a 25,000-square-foot space in Louisville’s Colorado Technology Center and has moved its administrativeoffices into a new 4,000-square-foot space in Superior. The company plans to hire about 45 new employees for avariety of positions in 2019, bringing the staffing total to about 120.

Production company Dorsey Pictures is relocating its headquarters from Jefferson County to 4700 Castleton Way inCastle Rock and leasing 11,266 square feet. The company plans to hire an additional 10-15 employees in the next twoyears. Dorsey expects to relocate in the second quarter of 2019.

Egg Strategy, a Boulder-based business consultancy with offices in New York and Chicago, is expanding its quantitativeresearch team in Boulder. Currently the company has 33 employees at the Boulder office. In addition to the new hires,the company plans to continue innovating in its own business, developing new strategic tools for understandingpeople, the marketplace, and consumers.

Denver Public Schools has cut more than 220 positions in the district’s central office, in part to pay for higher teachersalaries. At the same time, Superintendent Susana Cordova is creating about 60 new positions and reclassifying 15others to align to her vision for the district, which zeroes in on better serving the district’s black and Latino students.The changes amount to a net reduction of about 150 central office jobs and a savings of $17 million.

Payless ShoeSource Inc. filed for Chapter 11 bankruptcy protection and will close all its approximately 2,300 retaillocations. Payless had been trying to find a buyer, and when that failed it made plans to liquidate. The company has 21Denver-area stores.


Employment Outlook

Denver-Aurora MSA employers expect to hire at amoderate pace during the first quarter of 2019, accordingto the Manpower Employment Outlook Survey. Amongemployers surveyed, 22 percent plan to hire moreemployees from January to March, a decrease of 1percentage point from the same period last year. Thisnumber is offset by the 6 percent that plan to reducepayrolls, a 4-percentage point increase, while 72 percent ofemployers expect to maintain current staff levels, anincrease of 1 percentage point.

U.S. hiring intentions are at a 12 year high as demand forskilled workers is set to grow. The Manpower Employment Outlook Survey signals that the U.S. is likely to achieve 100months of consecutive job growth in January.

Employment Outlook Survey

Quarter 1 Quarter 4 Quarter 1 YTD YTD Ann Avg Ann Avg 2019 2018 2018 2019 2018 2014 2009

Denver-Aurora-Broomfield MSA Percent of Companies Hiring 22% 25% 23% 22% 23% 21% 11% Percent of Companies Laying Off 6% 7% 2% 6% 2% 6% 12% Percent of Companies No Change 72% 68% 71% 72% 71% 71% 74% Percent of Companies Unsure 0% 0% 4% 0% 4% 2% 3%

United States Percent of Companies Hiring 23% 22% 21% 23% 21% 19% 15% Percent of Companies Laying Off 5% 5% 5% 5% 5% 6% 14% Percent of Companies No Change 71% 71% 71% 71% 71% 72% 68% Percent of Companies Unsure 1% 2% 3% 2% 3% 3% 5%

Source: Manpower Inc.

Unemployment

The Colorado Department of Labor and Employment is currently conducting its annual benchmark revision to the unemployment data series. Data for January 2019 and revisions to 2018 data will be available mid-March.

Metro Denver’s not seasonally adjusted unemploymentrate rose 0.5 percentage points between November andDecember, rising to 3.7 percent. Over-the-year, the rateincreased 0.9 percentage points from 2.8 percent inDecember of 2017.

Between November and December, all seven counties inMetro Denver reported increases in the unemploymentrate, rising 0.6 percentage points in Adams County, 0.5percentage points in the City and County of Broomfield,and 0.4 percentage points in the remaining five counties.Over-the-year, the rate in all counties also rose, with eachcounty rising between 0.8 and 0.9 percentage pointsover-the-year.


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

December 2018 (p) 2018 YTD AVG 2017 YTD AVG 2013 2008

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 1,808.3 3.7% 1,796.4 3.0% 1,743.4 2.7% 6.5% 4.9% Adams County 271.3 4.1% 269.3 3.3% 261.3 3.1% 8.1% 5.4% Arapahoe County 364.2 3.8% 362.1 3.1% 351.4 2.8% 6.6% 4.9% Boulder County 194.9 3.3% 192.4 2.7% 186.9 2.4% 5.5% 4.1% Broomfield County 39.4 3.5% 39.1 2.8% 38.0 2.6% 5.8% 4.5% Denver County 411.7 3.7% 409.3 3.0% 397.2 2.8% 6.6% 5.4% Douglas County 190.0 3.4% 188.9 2.7% 183.3 2.4% 5.3% 4.2% Jefferson County 336.9 3.5% 335.3 2.9% 325.4 2.6% 6.3% 4.7%

Colorado 3,130.6 3.8% 3,091.4 3.1% 2,992.3 2.8% 6.9% 4.8% United States 162,510 3.7% 162,075 3.9% 160,320 4.4% 7.4% 5.8%

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

Metro Denver added 46,316 people either employed or looking for work between December 2017 and December2018. The labor force rose across all seven counties over-the-year, ranging from a 3.1 percent increase in BoulderCounty to a 2.5 percent increase in Jefferson County.

Colorado reported an unemployment rate of 3.8 percent, rising 0.8 percentage points from December 2017. Duringthat time, the labor force in Colorado increased, rising 3.3 percent or adding 98,808 people either employed or lookingfor work. The national unemployment rate decreased 0.2 percentage points over-the-year to 3.7 percent.

Weekly First-Time Unemployment Insurance Claims

Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg 2008 Dec-18 Nov-18 Dec-17 2018 2017 % Change 2013

Metro Denver 1,192 1,118 1,391 990 1,103 -10.2% 1,625 1,738 Colorado 2,344 2,344 2,839 1,938 2,092 -7.4% 3,166 3,112

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.

Between November and December, initial unemployment insurance claims increased in Metro Denver, rising 6.6percent. However, the December level was 14.3 percent lower than the same month last year. The average number ofmonthly claims year-to-date (990 claims) is the lowest December since the beginning of the dataset in 2004.

Claims throughout Colorado remained flat over-the-month, holding steady at 2,344 claims. Between December 2017and December 2018, claims fell 17.4 percent. The year-to-date average monthly claims of 1,938 for Colorado was alsolower than any previous December since the beginning of the dataset.


Consumer Sector Sentiment & Spending

The Consumer Confidence Index for the U.S. increased inFebruary, following a decline in January. The Index nowstands at 131.4 (1985=100), up from 121.7 in January. ThePresent Situations Index improved, from 170.2 to 173.5.The Expectations index increased from 89.4 last month to103.4 this month.

Analysts at The Conference Board stated that consumers’appraisal of current conditions improved moderately inFebruary. The percentage of consumers stating businessconditions are “good” increased from 36.4 percent to 41.2percent, while those saying business conditions are “bad”was unchanged at 10.8 percent.

Colorado is included in the Mountain Region Index andthe area reported an increase in consumer confidence between January and February. The index rose from 130.1 inJanuary (revised) to 139.5 in February, an increase of 7.2 percent. In addition, the Mountain Region Index rose 6.2percent over-the-year. The Present Situation Index fell 0.2 percent over-the-month to 176.6 in February, and theExpectations Index rose 16.1 percent to 114.8.

Consumer Confidence Index

Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Feb-19 Jan-19 Feb-18 2019 2018 % Change 2014 2009

Mountain 139.5 130.1 131.4 134.8 126.7 6.4% 89.2 49.7 United States 131.4 121.7 130.0 126.6 127.2 -0.5% 86.9 45.2

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

National Retail Sales ($millions)

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

Annual Growth

Nov. 2018(p) Oct. 2018 Nov. 2017 2018 2017 % Change 2013 2008 Total Retail Sales 524,525 506,963 500,265 5,466,897 5,192,567 5.3% 3.6% -1.1% Motor Vehicles 97,602 101,302 95,181 1,124,683 1,085,812 3.6% 8.2% -13.7% Furniture and Home 11,135 10,120 10,788 110,009 104,121 5.7% 4.2% -11.2% Electronics & Appliance 10,212 7,649 10,274 86,759 85,227 1.8% 0.9% -1.2% Building Materials 32,064 34,490 31,717 360,749 349,389 3.3% 7.2% -5.9% Food and Beverage 63,064 61,986 61,195 675,095 651,662 3.6% 2.0% 3.9% Health and Personal Care 29,263 29,500 27,535 313,763 300,318 4.5% 2.9% 4.0% Gasoline Stations 41,839 46,942 38,811 476,542 417,183 14.2% -1.0% 11.5% Clothing & Accessories 26,303 21,809 24,714 239,223 226,327 5.7% 2.2% -2.5% Sporting Goods 6,972 5,881 7,866 69,413 74,048 -6.3% 1.9% -1.2% General Merchandise 66,626 58,439 64,286 634,089 612,736 3.5% 1.5% 2.8% Miscellaneous Store 11,861 11,586 11,275 119,459 117,997 1.2% 2.2% -4.9% Non-Store Retailers 69,805 56,911 62,287 601,826 548,871 9.6% 6.1% 3.4% Food Service & Drinking 57,779 60,348 54,336 655,287 618,876 5.9% 3.7% 2.6%

Source: U.S. Census Bureau.


National retail sales increased between October and November, with total retail sales rising 3.5 percent above themonth-ago level. Eight of the 13 sectors rose over-the-month, with the greatest increases in the electronics andappliance stores and the non-store retailers, which rose 33.5 percent and 22.7 percent, respectively. The greatestdecrease over-the-month was reported by gasoline stations, falling 10.9 percent between October and November.Food and beverage stores (+1.7 percent) and miscellaneous store retailers (+2.4 percent) reported the slowest growthduring the period.

Between November 2017 and November 2018, 11 of the 13 retail sectors reported growth. Total retail sales rose 4.8percent over-the-year. Non-store retailers (+12.1 percent) and gasoline stations (+7.8 percent) reported the largestgrowth over-the-year. Sporting goods, hobby, book, and music stores reported a decrease of 11.4 percent over-the-year, followed by electronics and appliance stores (-0.6 percent).

Price Changes

The U.S. Consumer Price Index (CPI) rose 1.6 percent between January 2018 and January 2019. Seven of the eightcomponents increased during the period, with the greatest increases in housing (+2.9 percent), medical care (+1.9percent), and other goods and services (1.9 percent). Transportation reported the only decrease over-the-year, falling1.3 percent.

The CPI for the Denver-Aurora-Lakewood area rose 0.4 percent over-the-year in January. Seven of the eightcomponents reported an increase. Other goods and services (+3.5 percent), medical care (+2.1 percent), and educationand communication (+2.1 percent) reported the largest increases. Apparel reported the only decrease, falling 18.7percent between January 2018 and January 2019.

According to the AAA Daily Fuel Gauge Report, the national average fuel price for February increased 6.7 percent fromthe prior month to $2.41 per gallon. The average fuel price for February was 5 percent lower than the prior year’s level.The Metro Denver average fuel price of $2.12 per gallon reflected a 7.5 percent increase from January to February, buta 10.1 percent decrease over-the-year. The average fuel price in Metro Denver was $0.29 lower than the nationalaverage.

On February 25th, Colorado’s average price per gallon of gas of $2.14 was lower than 42 other states, according to AAAColorado.

Stock Market

Between January and February, all four stock market indices reported increases. The DJIA reported the largest increaseover-the-month, rising 3.7 percent. The NASDAQ rose 3.4 percent, the S&P 500 rose 3 percent, and the BloombergColorado Index rose 2.6 percent during the period. All four indices also reported increases between February 2018 and2019, ranging from a 9.7 percent increase in the Bloomberg Colorado index to a 2.6 percent increase in the S&P 500.

Stock Market Indexes

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

Return Ann Avg

Return

Feb-19 Jan-19 Feb-18 2019 2018 2014 2009 Bloomberg Colorado 522.3 509.1 475.9 13.4% -4.4% -1.6% 46.2% S&P 500 2,784.5 2,704.1 2,713.8 11.1% 1.0% 11.4% 23.5% NASDAQ 7,532.5 7,281.7 7,273.0 13.5% 5.4% 13.2% 43.9% DJIA (Dow Jones) 25,916.0 24,999.7 25,029.2 11.1% 0.8% 7.6% 18.8%

Sources: Bloomberg.com; Yahoo! Finance.

Travel & Tourism

Rocky Mountain National Park reported a record number of 4,590,492 visitors in 2018, an increase of 3.5 percent from2017. The National Park Service’s annual ranking of the top 10 national parks has been delayed by the partial


government shutdown, but Rocky Mountain National Park was ranked fourth in 2017, slightly ahead of Yosemite National Park and slightly behind Zion National Park. Park officials point to increasing population along the Front Range as a factor.

According to a study by Kirkland, Washington-based Inrix, Denver is the 19th most congested city in the United States. The typical driver during peak commute times spends an average of 83 hours sitting in their vehicles, an increase of 3 percent from the previous year, and costing $1,152 in direct and indirect costs. Nationally, Americans lost an average of 97 hours a year due to congestion, which translates to an average of $1,348 per driver.

The average hotel occupancy rate in Metro Denver rose 6.1 percentage points between December and January to 60.5 percent occupied. Between January 2019 and the previous year, occupancy fell 0.7 percentage points. The average room rate decreased 3.2 percent over-the-year, falling by $4.22 per night.

Metro Denver Hotel Statistics

Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Jan-19 Dec-18 Jan-18 2019 2018 % Change 2014 2009 Percent of Hotel Rooms Occupied 60.5% 54.4% 61.2% 60.5% 61.2% -0.7% 75.8% 59.0% Average Hotel Room Rate $126.48 $115.31 $130.70 $126.48 $130.70 -3.2% $124.37 $106.85

Source: Rocky Mountain Lodging Report.

The Federal Aviation Administration ranked Denver International Airport (DEN) as the fifth-busiest airport in the nation. DEN’s 2018 traffic ranked behind O’Hare International Airport in Chicago, Hartsfield-Jackson Atlanta International Airport, Los Angeles International Airport, and Dallas Fort-Worth International Airport.

Spokespeople for Denver International Airport (DEN) reported that over 5.2 million passengers passed through the airport in December, an increase of 5.5 percent from the previous year, or an additional 272,973 passengers. However, the December level was 1 percent lower than the previous month.

Denver International Airport Passengers

Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual Dec-18 Nov-18 Dec-17 2018 2017 % Change 2013 2008 Number of Airline Passengers 5,223,597 5,274,999 4,950,804 64,494,613 61,379,396 5.1% 52,556,359 51,245,432

Source: Denver International Airport, Traffic Statistics.

Residential Real Estate The Lanterns, a master-planned community in Castle Rock, will add 1,200 single-family detached homes, including 664

age-restricted units. Toll Brothers Land Development plans to incorporate 13 miles of trail and a link to the Front Range Regional Trail system, a multi-state trail system along the Front Range. Construction is planned to begin in May.

The new owner of the former AT&T campus in Denver’s Elyria-Swansea neighborhood, acting as Iselo 40th Avenue LLC, wants to redevelop the 14-acre site to incorporate approximately 760 residential units, including 60 to 70 income-restricted units, as well as a 500-seat performance venue that would be the home of the Wonderbound ballet company. The project, dubbed “Smokestack 40,” would repurpose the existing 235,000-square-foot building currently on-site and provide new construction on the large parking lot to the east. Assuming the site’s rezoning is approved, the project could break ground by year-end and likely would be a three-year development process.

Ludlow Subdivision, planned for a 53-acre property in Longmont, will be a new residential neighborhood consisting of 413 condos and townhomes and 42 single-family homes, as well as a 266-unit apartment community. The location is situated next to the UCHealth employment center and Fox Hill Club.


Charleston, S.C.-based apartment developer Greystar is about six months from completion of the Parq on Speerapartment building. The 16-story building’s 301 units — 38 studios, 124 one-bedroom apartments, 101 two-bedrooms,16 three-bedrooms, 16 penthouses, and four townhomes — range in size from around 540 square feet to more than3,400 square feet. All units offer high-end, luxury finishes with studio rents start at $1,600 per month. Parq on Speerwill also include 50,000 square feet of amenities including a pool deck and a covered dog park.

UDR, a Highlands Ranch-based developer, plans to build an apartment complex at 1570 N. Grove Street and 3030 W.16th Avenue, located just west of the Mile High Stadium. The complex will be seven stories tall and will include 285units and 350 parking spaces.

Crescent Communities has proposed a 260-unit apartment complex, with a pool and fitness center, for the formerWhite Fence Farm property in Lakewood. Developers plan to preserve the barn that may be turned into a communityarea for future residents. White Fence Farm closed toward the end of 2018 after operating since 1973.

Shea Properties is in the preliminary planning stages of building an affordable senior housing complex next door to theJames H. LaRue library, at the corner of Ridgeline Boulevard and Dorchester Street in Highlands Ranch. Construction ofthe four-story building with 130 units is expected to begin in 2020. Using low-income housing tax credits, the propertywould provide affordable housing for residents 55 and older who earn 60 percent of Douglas County's median income.

Unison Housing Partners, the housing authority in Adams County, received approval for its preliminary developmentplan and preliminary plat for a 116-unit housing development at the old Adams County Child and Family ServicesCenter site in unincorporated Adams County at 7401 Broadway. Twelve of the units will be for young people who wereonce in the foster system. Raised garden beds, two playgrounds, a basketball court, a barbecue area, and rooftop areamong the planned amenities.

Austin-based PSW Real Estate plans to build a multi-story condo project in the Five Points neighborhood. At fivestories, the project would include at least 90 for-sale condo units, and as many as 115. Two-bedroom units would rangein size from 800 square feet to 1,030 square feet. Those units would cost about $600 to $630 per square foot. An entireunit would likely stay under $650,000.

A 1940s-era nursing residence on Sloan Lake on the old St. Anthony’s Hospital campus has been converted into a 49-unit apartment building, called Sienna on Sloans Lake, reserved for people earning no more than 60 percent of the areamedian income.

Speer Development Group LLC has purchased a vacant single-story office building at 2881 N. Speer Blvd. and plans tobuild a five-story, 36-unit apartment building at the site. Records show the plan is still under review.

Construction is complete on the Yale 25 Station apartments located at 5121 E. Yale Ave. in Denver. Yale Station is afive-story, 186,500-square-foot transit-oriented apartment complex. The property offers one- and two-bedroomapartment units as well as a host of amenities including a community center, arts and crafts room, picnic area, andunderground parking.


Home Resales

Metro Denver

Metro Denver existing home sales decreased 14 percent between December and January. Over-the-year, home sales decreased 3.8 percent as the market continues to cool.

Unsold homes on the market were 5.5 percent higher in January than December and were 52 percent higher than January 2018. Compared with last year, there were 2,012 additional homes on the market.

The average sales price for single-family homes decreased 0.3 percent over-the-year to $476,651, while the average sales price of condominiums ($304,624) increased 6.3 percent during the same period.

Previously-Owned Home Sales Activity Month of Month of Month of YTD Total YTD Total YTD Total Ann Total Ann Total

Jan-19 Dec-18 Jan-18 2019 2018 % Change 2014 2009 Home Sales (Closed) 3,170 3,686 3,294 3,170 3,294 -3.8% 54,068 42,070

Unsold Homes on Market 5,881 5,577 3,869 5,881 3,869 52.0% 6,744 19,762 Average Sales Price-Single Family $476,651 $489,602 $478,098 $476,651 $478,098 -0.3% $363,604 $264,803 Average Sales Price-Condo $304,624 $301,944 $286,521 $304,624 $286,521 6.3% $224,997 $159,628 Median Sales Price-Single Family $403,750 $401,900 $396,800 $306,000 $219,000 Median Sales Price-Condo $260,000 $258,000 $254,600 $180,000 $135,000

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

National

Total existing-home sales experienced a minor drop for the third consecutive month in January according to the National Association of Realtors (NAR). Total existing home sales decreased 1.2 percent from December to a seasonally adjusted annual rate of 4.94 million in January. Sales are now down 8.5 percent from a year ago (5.4 million in January 2018).

Total housing inventory at the end of January increased to 1.59 million, up from 1.53 million existing homes available for sale in December, and an increase from 1.52 million a year ago. Unsold inventory is at a 3.9-month supply at the current sales pace, up from 3.7 months in December and from 3.4 months in January 2018.

Properties remained on the market for an average of 49 days in January, up from 46 days in December and 42 days a year ago. Thirty-eight percent of homes sold in January were on the market for less than a month.


Home Prices

NAR data shows that the median existing-home price for all housing types in January was $247,500, up 2.8 percent from January 2018 ($240,800). January’s price increase marks the 83rd straight month of year-over-year gains. The median price in the Northeast was $270,000, which was up 0.4 percent from January 2018. In the Midwest, the median price was $189,700, up 1.4 percent from last year. The median home price in the South was up 2.5 percent to $214,800, while the median price in the West was $374,600, up 2.9 percent from January 2018.

A separate NAR report revealed that the median price in the Boulder MSA ($592,300) during the fourth quarter of 2018 was 2 percent lower over-the-quarter but was 8.4 percent higher over-the-year. The Denver-Aurora MSA ($438,300) was 2.6 percent lower than the third quarter but was 5.8 percent above the year-ago level.

The national median sales price during the fourth quarter of 2018 decreased 3.3 percent over-the-quarter to $257,600 but was 4 percent higher than the previous year’s level.

Median Sales Price of Existing Single-Family Homes ($000s) Quarter 4 Quarter 3 Quarter 4 YTD Avg YTD Avg YTD Avg Median Median

2018 (p) 2018 (r) 2017 2018 2017 % Change 2013 2008 Boulder MSA $592.3 $604.2 $546.4 $607.4 $566.1 7.3% $371.8 $359.6 Denver-Aurora MSA $438.3 $450.1 $414.4 $449.9 $414.7 8.5% $280.6 $219.3 United States $257.6 $266.5 $247.8 $261.6 $248.8 5.1% $197.4 $196.6

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

Of the 178 MSAs included in the fourth quarter 2018 report, the Boulder MSA reported the sixth-highest median price, while the Denver-Aurora MSA median price was the 11th-highest.

According to the S&P/Case-Shiller home price index, Denver housing prices depreciated in December, after a slight decrease in November. The Denver index decreased 0.14 percent over-the-month to 215.13. However, the index rose 5.5 percent over-the-year. Home prices continue to outpace wage gains. A decline in interest rates in the fourth quarter was not enough to offset the impact of rising prices on home sales.

Las Vegas (+11.4 percent), Phoenix (+8 percent), and Atlanta (+5.9 percent) recorded the largest increases over-the-year. Denver tied for fourth place with Minneapolis (+5.5 percent).

San Diego (+2.3 percent), Washington, D.C. (+2.7 percent), and Chicago (+3 percent) recorded the smallest increases over-the-year.

The national home price index decreased over-the-month by 0.1 percent but rose 4.7 percent over-the-year, showing that the rate of home price increases across the U.S. slowed for the eighth month in a row.


Foreclosures

Foreclosures in Metro Denver fell 3.1 percent or by 7 fewer homes foreclosed between December 2017 and December2018. Four of the seven counties in Metro Denver reported decreases in the number of foreclosures over-the-year.Boulder County reported the largest decrease in foreclosures, falling 33.3 percent, followed by the City and County ofDenver (-28.1 percent), and Douglas County (-16.7 percent). Jefferson County, Adams County, and Broomfield Countyall reported increases over-the-year. Adams and Jefferson Counties each rose by 11 filings, and the City and County ofBroomfield rose from zero filings last year to two filings this year.

Real Estate Foreclosures

Month of Month of Month of YTD Total YTD Total YTD Total Annual Total Annual Total Dec-18 Nov-18 Dec-17 2018 2017 % Change 2013 2008

Total Metro Denver* 221 193 228 2,725 2,982 -8.6% 7,520 24,727 Adams County 58 50 47 637 672 -5.2% 1,636 5,629 Arapahoe County 46 41 52 638 706 -9.6% 1,700 5,860 Boulder County 10 8 15 124 170 -27.1% 387 984 Broomfield County 2 3 0 42 39 7.7% 109 260 Denver County 41 36 57 538 648 -17.0% 1,616 6,145 Douglas County 20 23 24 278 265 4.9% 769 2,180 Jefferson County 44 32 33 468 482 -2.9% 1,303 3,669 *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.

Between November and December, two counties reported decreases in foreclosure filings, Douglas County (-3 filings)and Broomfield County (-1 filing). Jefferson County reported the largest increase, rising by 12 foreclosure filings,followed by Adams County (+8 filings). Jefferson County and Boulder County reported the largest percentage increasesover-the-month, rising by 37.5 percent and 25 percent, respectively.

New Home Sales

Sales of new single-family homes in Novemberwere at a seasonally adjusted annual rate of657,000, according to estimates released by theU.S. Census Bureau and the Department ofHousing and Urban Development. This was 16.9percent above the revised October rate of562,000 and 7.7 percent below the November2017 estimate of 712,000.

Between November 2017 and 2018, three of thefour regions reported decreases in home sales.The West reported the largest decrease, falling25.9 percent over-the-year to 160,000 homessold. The Midwest fell 2.5 percent to 77,000homes, followed by the South (-0.8 percent).The Northeast reported the only increase, rising15 percent between November 2017 andNovember 2018.


New Home Construction

National Builder confidence for newly built single-family homes remained unchanged at a healthy 72 level in February on the

National Association of Home Builders/Wells Fargo Housing Market Index (HMI). Builders are excited about the pro-business political climate that will strengthen the housing market and support overall economic growth. However, they need to manage supply-side construction hurdles, such as shortages of labor and lots and building material price increases. With ongoing job creation, increasing owner-occupied household formation, and a tight supply of existing home inventory, the single-family housing sector should continue to strengthen at a gradual but consistent pace.

According to the Census Bureau, the seasonally adjusted annual number of nationwide residential building permits increased 0.3 percent in December (1.3 million permits) from November and increased 0.5 percent over-the-year.

Only one of the three market types increased between November and December, with multifamily permits increasing 5.7 percent. The number of single-family detached permits decreased 2.2 percent and the single-family attached market fell 5.1 percent during the same period.

Between December 2017 and December 2018, multifamily units rose to 460,000 permits, an increase of 13.6 percent. Single-family detached units fell 5.5 percent to 829,000 permits, while single-family attached units fell to 37,000 permits, a decrease of 2.6 percent.

The Midwest and Northeast reported decreases over-the-year, falling 34.1 percent and 23.6 percent, respectively. The number of permits issued in the South increased 16.8 percent and the West increased 4.4 percent.

Metro Denver

Residential building permits for the Metro Denver area increased 116 percent in December 2018 compared with the same month last year.

Multifamily units reported the largest increase over-the-year, rising 586 percent from only 294 units in December 2017 to 2,016 units in December 2018. Single-family attached units increased from 0 last year to 18 this year. Single-family detached units decreased 23.6 percent during the same period.

The number of residential units permitted in Metro Denver increased 26 percent from November to December due to a 54.7 percent increase in multifamily units. Single-family attached units decreased 28 percent and single-family detached units fell 14.3 percent.

Residential Building Permits

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

Dec-18 Nov-18 Dec-17 2018 2017 % Change 2013 2008 Single-Family Detached Units 764 892 1,000 12,174 11,277 8.0% 7,396 4,037 Single-Family Attached Units 18 25 0 392 347 13.0% 399 224 Multi-Family Units 2,016 1,303 294 11,487 12,095 -5.0% 9,145 5,296 Total Units 2,798 2,220 1,294 24,053 23,719 1.4% 16,940 9,557

Source: U.S. Census Bureau.

Apartment Rental Market

The volume of multi-family investment transactions across the U.S. in 2018 reached a historic high of $167.5 billion and increased 15.1 percent from the year before, according to a new report from commercial real estate firm JLL. A total of


$5.3 billion was invested in Metro Denver, which reflected a 22.2 percent decline over the 2017 level. Denver ranked as the eighth most active multifamily investment market, with New York, Dallas, and Los Angeles taking the top three spots.

Metro Denver had the largest percentage increase during the past decade of any major metropolitan area in the number of households who rented and made $100,000 or more a year, according to a new study from Apartment List. The number of renter households in metro Denver earning that level of income increased 146 percent between 2008-17. Nationally, the increase was 48 percent.

Apartment construction continues to thrive, with another 52,000 units that are currently under construction or in the planning stages. The region added 12,324 new apartments last year and 13,348 the year before. The last few years have been significantly higher than the average of 4,534 units per year over the last three decades, though demand has kept up with the fast pace of supply. Last year, Metro Denver residents absorbed 13,707 apartments last year, more than the number constructed.

The apartment vacancy rate throughout Metro Denver increased in the fourth quarter of 2018, rising 0.3 percentage points to 5.8 percent from the third quarter of 2018, translating into roughly 20,000 vacant apartments. However, the average vacancy rate decreased over-the-year by 0.6 percentage points. Vacancy rates ranged from 4.8 percent in the Douglas County submarket to 6.6 percent in the Denver submarket. Douglas County reported a 5.3 percentage point decrease in the vacancy rate between the fourth quarter of 2017 and the fourth quarter of 2018, which was the result of a market correction after new units delivered to the market last year. Vacancy rates fell over-the-year in five of the six submarkets, with the largest decreases reported by Jefferson County (-1.4 percentage points) and Adams County (-0.9 percentage points). Arapahoe County reported the only increase, rising 0.9 percentage points during the period.

The average monthly rental rate of apartments in Metro Denver decreased over-the-quarter in four of the six submarkets in the fourth quarter of 2018. The average rental rate ranged from $1,384 in Adams County to $1,589 in the Boulder/Broomfield County submarket.

Apartment Statistics

Quarter 4 Quarter 3 Quarter 4

YTD Average

YTD Average

YTD Average

Annual Average

Annual Average

2018 2018 2017 2018 2017 % Change 2013 2008 Apartment Vacancy Rate 5.8% 5.5% 6.4% 5.9% 5.6% 4.6% 6.6% Average Monthly Rental Rate (all units) $1,456 $1,465 $1,396 $1,456 $1,403 3.8% $1,026 $882

Source: Denver Metro Apartment Vacancy and Rent Survey.

Commercial Real Estate Across the U.S., commercial and multifamily construction starts in 2018 totaled $212.4 billion, up 4 percent over 2017

according to New York-based Dodge Data & Analytics. Metro Denver, which ranked No. 17 overall, saw a 23 percent drop last year, from $3.6 billion in 2017 to $2.8 billion in 2018. The report examined construction starts for new office buildings, stores, hotels, warehouses, commercial garages, and multifamily housing.

More than $805 million in foreign capital was invested into Denver’s real estate market last year. This was not only the biggest year on record for foreign investment, but it also marked a shift in how foreign companies are spending their dollars in the market. Denver has risen in popularity among international investors over the last decade, with total investments from such companies increasing by 550 percent to $691 million in 2017, the previous record, from $106 million in 2007. The parameters and criteria for foreign capital investment in the Denver area are increasing to include not only new, transit-oriented, properties, but also older properties in areas that are not necessarily up-and-coming.

Denver-based developer Nichols Partnership has purchased a 1.45-acre lot at 1701 Platte Street where it plans a five-story project. The 252,000-square-foot building dubbed One Platte will have about 12,000 square feet of retail space


on the first floor and office space above. The company hopes to break ground in fall 2019, but the timing will depend upon pre-leasing activity. The expected 27-month build would be completed at the end of 2021.

The Opus Group has started construction on a 151,405-square-foot industrial building located in Thornton. The building is the first phase of North Washington Commerce Center, a multi-tenant park located at the southeast corner of 128th Avenue and Washington Street that will offer a variety of sizes, clear height, and loading options. The first phase will offer 24 dock positions (expandable to 26), six drive-in doors, and 303 parking stalls. The first building is slated for completion in summer 2019.

Tennessee-based Southern Land Company and its financial partner, New York-based GTIS Partners, broke ground on a six-acre mixed-use development in Boulder. Called Rêve Boulder, it is located on the southeast corner of 30th Street and Pearl Parkway across from Google's Boulder campus. The development will include 242 residences, 24,500 square feet of retail space, and over 120,000 square feet of office space slated to be completed by summer 2021. Forty percent of the site will be dedicated to open space. The 242 residences will include options ranging from micro-sized to three-bedroom apartments, as well as townhomes.

Revolution 360 LLC is partnering with Haselden Construction to develop Rev360, a mixed-use building in the River North district. The five-story office and retail development is slated to break ground in the second quarter of 2019 and is already 50 percent preleased. Rev360 is anticipated to deliver in the third quarter of 2020.

Pure Strike Development, based in Bryan, Texas, has submitted plans to the city of Littleton to build a five-story, 120-room Woodspring Suites hotel at 5280 South Santa Fe Drive. The hotel would feature an inviting lobby and guest area, fitness room, and guest laundry facility.

A new development is planned for the former Briarwood Inn property in Golden. The developer, Basecamp, LLC, proposed a 48-room lodge/hotel and two 36-unit apartment buildings, including 10 early-start allocations for affordable housing. The development will include a total of 122 parking spaces on site for the residential building and 49 spaces for the lodge/hotel.

UCHealth University of Colorado Hospital plans to build an 11-story tower at its Anschutz Medical Campus location in Aurora. The addition will cost roughly $388 million and will add 103 inpatient beds. Construction on the tower, which will begin this year, is expected to be complete by 2022. The expansion will add beds to the intensive care unit along with medical and surgical beds. The project will also include nine operating rooms, and space for renovations or expansions in other parts of the hospital, including the emergency department.

Regis University plans to expand its athletic facilities with a $1.4 million indoor practice facility. The Berce Athletic Center, which will break ground in July, will be an approximately 24,000-square-foot air dome. The dome will house two full-sized basketball courts, volleyball courts, a weight-and-fitness area, and a film room. The facility will be completed in November.

The Denver Zoo recently broke ground on a new, state-of-the-art animal hospital with planned completion in early 2020. The new 22,000-square-foot facility will include one of the country’s only animal CT scanners along with other advanced technologies designed to increase animal welfare. The new hospital will replace the zoo’s 51-year-old clinic.

Office Market

According to Newmark Knight Frank, the fourth quarter 2018 Denver office market reported 578,509 square feet of net absorption, boosting absorption for the entire year to 2.8 million square feet. The market has not realized this level of annual absorption since the pre-recession year of 2006. There is already strong activity planned for the next 12 to 18 months and development continues at a measured pace, setting the stage for continued expansion of Denver’s office market.

Marketview by CBRE reported that over 815,000 square feet of office construction broke ground in Metro Denver in 4Q 2018, with new suburban projects accounting for 66.9 percent of all new construction starts. Overall, the Downtown


submarket led construction activity with 1.2 million square feet currently underway. With just 26.1 percent of speculative construction preleased throughout Metro Denver, increased vacancy is a concern for existing properties.

The Metro Denver office market reported positive trends for the fourth quarter of 2018. According to CoStar Realty data, the direct vacancy rate fell 0.5 percentage points over-the-year to 9 percent vacancy. The average lease rate rose by $0.01 between the fourth quarters of 2017 and 2018, reaching $26.62 per square foot during the period.

Office Market Statistics

Quarter 4 Quarter 3 Quarter 4 Quarter 4 Quarter 4 Quarter 4 2018 2018 2017 2016 2015 2014

Number of Buildings 6,368 6,363 6,334 6,293 6,257 6,223 Existing Square Feet (millions) 191.5 190.7 187.7 184.4 182.9 180.6 Vacant Square Feet (direct, millions) 17.3 17.9 17.8 16.7 17.2 18.1 Vacancy Rate (direct) 9.0% 9.4% 9.5% 9.1% 9.4% 10.0% Vacancy Rate (with sublet) 9.9% 10.2% 10.4% 9.9% 10.0% 10.6% Avg. Lease Rate (direct, per sq. foot, full service) $26.62 $26.64 $26.61 $25.70 $24.68 $23.39 New Construction Completed (year-to-date) 3.83 MSF,

33 Bldgs 2.95 MSF,

25 Bldgs 3.00 MSF,

38 Bldgs 1.36 MSF,

28 Bldgs 2.08 MSF,

27 Bldgs 1.16 MSF,

23 Bldgs Currently Under Construction 4.12 MSF,

46 Bldgs 4.36 MSF,

45 Bldgs 5.11 MSF,

43 Bldgs 5.91 MSF,

45 Bldgs 3.18 MSF,

33 Bldgs 2.85 MSF,

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

Office construction in Metro Denver was robust during the fourth quarter of 2018. There was 3.83 million square feet of space completed across 33 buildings by the end of the fourth quarter 2018. Two of the largest office buildings completed in 2018 included the 672,000-square-foot 1144 Fifteenth Class A high rise-office building and the 428,219-square-foot 16 Chestnut office building in Denver. Sixty-six percent of the completed office space was in the City and County of Denver.

There was 4.12 million square feet of space under construction at the end of the fourth quarter of 2018, a 19.4 percent decrease in space under construction compared with the same time last year. Of this space, the largest project in terms of square footage was the Block 162 tower, which will be adding 566,050 square feet of office space to the Denver market. The next largest project currently under construction is the 4120 Brighton Blvd. office building. Of the office space under construction, 75.8 percent was in the City and County of Denver.

Industrial & Flex Market

According to Newmark Knight Frank, the Metro Denver industrial market ended the fourth quarter with annual absorption reaching a record-breaking 4.8 million square feet, the highest since pre-recession 2006. A significant portion of the absorption was due to pre-leasing in new deliveries, but the majority came from leases occupying second-generation space. Overall, 2019 is unlikely to reach the heights of 2018. The continued steady delivery of new product, along with current space available, is likely to keep up with demand. High construction costs and limited availability of sites for new development will keep the market from becoming over-built.

Marketview by CBRE reported that the Metro Denver industrial market continued its streak of positive net absorption for the 35th consecutive quarter. Developers remain active in the market with several sizeable planned speculative projects expected to break ground soon. The average annual lease rate pushed to an all-time high level before cooling in 4Q 2018, indicating stabilizing lease rates. Overall, continued demand, leasing activity, and new construction indicate a robust industrial market.

CoStar data revealed that the industrial market remains healthy through the fourth quarter of 2018. The fourth quarter direct vacancy rate was 0.2 percentage points higher than the same period last year. The average lease rate rose 3.9 percent between the third quarters of 2017 and 2018, adding $0.30 per square foot to the average lease rate.

There was 5.75 million square feet of industrial space completed across 34 buildings as of the end of the fourth quarter of 2018 as industrial construction continued at a healthy pace. Major completed projects included the new Amazon


distribution center in Thornton, adding 2.4 million square feet of industrial space, as well as a 701,900-square-foot distribution center in Majestic Commercenter in Aurora. Adams County welcomed nearly 79 percent of the completed industrial space through the fourth quarter of 2018, or 3.31 million square feet.

There were 35 buildings with over 4.6 million square feet of space under construction during the period, including 555,840 square feet for the First Aurora Commerce Center. As with completed space, most of the space currently under construction is in Adams County, or 66 percent of the square footage.

Industrial Market Statistics


Number of Buildings 7,087 7,080 7,053 7,005 6,977 6,965 Existing Square Feet (millions) 220.4 218.4 216.2 210.8 206.5 204.9 Vacant Square Feet (direct, millions) 9.1 9.1 8.4 8.0 6.3 6.2 Vacancy Rate (direct) 4.1% 4.2% 3.9% 3.8% 3.1% 3.0% Vacancy Rate (with sublet) 4.4% 4.4% 4.0% 4.1% 3.3% 3.2% Avg. Lease Rate (direct, per square foot, NNN) $8.05 $7.89 $7.75 $7.47 $7.05 $6.04 New Construction Completed (year-to-date) 5.75 MSF,

34 Bldgs 2.39 MSF,

26 Bldgs 5.32 MSF,

45 Bldgs 4.51 MSF,

30 Bldgs 1.37 MSF,

7 Bldgs 2.60 MSF,


35 Bldgs 6.71 MSF,

33 Bldgs 4.97 MSF,

25 Bldgs 2.33 MSF,

29 Bldgs 2.97 MSF,

17 Bldgs 1.35 MSF,


The Metro Denver flex market recorded falling vacancy rates and increasing average lease rates through the fourth quarter of the year. According to CoStar, the direct vacancy rate for flex space fell 0.6 percentage points to 5.2 percent between the fourth quarters of 2017 and 2018. The average lease rate rose 0.3 percent over-the-year to $12.07 per square foot.

There was 442,793 square feet of new space completed as of the end of the fourth quarter of 2018, including 133,122 square feet of flex space in the Interpark industrial development in Broomfield. Nine buildings offering 432,526 square feet of new flex space were under construction at the end of the fourth quarter, with the largest project located in Broomfield County, adding 152,761 square feet of flex space.

Flex Space Statistics



8 Bldgs 0.35 MSF,

7 Bldgs 0.56 MSF,

12 Bldgs 0.24 MSF,

6 Bldgs 0.50 MSF,

7 Bldgs 0.57 MSF,


9 Bldgs 1.22 MSF,

13 Bldgs 0.18 MSF,

8 Bldgs 0.39 MSF,

8 Bldgs 0.22 MSF,

4 Bldgs 0.32 MSF,


Retail Market

Newmark Knight Frank’s 4Q 2018 Denver Retail Market Overview reported that absorption in the fourth quarter was 81,722 square feet, bringing full year absorption to 771,748 square feet. Because of limited supply, there is high demand for second-generation space in well-located, Class A retail centers, which are full and thriving. The “death of retail” has been greatly exaggerated, and 2019 is expected to be a year of evolution and opportunity


for retailers nimble enough to develop viable, new business models with emphasis on customer experience, technology tools, and rightsizing brick and mortar stores.

According to CBRE’s Marketview, Metro Denver’s fourth quarter 2018 retail market remained healthy as net absorption was unaffected by national retailer bankruptcies, store closures, and e-commerce disruptions. Annual net absorption in 2018 more than doubled compared to year-end 2017 but was not as high as net absorption in 2016. Owners are adapting to changing consumer preferences by overhauling existing shopping centers with more entertainment and medical service options. Vacant big-box spaces continue to be redeveloped or absorbed by segments that are outperforming benchmarks, including fitness, discount, and value retailers.

The Metro Denver retail market reported a falling vacancy rate and an increase in the average lease rate over-the-year through the fourth quarter of 2018, according to CoStar Realty data. The direct vacancy rate fell 0.2 percentage points to 4.1 percent between the fourth quarter of 2017 and the fourth quarter of 2018, while the average lease rate for retail space rose 5.2 percent over-the-year, adding $0.95 per square foot during this same period.

Retail Market Statistics



113 Bldgs 0.84 MSF,

78 Bldgs 1.62 MSF, 101 Bldgs

1.32 MSF, 90 Bldgs

1.16 MSF, 66 Bldgs

0.59 MSF, 51 Bldgs

Currently Under Construction 0.97 MSF, 53 Bldgs

1.57 MSF, 69 Bldgs

1.46 MSF, 60 Bldgs

1.19 MSF, 51 Bldgs

0.94 MSF, 43 Bldgs

0.87 MSF, 37 Bldgs

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

There were 53 buildings under construction during the fourth quarter of 2018, totaling 968,461 square feet. Some of the largest projects under construction included the 185,000-square-foot 9th & Colorado Retail project located on the former campus of the University of Colorado Health Sciences Center and Vista Highlands in Broomfield, which will offer 96,500 square feet of retail space.

There was 1.59 million square feet of new retail space completed in 2018, located in 113 buildings. The Denver Premium Outlets in Thornton (330,000 square feet) and the King Soopers in the Candelas neighborhood of Arvada (140,000 square feet) were the largest spaces completed.


Monthly Economic Indicators

Positive Changes

4,100 36,500 42,700

22% 22% 22%

3.7% 0.9 percentage point 3.0%

6.6% -14.3% -10.2%

3.5% 4.8% 5.3%

139.5 6.2% 134.8

60.5% -0.7 percentage point 60.5%

-1.0% 5.5% 5.1%

522.3 9.7% 13.4%

25,916.0 3.5% 11.1%

3,170 -3.8% 3,170

$438,300 5.8% $449,900

221 -3.1% 2,725

2,798 116.2% 24,053

Permits increased 26% from Nov to Dec

Permits up Dec 2017 to 2018YTD permits up 1.4% through

Dec 2018

ForeclosuresUp 14.5% from Nov to Dec Down from Dec 2017 to 2018 Down 8.6% YTD through Dec 2018

Residential Building Permits (Total)

Home Sales (closed)Sales down 14% between Dec and Jan Sales down from Jan 2018 to 2019 YTD sales down 3.8% through Jan 2019

Median Home Price (Denver-Aurora MSA)

Down 2.6% from 3Q 2018 to 4Q 2018 Price up from 4Q 2017 to 4Q 2018 YTD price 8.5% higher through 4Q 2018

Bloomberg Colorado IndexIndex up 2.6% from Jan to Feb Index up from Feb 2018 to 2019 YTD return up through Feb 2019

Dow Jones Industrial AverageIndex up 3.7% from Jan to Feb Index up from Feb 2018 to 2019 YTD return up through Feb 2019

Hotel OccupancyIncreased 6.1 percentage points from Dec

to JanOccupancy decreased from Jan 2018 to

Jan 2019YTD occupancy decreased 0.7 percentage

points from last year

Denver International Airport PassengersPassengers down from Nov to Dec Passengers up from Dec 2017 to 2018

YTD passengers increased through Dec 2018

Total National Retai l SalesNational sales increased from Oct to Nov

National sales increased from Nov 2017 to 2018

YTD sales rose through Nov 2018

Mountain Region Consumer Confidence IndexIndex up 7.2% from Jan to Feb Index up from Feb 2018 to 2019 YTD average up 6.4% through Feb 2019

Unemployment RateUnemployment up 0.5 percentage points

between Nov and DecUnemployment increased from Dec 2017

to 2018Up 0.3 percentage points from 2017 YTD

average

Initial Unemployment Insurance ClaimsClaims increased from Nov to Dec Claims decreased from Dec 2017 to 2018

YTD average claims decreased through Dec 2018

Nonfarm Employment GrowthEmployment up 0.2% from Nov to Dec

Employment up 2.2% from Dec 2017 to 2018

YTD employment up 2.6% through Dec

% Companies Hiring (Denver Area) Companies expecting to add workers fel l

3 percentage points from 4Q 2018 to 1Q 2019

Companies expecting to add workers fell 1 percentage point from 1Q 2018 to 1Q

2019

YTD average down 1 percentage point compared with 2018

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

9 of 18 13 of 18 12 of 18


5.8% -0.6 percentage point 5.9%

Vacancy increased 0.3 percentage points from 3Q

2018 to 4Q 2018

Vacancy decreased from 4Q 2017 to 4Q 2018

YTD average up 0.3 percentage points from last year

9.9% -0.5 percentage points -0.5 percentage points

Vacancy rate decreased from 3Q 2018 to 4Q 2018

Vacancy rate down from 10.4% one year ago

Vacancy rate down from 10.4% one year ago

4.4% +0.4 percentage points +0.4 percentage points

Vacancy rate unchanged from 3Q 2018 to 4Q 2018

4Q 2018 vacancy up from 4% one year ago

4Q 2018 vacancy up from 4% one year ago

4.3% -0.2 percentage points -0.2 percentage points

Vacancy rate decreased 0.2 percentage points from 3Q

2018 to 4Q 2018

4Q 2018 vacancy down from 4.5% one year ago

4Q 2018 vacancy down from 4.5% one year ago

Office Vacancy Rate (with Sublet)

Industrial Vacancy Rate (with Sublet)

Retail Space Vacancy Rate (with Sublet)

Apartment Vacancy Rate

Economic and Demographic Research

Industry Studies

Fiscal and Economic Impact Analysis

Real Estate Economics

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