metro denver economic summary

Monthly Economic Summary

A Monthly Summary of Economic Conditions in Metro Denver (Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, and Jefferson Counties)

Released May 7, 2013

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MONTHLY ECONOMIC SUMMARY

The Monthly Economic Summary 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-Broomfield 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 sections: labor force and employment, the consumer sector, residential real estate, and commercial real estate.

Notable Rankings The State Competitive Index, published by the Beacon Hill Institute, showed Colorado slipping three places to

6th in this year’s index. Massachusetts, North Dakota, Minnesota, South Dakota, and Utah were placed above Colorado in the rankings. The rankings are based on 43 factors related to government, security, infrastructure, human resources, technology, business incubation, openness, and environmental policy.

The Small Business and Entrepreneurship Council released its Business Tax Index 2013, ranking Colorado as the 8th best state for taxes on entrepreneurship and small businesses. It is up two spots from the state’s 2012 ranking. Twenty-one different tax measures were used to compile the rankings, including the top personal income tax rate, the top individual capital gains tax rate, the top tax rate on dividends and interest, the corporate income tax rate, and the top corporate capital gains tax rate. The highest-ranked state was Texas, followed by South Dakota and Nevada.

Colorado received an “A” grade for its business-friendly environment from Thumbtack.com. The rating was based on a new survey of 7,000 small business owners across the nation through a partnership with the Kauffman Foundation. Colorado improved from its previous grade of “B+” based on factors such as starting a business, hiring costs, regulation, taxes, and the availability of training and networking programs. Cities were also given grades, with Denver receiving an “A-“ grade and Colorado Springs receiving an “A” grade.

A new study released by the U.S. Chamber of Commerce, the Enterprising States report, showed Colorado as a top three state for supporting innovation. The study looked at five measures including exports and international trade, entrepreneurship and innovation, business climate, talent pipeline, and infrastructure. Each state was also measured and ranked on overall economic climate and growth. Along with Colorado, Maryland and Virginia were also in the top three. The report noted that Colorado has a high concentration of high-tech businesses and ranks 4th in the country for the number of new businesses.

American Express OPEN released a study, “State of Women-Owned Businesses Report,” which used U.S. Census Bureau surveys to determine the number of women-owned firms in an area. Colorado ranked 23rd among states, with an increase of 54.2 percent over the past 16 years to an estimated 177,000 businesses. The average U.S. increase during the 16 years was 59.1, showing Colorado lagged slightly behind the national average. The women-owned businesses in Colorado reportedly brought in $25.9 billion in annual sales, an increase of 88.4 percent from the number 16 years prior.

CareerBuilder ranked Denver as the 6th best city for college graduates looking for a job. The ranking was determined by the amount of job listings for entry-level positions in March compared with year-ago listings. Entry-level positions were defined as jobs that required two years of experience or less and required a two- or four-year college degree or equivalent. Denver listings increased 25 percent over-the-year, 7 percentage points below the 32 percent increase that the first place city, Phoenix, reported.

According to a report from the Solar Foundation, Colorado ranks 6th in the nation for solar-related jobs. The report showed the state has 3,600 direct solar jobs mainly in installation and manufacturing. Colorado has 266

Metro Denver Economic Development Corporation Released May 7, 2013


solar companies and ranks 5th in the nation for the number of homes powered by solar. The number one state for jobs was California, followed by Arizona.

Rigzone ranked Denver as the 3rd best city in the world for oil and gas industry careers. The ranking was determined by a survey of nearly 8,000 oil and gas professionals and took into account the state of the industry and amenities available during non-working hours. Denver was the only U.S. city in the top ten and was ranked behind Dubai, United Arab Emirates (1st) and Calgary, Alberta (2nd).

According to a Gallup survey, the Denver-Aurora metropolitan area ranked 2nd for the percent of residents that felt safe walking the streets. Denver-Aurora tied with Raleigh-Cary, NC and was behind Minneapolis-St. Paul, MN. The survey results showed 78 percent of those polled in the Denver-Aurora area feel safe, while Minneapolis-St. Paul showed slightly more (80 percent). The data were collected continuously throughout 2012 for the 50 largest metropolitan areas.

Castle Rock and Parker were named two of the 100 safest cities in the country by Neighborhood Scout. Castle Rock was ranked 32nd and Parker 50th. The rankings included cities with a population of 25,000 or more and were based on the total number of crimes reported to the Federal Bureau of Investigation in the past year.

Forbes listed Cherry Hills Village as 3rd on its list of the “Top 25 Places to Retire Rich.” The rankings began with areas that had a higher than average percentage of residents older than 65. Then, areas with higher incomes and median household incomes were ranked based on factors like scenic beauty, weather, and cultural, medical, and airport facilities. Belle Meade, Tennessee and Bunker Hill Village, Texas took the top two spots.

Colorado was ranked 2nd on the League of American Bicyclists’ list of the most bicycle friendly states. The state was up two spots from last year’s list. States were ranked on legislation, policies, infrastructure, education, and planning. Colorado rated highest in the areas of legislation and enforcement and lowest on infrastructure and funding and evaluation and planning. The top state was Washington for the second year in a row.

Policy Watch National & International

The latest International Monetary Fund World Economic Outlook forecasts world output growth to reach 3.3 percent in 2013 and 4 percent in 2014. With the help of improving financial markets, U.S. growth prospects are improving, but growth is still projected to stay at about 2 percent in 2013. The euro area continued to struggle with constrained credit supply and other financial issues, leading to a contraction of 0.25 percent for the region during 2013. Overall growth in the advanced economies is expected to pick up in the second half of 2013 and average 2 percent during the year, increasing to 2.3 percent growth in 2014.

The European Central Bank cut its key interest rate to 0.5 percent, a record low. The move was coupled with the extension of its offering of unlimited, cheap loans to banks through at least July 2014, as the bank seeks to spur lending and help pull the euro zone out of a recession. The interest rate was lowered from 0.75 percent, and bank leadership indicated that it was willing to implement further accommodative policies if necessary amid growing evidence that Europe’s economy continued to weaken.

Local Mayor Michael Hancock and the Office of Economic Development launched a five-year incentive program

aimed at supporting businesses that invest in growth through capital investment and job creation. The program includes a tax credit provided by the passage of Measure 2A last year. The tax credit is awarded annually through 2017 to local businesses that make qualifying investments in business personal property, including



machinery, equipment, and furniture. Eligible businesses include Denver businesses that made significant capital investments through a start-up or expansion. Expansion claims must meet one of the following: investment of at least $1 million, increased investment of at least 100 percent of prior capital level, increased employment by at least 10 jobs compared with prior 12-month average, or increased employment by 10 percent or more compared with previous 12-month average.

Governor John Hickenlooper and Colorado’s chief marketing officer, Aaron Kennedy, launched an effort to create a brand for the state, known as “Making Colorado.” An estimated $1 million will be spent over the coming months to solicit ideas and form a plan, which the governor will reveal in August. Potential elements of the marketing campaign may include national media campaigns, new license plates, and more uniform websites among the 150 state-operated websites.

The Colorado Department of Transportation announced that it has picked a partnership of companies to complete Phase 2 of the US Highway 36 Bus Rapid Transit project. The Phase 2 portion of the project includes adding express lanes in each direction between 88th Avenue and Table Mesa, rebuilding two general-purpose lanes, widening the highway to accommodate 12-foot wide inside and outside shoulders, replacing the Coal Creek bridge, and widening two additional bridges. Plenary Roads Denver has been hired for the express lane addition and Ames Construction and Granite Construction will be Plenary’s partners responsible for building the lanes.

The RTD West Corridor light rail line opened in April, connecting the Jefferson County Government Center in Golden with Union Station in Denver. The 12.1-mile rail line passes through Lakewood and includes 11 new stations and six Park-n-Rides.

Governor John Hickenlooper signed into law the $20.5 billion state budget for the 2013-2014 fiscal year. The budget includes $188.1 million for capital construction projects and $5.9 million for economic development programs. The economic development programs include $2.9 million for incentives for relocating and expanding companies, $1 million for increased film incentives, and $2 million for increased tourism marketing and development of a state branding campaign.

General Economic Overview The Bureau of Economic Analysis (BEA) released an advance estimate of first quarter gross domestic product (GDP), which showed an annual growth rate of 2.5 percent. Growth for the quarter was up significantly from the 0.4 percent growth rate recorded for the fourth quarter of 2012. Growth for the first quarter reflected positive contributions from personal consumption expenditures, private inventory investment, exports, residential investment, and nonresidential fixed investment. Factors negatively affecting growth were decreased federal, state, and local government spending and increased imports. A second estimate of first quarter GDP will be released from the BEA on May 30, 2013.

The Federal Open Market Committee (FOMC) announced that it will continue its current accommodative policies. The economy expanded at a moderate pace and labor market conditions improved. Household spending and business fixed investment advanced and the housing market continued to strengthen. However, the unemployment rate remains elevated and fiscal policy is restraining growth. The FOMC will continue purchasing additional agency mortgage-backed securities at $40 billion per month and longer-term Treasury securities at $45 billion per month. In addition, The FOMC will continue its practice of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The federal funds rate target range remains at zero to 0.25 percent, which will remain appropriate until unemployment falls to 6.5 percent. The next meeting of the FOMC will take place on June 18-19, 2013.



Economic Indexes & Notable Data Releases

National & International The U.S. trade deficit decreased to $43 billion between January and February, down from $44.5 billion in

January. Exports increased by $1.6 billion to $184.4 billion in February, mainly due to an increase in industrial supplies and material, automotive vehicles parts and engines, and other goods. Capital goods, consumer goods and foods, feeds, and beverages declined on a monthly basis. Imports increased $0.1 billion to $228.9 billion.

The Conference Board’s Leading Economic Index declined 0.1 percent between February and March to 94.7. According to economists, the decline still points to a slow but continued expansion in the economy, as strengths and weaknesses were equally balanced for the month.

The Institute for Supply Management’s Purchasing Managers Index decreased to 50.7 percent in April, losing 0.6 percentage points over March. Despite the decrease, some survey respondents noted that business was still strong and demand was generally steady.

The Institute for Supply Management’s Non-Manufacturing Index decreased 1.3 percentage points between March and April to 53.1 percent, indicating continued growth at a slower pace than the previous month. According to survey respondents, business conditions are challenging but some reported improved conditions.

According to a survey by the National Association of Business Economists (NABE), the majority (93 percent) of respondents said political developments had no effect on employment during the first quarter. Businesses may have accounted for higher taxes and lower government spending in the fourth quarter of 2012, partially offsetting some of the potential effects. Respondents to the survey also said consumer spending was not affected by the higher taxes and spending cuts: 79 percent reported that there was no impact on sales and only 16 percent thought there was some effect. The small survey consisted of 58 members and was taken between March 19 and April 2. The respondents represented sectors including finance, transportation, health care, and manufacturing. Fifty-five percent of the respondents reported rising sales in the first quarter, and 31 percent reported increased wages and salaries.

Local The Goss Institute’s Colorado Business Conditions Index fell to 58.2 in April from 60.8 in March. The 4.3

percent decline still left the index well above growth neutral. It was noted that the construction industry turnaround was particularly important for economic growth during the month.

The Leeds Business Confidence Index improved for the second quarter, rising 13.3 percent to 58.1. Confidence rose and uncertainty was alleviated as the economy showed more stability and resilience to political and international influences. Each metric of the survey measured positive (above 50), and hiring expectations showed the greatest over-the-quarter improvement since the survey began. Positive expectations have been recorded for six consecutive quarters.

According to The Conference Board, online job advertisements in Colorado were down by 1,200 in March, which was the third consecutive monthly decline for the state. Metro Denver ads rose slightly during March, increasing by 400 to 62,800. Job advertisements for Colorado increased by 28,100 during 2012 compared with 2011.

According to the 2013 U.S. Bank Small Business Annual Survey, small business owners in Colorado generally feel like the state’s economy is better than the national one. The survey consisted of 3,210 small businesses across the 25 states in which U.S. Bank is located. The businesses have $10 million or less in annual revenue during the first quarter of 2013 and 200 of the surveyed businesses were in Colorado. Results indicated that 46 percent of the Colorado businesses thought the state’s economy was better than the nation’s, 46 percent thought the two were about the same, and 8 percent were unsure. Additionally, 43 percent of the Colorado



business owners thought the U.S. was still in a recession, 47 percent thought it was in recovery, and 1 percent felt that the U.S. economy is expanding. According to respondents, the biggest challenge for the U.S. economy is economic uncertainty and the top issue is the federal budget deficit/debt.

The Brookings Institution released a report on job sprawl, showing that more than a third of Metro Denver’s jobs are located farther than 10 miles from downtown. According to the study, 36.7 percent are located farther than 10 miles and 21.5 percent are closer than three miles to downtown. The national average for jobs located more than 10 miles from a downtown area is 43.1 percent when considering the nation’s 100 largest metro areas. The national rate for jobs located within 3 miles of downtown is 22.9 percent. The report also noted that jobs located farther away from Denver’s downtown rose 5.8 percent between 2000 and 2010 and closer jobs declined.

The Beige Book for the Tenth District, which includes Colorado, reported the region’s economy expanded moderately in March. Consumer spending was stronger than predicted and expectations strengthened for future economic activity. Residential and commercial real estate were stronger than expected for the time of year, as sales, prices, and construction activity improved. Manufacturing did not show the same strong numbers, but orders, production, and shipments are expected to rebound.

County assessors have determined that overall residential property valuations, including apartments, declined 2.5 percent throughout the state between the period from June 30, 2010 to June 30, 2012. This finding contradicts recent data such as the Federal Housing Finance Agency home-price index, which reported that Colorado home prices rose 10.7 percent last year. The discrepancy is driven by timing as the assessors looked at sales over an 18- to 24-month time frame ended June 30, a period when the housing market was still struggling. In fact, assessors noted that the 2.5 percent decline would have been larger had it not been for the inclusion of apartment buildings, which experienced low vacancy, rising rents, and large increases in price.

Labor Force and Employment Employment in Metro Denver was higher in March compared with both February and the year-ago data. On a monthly basis, 7,800 jobs were added, an increase of 0.6 percent. Over-the-year growth was 2.5 percent or 34,500 jobs. The only supersector to show decreasing employment since March 2012 was information, which declined 1.7 percent or 900 jobs. The highest growth in the 11 supersectors was reported in natural resources and construction, showing an expansion of 5.3 percent or 3,900 jobs. The largest supersector in Metro Denver, professional and business services, added the most jobs over-the-year (10,200) and grew by 4.1 percent. Employment in the second largest supersector, government, was unchanged, which is not unexpected after the recent sequestration. In fact, both federal (-2 percent) and local (-0.5 percent) government jobs declined, while state government jobs grew by 2.3 percent.

Colorado employment also grew over-the-month and compared with March 2012: the state added 12,900 jobs between February and March or 0.6 percent, and 60,500 jobs during the past 12-month period or 2.7 percent. The U.S. showed employment growth of 0.6 percent over-the-month and 1.5 percent compared with year-ago employment.

Aerospace

• Ball Aerospace was awarded a contract with the U.S. Air Force for an undisclosed amount. The contract pertains to research the company will do to create a microwave instrument to measure water and wind as part of a government weather satellite program. The instrument may be designed to fit into smaller, lower-cost space launch vehicles.

• The University of Colorado-Boulder will receive about $36 million from the National Aeronautics and Space Administration (NASA) to build and operate an instrument that will collect data about space



weather. The instrument will study geomagnetic storms, which can disrupt communication and navigation satellites. The project will be called Global-scale Observations of the Limb and Disk or GOLD and include 40 local researchers, including up to 10 students. New employees may be hired to work on the project as well.

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 Mar-13 (p) Feb-13 Mar-12 2013 2012 % Change 2008 2003Total 11-County Metro Denver* 1,425.3 1,417.5 1,390.8 1,417.8 1,379.3 2.8% 1.0% -1.4% Denver-Aurora MSA 1,253.5 1,247.3 1,224.0 1,247.5 1,214.4 2.7% 1.0% -1.2% Boulder-Longmont MSA 171.8 170.2 166.8 170.3 164.9 3.3% 1.0% -2.8% Natural Resources & Construction 76.8 76.3 72.9 76.1 72.1 5.5% -1.5% -7.1%Manufacturing 79.6 79.3 78.7 79.5 78.3 1.5% -2.3% -4.9%Wholesale & Retail Trade 210.4 211.3 204.9 211.5 204.9 3.3% 0.1% -2.3%Transp., Warehousing & Utilities 48.1 48.8 47.2 48.6 47.3 2.7% 0.2% -0.3%Information 51.0 50.7 51.9 50.8 51.9 -2.2% -1.7% -8.0%Financial Activities 101.7 101.2 98.3 101.6 97.9 3.7% -2.2% 3.4%Professional & Business Services 257.0 254.1 246.8 254.5 244.4 4.1% 2.1% -1.3%Education & Health Services 180.4 179.5 173.2 179.4 172.3 4.1% 4.3% 2.6%Leisure & Hospitality 150.1 147.8 148.0 148.9 145.6 2.2% 1.4% -0.6%Other Services 55.4 55.0 54.1 55.2 53.7 2.8% 2.7% -0.4%Government 214.8 213.5 214.8 211.8 210.9 0.4% 2.6% 0.2% Federal Gov't 29.7 29.9 30.3 29.9 30.2 -1.0% -0.7% 0.5% State Gov't 57.2 56.1 55.9 54.8 53.3 2.9% 3.7% -2.9% Local Gov't 127.9 127.5 128.6 127.1 127.4 -0.3% 3.0% 1.4% Colorado 2,341.6 2,328.7 2,281.1 2,326.4 2,263.8 2.8% 0.8% -1.4%United States 134,485 133,726 132,505 133,638 131,589 1.6% -0.6% -0.3%

*Includes the Denver-Aurora-Broomfield MSA (Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park Counties) and the Boulder-Longmont MSA (Boulder County).

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

• The national unmanned aircraft systems (UAS) industry may support as many as 1,200 jobs between 2015 and 2017 and generate $232 million in economic impact. Unmanned aircrafts, or drones, can be used for a variety of tasks including agriculture and public safety. President Barack Obama is expected to sign legislation to allow unmanned commercial aircrafts in late 2015. Several Colorado political leaders, including Governor John Hickenlooper and U.S. Senators Mark Udall and Michael Bennet, have written to the Federal Aviation Administration (FAA) urging the organization to choose Colorado as one of the six planned UAS testing sites. The letter emphasized that Colorado is home to four key military commands and three space-related Air Force bases. The FAA is expected to name the sites by the end of 2013.

Aviation

• United Airlines announced that the 787 Dreamliner will resume service between Houston and Denver on May 31st, and the flight between Denver and Tokyo has been set with a firm date of June 10th. The Federal Aviation Administration still needs to approve the battery system upgrades on the Dreamliners.



Cleantech

• Vestas Wind Systems received its largest-ever Canadian order for wind turbines, which included a 20-year service and maintenance agreement, its longest such agreement in North America. It was not announced how much of the order will be completed at the Colorado manufacturing plants or whether previously laid off workers will be rehired.

• Cool Planet Energy Systems, a California-based biofuel company, may relocate its headquarters to the Metro Denver area. The company could create as many as 393 new jobs within three years. Its patented process turns biomass into gasoline, using a carbon-neutral process that means the more fuel an engine burns, the more carbon dioxide is taken out of the atmosphere. The jobs will be relatively high paying, with executive positions making an average of $170,000 per year and manufacturing jobs making an average of nearly $58,000 per year.

Fossil Energy

• Halcón Resources Corp., based in Houston, announced that it will be opening an office in Denver and signed a lease for two floors of the 1801 California St. former Qwest tower building. The energy company did not announce the number of employees that will be moved or any local hiring that will take place.

• The first uranium mill in the U.S. in over 30 years was granted a license for construction by the Colorado Department of Public Health and Environment. Owned by Energy Fuels, the Piñon Ridge Mill will be constructed in Naturita in Montrose County and will have the capacity to process 500 tons of uranium and vanadium per day.

Healthcare and Wellness

• Healthgrades Inc. released its 2013 Healthgrades Outstanding Patient Experience Awards naming 12 Colorado hospitals to the list. Three of the hospitals were in Metro Denver: Avista Adventist Hospital in Louisville, Exempla Good Samaritan Medical Center in Lafayette, and Longmont United Hospital in Longmont. Healthgrades used Medicare patient data from the U.S. Centers for Medicare and Medicaid Services for the rankings, looking at areas including doctor and nurse communication, hospital cleanliness, noise levels, medication, and post-discharge care instructions.

IT-Hardware

• Seagate Technology announced plans to add 150 jobs at its design center in Longmont. The jobs will primarily be filled by engineers. The company makes disc drives and employs 1,250 workers at its Longmont location and almost 55,000 globally.

IT-Software

• TriZetto Corp opened its new world headquarters in Douglas County. The 168,000-square-foot building will house its 900 workers in the state, while the company plans to hire up to 750 new employees over the next five years. The healthcare information technology company is the largest provider of software to health insurance companies in the nation.

• EcoSys announced that it will be relocating its headquarters, global sales, professional services, and corporate leadership to Broomfield from Rye Brooke, NY. The project controls software company has 250 customers globally and works in oil and gas, utilities, construction, mining, transportation, IT, and government. The company did not say how many employees would relocate or if new workers would be hired locally.



• Hybris, a software company, will be opening an office with 30 employees in Boulder with an endurance sports theme by the end of summer. While additional hiring plans were not announced, the company does plan to choose a space that can accommodate future growth.

• Rally Software Development Corp. raised $84 million from its initial public offering. The company sold six million shares in the offering released in April. The cloud-based software-applications company is one of the fastest-growing in the state and has about 380 employees.

Telecommunications

• Zayo Group LLC announced that its new corporate headquarters will be located on the Twenty Ninth Street shopping district in Boulder. The 15,500-square-foot space will house about 100 Zayo employees and is expected to be ready at the end of April.

Employment Outlook The second quarter results from the Manpower Employment Outlook Survey suggest hiring is down slightly, but the percent of companies planning to lay off workers has also decreased. The Denver-Aurora-Broomfield survey results suggest hiring is stronger in the area than nationally. The percent of companies planning to hire is 3 percentage points higher than the same period in 2012, and year-to-date totals show a similar trend with the 2013 average 5 percentage points higher than the 2012 average. The percentage of companies that expect no personnel changes increased 3 percentage points over-the-quarter, but decreased 9 percentage points compared with year-ago data.

U.S. results for the second quarter show a slightly higher percent of companies planning to hire compared with first quarter results. Companies planning to decrease personnel levels fell 3 percentage points over-the-quarter and 1 percentage point compared with year-ago results. The survey suggests that fewer companies find it necessary to decrease employee numbers as the economy improves, and more companies are maintaining or increasing their current staffing levels.

Employment Outlook Survey

Quarter 2 Quarter 1 Quarter 2 YTD Avg YTD Avg Ann Avg 2013 2013 2012 2013 2012 2008Denver-Aurora-Broomfield MSA

Percent of Companies Hiring 21% 23% 18% 22% 17% 28%Percent of Companies Laying Off 6% 8% 0% 7% 5% 11%Percent of Companies No Change 69% 66% 78% 68% 74% 50%Percent of Companies Unsure 4% 3% 4% 4% 5% 11%

U.S.

Percent of Companies Hiring 18% 17% 18% 18% 16% 24%Percent of Companies Laying Off 5% 8% 6% 7% 8% 11%Percent of Companies No Change 73% 72% 72% 73% 71% 59%Percent of Companies Unsure 4% 3% 4% 4% 6% 6%

Source: Manpower Inc.

The annual benchmark revision to unemployment data reveals that unemployment rates were higher than originally estimated for the seven counties in Metro Denver. In 2011, each of the seven counties showed an upwardly revised rate. Five of the seven counties showed an upward revision of 0.3 percentage points and two of the county rates, Boulder County and the City and County of Denver, were revised up by 0.2 percentage points. These increases pushed the Metro Denver rate up by 0.3 percentage points to 8.4 percent. The 2012 data show



smaller revisions in all counties. Arapahoe, Boulder, and Jefferson County rates increased by 0.1 percentage points, and the Douglas County unemployment rate rose by 0.2 percentage points. The Metro Denver rate was unrevised in 2012, remaining at 7.7 percent The upwardly revised figures represent increases in the total number of unemployed persons relative to the labor force, or a decline in the labor force, or a combination of the two effects. Colorado’s unemployment rate was revised upward in both 2011 and 2012. The 2011 rate increased by 0.3 percentage points to 8.6 percent and the 2012 rate of 8 percent was 0.1 percentage points higher than the preliminary rate. The U.S. rate was unchanged.

Labor Force Statistics (000s, not seasonally adjusted)

2012 2011 Labor Force Unemployment Rate Labor Force Unemployment RateMetro Denver 1,566,271 7.7% 1,547,636 8.4% Adams County 234,437 9.2% 232,116 10.0% Arapahoe County 323,283 7.8% 319,755 8.5% Boulder County 179,816 6.1% 176,619 6.4% Broomfield County 31,507 7.1% 31,079 7.6% Denver County 328,933 8.5% 325,762 9.3% Douglas County 162,971 6.4% 160,537 6.7% Jefferson County 305,325 7.6% 301,770 8.2%Colorado 2,743,264 8.0% 2,723,130 8.6%United States 154,975 8.1% 153,617 8.9%

Note: data are subject to further revisions. Source: Colorado Department of Labor and Employment, Labor Market Information.

The unemployment rate in Metro Denver improved in March, declining to 7 percent from 7.3 percent in February. Compared with March 2012, the rate declined 1.3 percentage points. The unemployment rate declined over-the-month in each of the Metro Denver counties with the exception of the City and County of Broomfield, which showed no change. Douglas and Boulder Counties and the City and County of Denver reported the greatest decrease of 0.3 percentage points. Compared with year-ago data, each county has shown a lower rate. The largest decline occurred in Adams County, where the rate decreased 1.5 percentage points over-the-year. The smallest decline was in the City and County of Broomfield (-0.4 percentage points). Colorado’s unemployment rate also improved during the year, dropping 1.3 percentage points since March 2012.



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

Mar 2013 (p) 2013 YTD Avg 2012 YTD Avg 2008 2003

Labor Force

Unemploy-ment Rate

Labor Force

Unemploy-ment Rate

Labor Force

Unemploy-ment Rate

Ann Avg Unemploy- ment Rate

Ann Avg Unemploy-ment Rate

Metro Denver 1,560.1 7.0% 1,565.3 7.2% 1,555.4 8.4% 4.8% 6.4% Adams County 233.3 8.6% 234.4 8.8% 233.8 10.3% 5.4% 7.2% Arapahoe County 321.3 6.9% 322.3 7.0% 320.6 8.3% 4.8% 6.3% Boulder County 180.6 5.4% 180.8 5.6% 178.5 6.5% 4.1% 5.8% Broomfield County 31.5 6.8% 31.5 6.7% 31.1 7.3% 4.5% 6.4% Denver County 327.5 7.8% 328.8 8.0% 327.4 9.4% 5.3% 7.2% Douglas County 162.2 5.6% 162.8 5.8% 161.0 6.6% 4.1% 5.3% Jefferson County 303.7 6.8% 304.8 7.0% 303.0 8.2% 4.6% 5.9%Colorado 2,740.0 7.3% 2,744.7 7.5% 2,725.1 8.7% 4.8% 6.1%United States 154,512 7.6% 154,678 8.1% 153,972 9.0% 5.8% 6.0%

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

The first-time weekly number of unemployment insurance claims declined in March by 4 percent compared with the same time one year prior. The decline in Metro Denver claims was not enough to push down the year-to-date average, which was still 1.6 percent higher in 2013 compared with 2012. An unusually high number of claims in January continued to keep the average elevated. Colorado weekly claims also declined 7.4 percent in March over-the-year, but the year-to-date statewide average reflected a similarly high January number and showed a 4.6 percent increase in 2013.

Weekly First-Time Unemployment Insurance Claims

Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Mar-13 Feb-13 Mar-12 2013 2012 % Change 2008Metro Denver 1,387 1,525 1,445 1,722 1,695 1.6% 1,738Colorado 2,635 2,810 2,846 3,338 3,190 4.6% 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.

Consumer Sector Sentiment & Spending

Consumers were more upbeat about the current economic conditions during April, with increased confidence in business conditions and the labor market. According to the Consumer Confidence Index, U.S. consumers’ confidence rose 10 percent between March and April to the highest point since November 2012. Despite a slight decrease over-the-year (-0.9 percent,) the monthly gain points to a recovery from the uncertainty caused by the sequestration.

The Mountain Region index showed an even greater monthly improvement, rising 46.3 percent between March and April. The region, which includes Colorado, dropped to its lowest point in March since October 2011. The April boost in confidence was still lower than the year-ago rate (-13.7 percent) but emphasized the national gain as consumers recovered from tax increases and federal spending cuts.



Consumer Confidence Index

Month of Month of Month of YTD Avg YTD Avg YTD Avg Ann Avg Ann Avg Apr-13 (p) Mar-13 Apr-12 2013 2012 % Change 2008 2003Mountain 68.9 47.1 79.8 59.8 74.6 -19.8% 76.5 89.4 United States 68.1 61.9 68.7 64.1 67.8 -5.5% 58.0 79.8

Source: The Conference Board. (p) = preliminary

U.S. retail sales rose in March by 2.8 percent over year-ago sales. March sales were 0.4 percent below the February number. Building material sales during the month showed the highest monthly figure since August 2008, but both gasoline and motor vehicle sales declined slightly between February and March. Core retail sales, a less volatile measure that excludes gasoline sales, increased 2.7 percent over-the-year. The Colorado Automobile Dealers Association reported that registrations of new cars and trucks increased 17.8 percent in March compared with the same period in 2012. This monthly increase helped push up the first quarter registrations to 18.3 percent higher than the first quarter of 2012. The Association noted that consumers are finding larger sales incentives from manufacturers, lower gas prices, a better job market, and low interest rates as reasons to purchase new vehicles.

Retail sales in Metro Denver were strong in February, despite the federal payroll tax increases and some income tax increases that went into effect in January. Sales were 4.8 percent higher over-the-year, and Douglas County was the only county to report a decline during the period (-4.8 percent). Adams County reported the largest increase of 9.4 percent, followed by Jefferson County (7.4 percent). Year-to-date sales for the metro area were 2.5 percent higher in 2013 compared with the first two months of 2012. Colorado retail sales were also 3.8 percent higher than February 2012, and year-to-date sales showed a 2.1 percent increase in 2013.

Total Retail Sales ($000s)

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

Annual Growth

Feb-13 Jan-13 Feb-12 2013 2012 % Change 2008 2003Total Metro Denver 7,081,109 6,948,607 6,754,221 14,029,716 13,689,192 2.5% 2.1% 1.6% Adams County 1,567,736 1,523,213 1,432,580 3,090,949 2,885,705 7.1% 11.5% 5.0% Arapahoe County 1,420,117 1,346,612 1,376,955 2,766,729 2,751,448 0.6% -4.8% 1.7% Boulder County 608,121 601,841 602,799 1,209,962 1,222,448 -1.0% 0.5% 4.2% Broomfield County 121,136 123,372 117,621 244,508 240,272 1.8% -4.6% -6.0% Denver County 1,761,063 1,737,711 1,669,587 3,498,774 3,410,636 2.6% 4.9% -1.5% Douglas County 516,565 578,726 542,697 1,095,291 1,126,681 -2.8% 0.0% 2.1% Jefferson County 1,086,371 1,037,132 1,011,982 2,123,503 2,052,002 3.5% -0.5% 3.4%Colorado 11,642,884 11,528,619 11,215,571 23,171,503 22,701,768 2.1% 2.6% 1.6%

Source: Colorado Department of Revenue.

The non-seasonally adjusted U.S. Consumer Price Index (CPI) increased 0.3 percent between February and March. The index also rose 1.5 percent over-the-year. The core CPI, which excludes food and energy items, rose 1.9 percent compared with the year-ago level, and increased by the same amount compared with the entire CPI (0.3 percent) over-the-month.

The AAA Daily Fuel Gauge Report reported that the national average price for a gallon of gasoline in April was $3.51, a decline of 3.6 percent over March’s average ($3.64). The price decreased 8.1 percent over April 2012. Metro Denver’s average price was slightly lower than the national average ($3.50) but decreased slower than the national average between March and April (-1.7 percent). The price was also 8.9 percent lower than the year-ago price ($3.84).



Stock Market

After hitting a record-high in March, the S&P 500 continued to rise in April by 1.8 percent. The NASDAQ and Dow Jones Industrial Average surpassed their respective peaks during April, both hitting record highs. The indexes rose 1.9 percent and 1.8 percent, respectively. The Bloomberg Colorado index declined slightly by 1.3 percent over the March number, but year-to-date returns remained positive for the index as well as for the other three indexes.

Stock Market Indexes

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

Return Ann Avg

Return Apr-13 Mar-13 Apr-12 2013 2012 2008 2003

Bloomberg Colorado 497.4 504.2 499.2 6.4% 10.5% -51.0% 41.8 %S&P 500 1,597.6 1,569.2 1,397.9 12.0% 11.2% -38.5% 26.4 %NASDAQ 3,328.8 3,267.5 3,046.4 10.2% 16.9% -40.5% 50.0%DJIA (Dow Jones) 14,839.8 14,578.5 13,213.6 13.2% 8.2% -33.8% 25.3%

Sources: Bloomberg.com; Yahoo! Finance.

Travel & Tourism

Visitors to Rocky Mountain National Park increased by 1.7 percent in 2012 to more than 3.2 million. The increase helped the park maintain its position as the 5th most-visited national park, according to the U.S. National Park Service. The Colorado national park recorded slightly less than 3.2 million visitors in 2011 and was ranked 5th for the number of visitors.

Hotel occupancy in Metro Denver dipped slightly in March, showing a 1.9 percentage point decline compared with the same time last year. The average room rate also slipped 1.6 percent to $105.05 during the month. Despite the over-the-year decline, year-to-date averages show improvement for 2013. The average hotel occupancy through the first quarter was 2 percent higher in 2013 compared with 2012, and the average room rate was also 2 percent higher.

Metro Denver Hotel Statistics

Month of Month of Month of YTD Avg YTD Avg YTD Avg Annual Annual Mar-13 Feb-13 Mar-12 2013 2012 % Change 2008 2003Percent of Hotel Rooms Occupied 63.5% 62.4% 65.4% 61.4% 60.2% 2.0% 65.0% 59.5%Average Hotel Room Rate $105.05 $107.49 $106.74 $106.16 $104.08 2.0% $118.27 $84.79

Source: Rocky Mountain Lodging Report.

A study by Evergreen-based Boyd Group International showed airline tickets have increased almost 30 percent since 2008. An average base one-way fare, including taxes and fees, increased to $219.50 during the fourth quarter of 2012, up 12.5 percent from 2008. The increase in unbundling of services from ticket sales, such as baggage fees or charges for food and drinks, is further increasing costs, pushing the real cost increase of fares up 29.1 percent during the period. Comparing 100 airports, Denver ranked 73rd for cost per mile, putting the city among the more affordable airports.

According to spokespeople for Denver International Airport, year-to-date passenger totals were up slightly through March by 0.5 percent. Passengers in March were nearly unchanged from the year-ago number, declining by less than 0.1 percent.



Denver International Airport Passengers

Month of Month of Month of YTD Total YTD Total YTD Total Annual Annual Mar-13 Feb-13 Mar-12 2013 2012 % Change 2008 2003Number of Airline Passengers 4,456,431 3,697,097 4,458,044 12,178,311 12,122,201 0.5% 51,245,432 37,505,138

Source: Denver International Airport, Traffic Statistics.

Residential Real Estate Home Resales

The National Association of Realtors (NAR) reported that existing-home sales declined over-the-month in March by 0.6 percent. Despite the monthly decline, sales rose 10.3 percent compared with March 2012. According to economists, demand continued to outpace supply during the month, as increased home construction and low mortgage rates provide favorable conditions. Each of the four regions reported rising home sales over-the-year. The Midwest was the region with the largest increase of 14.9 percent. The South showed the second largest increase (12.7 percent), and sales in the Northeast and West rose 6.8 percent and 4.4 percent, respectively.

The Metro Denver residential real estate market continued to grow at a healthy pace in April. Home sales closed rose 14.7 percent between March and April and 20.7 percent compared with April 2012. The strong sales helped push down inventory in April, which was 32.3 percent lower than April 2012 data. As sales increased and inventory declined, the average price of homes also rose for both condominiums and single-family homes. The average price of a condominium sold in April rose 0.8 percent compared with March and 10.5 percent over-the-year. Single-family homes reported slightly larger gains, as the average price increased 5.2 percent on a monthly basis and 12.5 percent over-the-year.

Previously-Owned Home Sales Activity

Month of Month of Month of YTD Total YTD Total YTD Total Ann Avg Ann Avg Apr-13 Mar-13 Apr-12 2013 2012 % Change 2008 2003Home Sales (Under Contract) 6,855 5,976 5,681 22,295 18,645 19.6% 62,647 29,703Home Sales (Closed) 4,714 4,333 3,891 14,967 12,331 21.4% 47,837 47,966Unsold Homes on Market 6,945 6,682 10,254 6,945 10,254 -32.3% 19,600 21,623Average Sales Price-Single Family $336,123 $319,366 $298,712 $317,919 $283,682 12.1% $270,261 $277,856Average Sales Price-Condo $196,966 $195,377 $178,231 $186,740 $163,787 14.0% $171,350 $175,215Median Sales Price-Single Family $280,000 $268,200 $249,900 $266,000 $233,000 14.2% $219,900 $230,000Median Sales Price-Condo $163,500 $154,000 $142,000 $152,000 $128,000 18.8% $138,000 $154,000

Note: Data includes the seven-county Metro Denver region plus Elbert, Park, Gilpin, and Clear Creek Counties as well as portions of the Loveland area. Source: MetroList, Inc.

Home Prices The NAR reported that home prices continued to increase in March, rising 11.8 percent over-the-year, the strongest increase since November 2005. This was the 13th consecutive increase, the longest running number of increases since May 2006. Each of the four regions also showed rising home prices for the month compared with March 2012. The largest increase was in the West, where prices increased 26.1 percent. The South reported the second highest increase of 10.4 percent. Home prices in the Midwest and Northeast increased by 7.8 percent and 3 percent, respectively.

The NAR’s metro area data for fourth quarter median home prices show that prices in the Boulder MSA increased over-the-quarter by 0.6 percent. Home prices in the Denver-Aurora-Broomfield MSA decreased 2.1 percent. Both



areas reported price increases over-the-year, with the Boulder MSA prices increasing 8.2 percent and the Denver-Aurora-Broomfield MSA rising 10.4 percent. The Phoenix-Mesa-Scottsdale MSA reported the highest gain in prices over-the-year of all the metro areas, where prices increased 33.9 percent. The Boulder MSA ranked 52nd for price gain, and the Denver-Aurora-Broomfield MSA ranked 38th.

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

Quarter 4 Quarter 3 Quarter 4 YTD Avg YTD Avg YTD Avg Median Median 2012 (p) 2012 (r) 2011 2012 2011 % Change 2007 2002

Boulder MSA $384.3 $382.1 $355.1 $383.7 $353.1 8.7% $376.2 n/aDenver-Aurora-Broomfield MSA $254.8 $260.3 $230.7 $252.4 $231.4 9.1% $245.4 $228.1 United States $178.9 $184.3 $162.6 $176.9 $166.2 6.4% $217.9 $158.1

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

The S&P Case-Shiller Home Price Index showed a slightly improved number for the 20-city composite index between January and February. The 0.3 percent increase reflected monthly gains in 13 of the 20 cities. The Denver index was one of the seven indices to decline over-the-month, but showed the second smallest decline (-0.2 percent). The Las Vegas index increased the most by 1.6 percent. 100

120

140

160

180

200

220S&P/Case-Shiller Home Price Indices

Denver 20-City CompositeSource: Standard & Poor's.

The 20-city composite index rose 9.3 percent over-the-year, and each of the 20 city indices increased as well. The Phoenix index was ranked as the highest increased index over-the-year (23 percent). Denver had the 11th highest increase at 9.9 percent.

Foreclosures RealtyTrac’s foreclosure report for March showed a decline of 1 percent in filings compared with February and a decline of 23 percent over-the-year. The decrease in March pushed the first quarter filings to the lowest level since the second quarter of 2007. Analysts note that while the overall foreclosure trend continues downward, filings are increasing in areas where aggressive foreclosure prevention efforts in previous years are wearing off.

Metro Denver foreclosure filings declined 22.6 percent between January and February. Filings were also down 46.7 percent compared with the year-ago number. Each county in Metro Denver reported a similar over-the-year decline, with the largest drop occurring in Arapahoe County (-53.9 percent), followed by the City and County of Denver (-52.1 percent). A monthly comparison shows five of the seven counties reported a decline, with Boulder (7.3 percent) and Douglas (26.2 percent) Counties reporting an increase between January and February.



Real Estate Foreclosures

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

Total Annual

Total Feb-13 Jan-13 Feb-12 2013 2012 % Change 2008 2003

Total Metro Denver* 708 915 1,328 1,623 2,556 -36.5% 24,799 9,427 Adams County 159 173 284 332 552 -39.9% 5,631 1,899 Arapahoe County 147 223 319 370 615 -39.8% 5,860 2,250 Boulder County 44 41 62 85 119 -28.6% 1,041 483 Broomfield County 12 23 18 35 33 6.1% 273 110 Denver County 127 204 265 331 534 -38.0% 6,145 2,500 Douglas County 82 65 133 147 265 -44.5% 2,180 653 Jefferson County 137 186 247 323 438 -26.3% 3,669 1,532

*The total number of election and demand setups (initial filings) received by county public trustees. Filings may be subsequently cured or withdrawn. Sources: Colorado Division of Housing and county public trustees.

New Homes

0

200

400

600

800

1,000

1,200

1,400

1,600

Feb 1965 Nov 1973 Aug 1982 May 1991 Feb 2000 Nov 2008

(000

s)U.S. New Home Sales, Seasonally Adjusted Annual Rate

Source: U.S. Census Bureau.

Seasonally adjusted data from the U.S. Census Bureau shows home sales rose on a monthly basis, as well as over-the-year. Sales were 1.5 percent higher between February and March and 18.5 percent higher compared with March 2012. Sales in each region of the country increased over-the-year – sales in the West rose the most by 37.5 percent, followed by the Northeast (32.2 percent). The Midwest reported sales that were 21.4 percent higher during the period, and sales in the South were 8 percent higher.

Residential building permits across the country fell in March by 3.9 percent compared with February. Permits in three of the four regions in the U.S. declined, including the two regions consistently reporting the highest amount of permits. The largest permit region, the South, reported permits that were 6.2 percent lower than the month prior, and the second largest region, the West, showed permits were 10.4 percent lower. Despite the monthly decline, permits increased over-the-year by 17.3 percent in the U.S. and increased in each of the four regions. The Northeast showed the most improved number of permits, with an increase of 24.7 percent.

The National Association of Homebuilders (NAHB)/Wells Fargo Housing Market Index declined for the fourth consecutive month in April to 42. Increasing building costs and concern over the supply of developed lots and labor pushed the index down during the month. Builders are becoming increasingly frustrated over the inability to respond to rising demand for new homes due to tight credit rules.

Residential building permits were down between January and February (-18.3 percent). The main factor behind the over-the-month decrease was a 57 percent decline in multi-family permits. Permits increased over-the-year by 22.7 percent in February. Multi-family permits declined 35.5 percent during the 12-month period, but single-family detached permits rose 60.2 percent and single-family attached permits rose 17.5 percent.



Residential Building Permits

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

Feb-13 Jan-13 Feb -12 2013 2012 % Change 2008 2003

Single-Family Detached Units 487 493 304 980 622 57.6% 3,686 12,656Single-Family Attached Units 94 83 80 177 130 36.2% 1,330 3,755Multi-Family Units 122 284 189 406 251 61.8% 4,413 1,858Total Units 703 860 573 1,563 1,003 55.8% 9,429 18,269

Source: Home Builders Association of Metro Denver.

Apartment Rental Market • Brookfield Residential is developing a new neighborhood called Midtown on West 67th Avenue and

Pecos Street. A total of 1,000 homes and 300 apartment units are scheduled to be built, and five acres will be developed for retail use. The homes will serve as a close, yet more affordable, option to the popular Highland neighborhood.

• Forum Real Estate Group LLC announced that a new luxury apartment complex will be going up in the Cherry Hills Village Neighborhood near University Boulevard and Hampden Avenue. The Kent Place Residences will feature 300 luxury units in a seven-story tower. The complex seeks to have a “resort” feel and will provide a concierge service, bike/ski equipment room, an outdoor pool, outdoor spas, a Bocce ball court, jogging trail, outdoor kitchen and rooftop lounge, and a fitness area.

• Forum Real Estate Group also expects to be opening the first units of its Veranda Highpoint luxury apartment complex located at I-25 and East Hampden Avenue in July. The new building features 362 units ranging from studios to three-bedroom apartments. Amenities will include concierge services, outdoor courtyards, a rooftop lounge, spa, sport court, dog park, and parking structure. The signature amenity will be a “lazy river” pool.

• The Denver City Council approved a re-zoning request in Cherry Creek North for the Zocalo Community Development Inc. to build a 12-story apartment building on First Avenue and Steele Street. The project includes 185 high-end apartments and 5,000 square feet of ground-level retail and an above and below ground parking structure.

• Delwest Capital and Drahota, a general contractor and construction company, announced that the Park Hill Apartments development broke ground. The 168-unit multifamily apartment project is located at 4000 Albion Street near the future light-rail stop on Colorado Boulevard.

The Denver Metro Apartment Vacancy and Rent Survey showed an improved vacancy rate for Metro Denver during the first quarter of 2013. The metro-wide vacancy rate declined 0.3 percentage points compared with both the fourth quarter of 2012 and the year-ago rate. Compared with the fourth quarter of 2012, rates in five of the six county submarkets declined. Rates in Adams and Douglas Counties increased over-the-quarter by 0.7 percentage points to 5.2 percent and 2.3 percentage points to 6.5 percent, respectively. The largest decline was in Arapahoe County, where the rate dropped 0.9 percentage points to 4.1 percent. Three of the six submarkets reported increased rates over-the-year (Adams and Douglas Counties, and the City and County of Denver) and the largest decline was in Arapahoe County (-2.2 percentage points).

The average rental rate in Metro Denver also improved, increasing 1.4 percent on a quarterly basis and 4.2 percent compared with the year-ago rate. Rental rates in the six submarkets showed a similar pattern to vacancy rates, with Arapahoe and Douglas Counties each declining 0.1 percent over-the-quarter. However, Adams County was the only county with a rate that declined compared with the first quarter of 2012, reporting a 2.5



percent drop. Every other county rate was higher over-the-year, the largest increase being in the Boulder/Broomfield market where rates increased 7.4 percent.

Apartment Statistics

Quarter 1 Quarter 4 Quarter 1

YTD Average

YTD Average

YTD Average

Annual Average

Annual Average

2013 2012 2012 2013 2012 % Change 2008 2003Apartment Vacancy Rate 4.6% 4.9% 4.9% 4.6% 4.9% 6.6% 12.0%Average Monthly Rental Rate (all units) $993 $979 $953 $993 $953 4.2% $882 $806

Source: Denver Metro Apartment Vacancy and Rent Survey.

Commercial Real Estate • According to commercial real estate experts, the Metro Denver area is a top market competing with

coastal cities in the country for capital investors looking to buy, build, or operate in the area. At the Bisnow’s Denver State of the Market panel discussion, the region’s highly educated work force, collaborative business environment, and amenity-rich lifestyle are attracting investors and businesses. In fact, according to a national market analysis done by Hines researchers, Denver Union Station and LoDo ranked fourth out of 478 office markets.

• Redevelopment has begun at the old Denver Post printing plant at I-25 and I-70. Ascendant Development Corp. announced that the 320,000-square-foot facility will be developed into a mixed-use development that will include design showrooms and studios, conference spaces, retail, and residences. Allied Works Architecture, Interior Architects, and Saunders Construction will be involved in the project. Named “25/70,” the 41-acre site should be under construction for 14 to 18 months with the first occupancy expected in fall 2014.

• The Pauls Corp. announced that the 150,000-square-foot building at 100 St. Paul Street in Cherry Creek broke ground. The project will be an 8-story office and retail building, which is about 40 percent preleased. FirstBank will become a key tenant of the space.

• White Lodging Services will begin construction on a 21-story, dual-branded Hyatt Place/Hyatt House in Downtown Denver. The hotel will be built on the corner of 14th Street and Glenarm Place and is scheduled to open in the spring of 2015. The property will feature 346 suites and cater to business travelers and extended stay guests.

• The Denver Art Museum will build a new wing located west of the Frederic C. Hamilton Building and south of the Clyfford Still Museum. The new 50,000-square-foot structure should be completed in spring 2014 and will house more than 100 museum employees. The $11.5 million building will be financed through private donations and include a research library and 9,000 square feet of art storage space.

• The Denver Museum of Nature and Science will be adding another wing called the Morgridge Family Exploration Center. The wing will be three stories and include atrium space for programs, science studio classrooms, a temporary exhibition gallery, and areas dedicated to early childhood education. The first exhibition is titled Maya: Hidden Worlds Revealed and is set to open in February 2014.

Office Market • Cassidy Turley’s first quarter Office Market Snapshot reported that stability and continued growth in

Metro Denver companies has been a boon for the area’s office market, assisting in increased leasing



activity and demand. Build-to-suit projects comprise the majority of the current construction activity, but new speculative development is on the horizon. The report forecasted an increase in rental rates by 3 to 5 percent during 2013, increasing office property values, and a drop in supply due to demand for well-placed investment opportunities.

• The most recent edition of the View from Newmark Grubb Knight Frank reported an improved office market in Metro Denver with ongoing development activity. Speculative activity only included one building at the end of the first quarter, but build-to-suit projects are more prevalent and should pick up during the year. LoDo office space is particularly constrained, with no existing spaces greater than 50,000 square feet available. Development activity should pick up in this submarket as well as the Central Platte Valley during the year.

• The CBRE Group Inc. released its first quarter report for the office market in Metro Denver, noting that broad-based expansion is going on in the markets. The southeast submarket accounted for almost half of the space leased during the quarter. Builders are beginning to show confidence and move forward with new construction projects in several areas, specifically downtown.

According to data from CoStar Realty Information Inc., the direct office vacancy rate declined 0.4 percentage points between the first quarter of 2013 and the fourth quarter of 2012. The rate was also 0.8 percentage points below the year-ago rate. This rate was the lowest quarterly rate since the second quarter of 2008. The direct average lease rate for office space has slowly begun to improve as the vacancy rate declines. The average lease rate increased 1.6 percent over-the-quarter and 5.9 percent compared with the year-ago rate. New office construction is ramping up, with an additional 290,000 square feet of new office space under construction compared with last quarter.

Office Market Statistics

Quarter 1 Quarter 4 Quarter 1 Quarter 1 Quarter 1 Quarter 1 2013 2012 2012 2011 2010 2009

Number of Buildings 5,867 5,863 5,857 5,843 5,825 5,804 Existing Square Feet (millions) 170.8 170.7 170.1 169.5 168.0 166.6 Vacant Square Feet (direct, millions) 20.1 20.8 21.4 22.3 22.5 22.3 Vacancy Rate (direct) 11.8% 12.2% 12.6% 13.2% 13.4% 13.4%Vacancy Rate (with sublet) 12.1% 12.4% 13.0% 13.8% 14.2% 14.6%Avg. Lease Rate (direct, per sq. ft, full service) $21.07 $20.74 $19.90 $19.87 $20.14 $21.34New Construction Completed (year-to-date) 0.08 MSF,

1 Bldgs0.87 MSF,

8 Bldgs0.29 MSF,

3 Bldgs0.37 MSF,

5 Bldgs 0.01 MSF,

1 Bldg0.40 MSF,

9 BldgsCurrently Under Construction 1.19 MSF,

15 Bldgs0.90 MSF,

10 Bldgs0.70 MSF,

6 Bldgs0.61 MSF,

10 Bldgs 1.16 MSF,

7 Bldgs1.85 MSF,

24 Bldgs

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

Industrial & Flex Market • Cassidy Turley’s first quarter report for the industrial market in Metro Denver forecasts continued rising

rent with a 5 to 10 percent increase through the first quarter of 2014 for Class A and B properties. According to the report, the industrial sector accounted for about 40 percent of jobs added in the area during 2012, and continued expansion is expected for the market. The first speculative project in five years, the Majestic Commercenter campus, breaks ground in May in Aurora near I-70 and Tower Road. Two or three additional speculative projects are expected to begin by the end of 2013.

• Newmark Grubb Knight Frank’s the View showed the industrial sector in Metro Denver improved in the first quarter, with positive net absorption and rental rates expected to increase in the second half of 2013.



Quality space is scarce for the sector following strong absorption during 2012, pushing companies to purchase single-tenant buildings or construct build-to-suit facilities.

• The first quarter report from CBRE Group Inc. noted that the industrial market had slowed during the quarter after the fiscal cliff. Analysts for the group pointed out that demand was slightly weak as a result of the federal policymakers, but rates should pick up soon. The availability of Class A space remains tight, and demand for the space is especially high.

Industrial market data from CoStar Realty Information Inc. suggest that the vacancy rate is in its lowest range since 2001. Despite the 0.1 percentage point increase over-the-quarter, the rate continues to be near its lowest point in more than a decade. These low vacancy rates have not yet pushed the direct average lease rate up. The lease rate held steady at $4.66 per square foot between the fourth quarter of 2012 and the first quarter of 2013 but was improved by 2.2 percent compared with year-ago data.

Industrial construction has increased over-the-quarter, with 100,000 square feet more being built compared with last quarter. The amount of new construction completed was more than 86 percent less than the fourth quarter of 2012, but is the most completed in the first quarter of a year since 2009. The United Natural Foods, Inc. building (553,000 square feet) and the Leprino Foods facility (500,000 square feet) were the two largest construction projects underway during the period.

Industrial Market Statistics


Number of Buildings 7,353 7,337 7,330 7,319 7,315 7,304 Existing Square Feet (millions) 223.9 223.5 223.0 222.6 222.5 222.2 Vacant Square Feet (direct, millions) 11.8 11.6 14.2 14.0 15.0 15.9 Vacancy Rate (direct) 5.3% 5.2% 6.4% 6.3% 6.8% 7.2%Vacancy Rate (with sublet) 5.4% 5.6% 6.7% 6.8% 7.3% 7.4%Avg. Lease Rate (direct, per square foot, NNN) $4.66 $4.66 $4.56 $4.70 $4.78 $5.12New Construction Completed (year-to-date) 0.08 MSF,

1 Bldgs0.58 MSF,

8 Bldgs0.01 MSF,

1 Bldgs0 MSF, 0 Bldgs

0.01 MSF, 1 Bldg

0.11 MSF, 2 Bldgs

Currently Under Construction 1.15 MSF, 9 Bldgs

1.05 MSF, 7 Bldgs

0.17 MSF, 4 Bldgs

0.13 MSF, 4 Bldg

0.02 MSF, 1 Bldg

0.06 MSF, 1 Bldg


CoStar data show the direct vacancy rate for flex space in Metro Denver has improved. The rate is 0.3 percentage points below the fourth quarter rate in 2012 and 1 percentage point below the first quarter of 2012. The direct average lease rate for flex space also improved, rising 4.8 percent over the fourth quarter 2012 and 3.6 percent over the year-ago rate. Completed construction was at its highest point for a first quarter since 2009, but current construction declined by 20,000 square feet over-the-quarter and 140,000 square feet over-the-year.



Flex Space Statistics



1 Bldgs0.13 MSF,

3 Bldgs0 MSF, 0 Bldgs

0 MSF, 0 Bldgs

0 MSF, 0 Bldgs

0.06 MSF, 3 Bldgs

Currently Under Construction 0.06 MSF, 3 Bldgs

0.08 MSF, 3 Bldgs

0.20 MSF, 3 Bldg

0 MSF, 0 Bldgs

0 MSF, 0 Bldgs

0.22 MSF, 5 Bldgs


Retail Market • In the first quarter Retail Market Snapshot, Cassidy Turley reported that the Metro Denver retail market

is flourishing in high-density locations, including new retailers and restaurant openings in the Downtown and Cherry Creek submarkets. Additionally, there was a spike in new development and redevelopment projects during the quarter. The report forecasts heightened leasing activity in the sector and the eighth consecutive year of positive absorption.

• According to the first quarter Newmark Grubb Knight Frank report, the View, 2012 was the strongest year for the retail market since 2008, and 2013 is expected to post similar numbers. Moderate development continued in strong urban in-fill sites and some suburban neighborhoods throughout Metro Denver. Large retailers are waiting to break ground on build-to-suit options.

• CBRE Group Inc. released its first quarter report for the Metro Denver retail market, noting that lease rates were mostly flat but there were some positive signs for the sector. Denver’s strong real estate market should contribute positively to growth in retail, especially for quick-service restaurants and home goods stores. The best retail area continued to be the Colorado Boulevard/Cherry Creek submarket with a particularly low vacancy rate and higher lease rate.

Retail market data also show a decreased vacancy rate. According to CoStar Realty Information Inc., the retail market direct vacancy rate decline 0.2 percentage points compared with the fourth quarter of 2012 and 0.7 percentage points compared with the first quarter of 2012. The direct average lease rate for retail space rose 2.1 percent between the fourth quarter of 2012 and the first quarter of 2013 and 2 percent over-the-year. As incomes improve and consumers begin spending more, the need for new retail space is increasing, leading to an increase in construction of 5.9 percent over-the-quarter and 143.2 percent compared with the year-ago number.



Retail Market Statistics



20 Bldgs0.59 MSF,

46 Bldgs0.04 MSF,

8 Bldgs0.14 MSF,

2 Bldgs 0.03 MSF,

3 Bldgs0.68 MSF,

27 BldgsCurrently Under Construction 0.90 MSF,

22 Bldgs0.85 MSF,

27 Bldgs0.37 MSF,

15 Bldgs0.59 MSF,

8 Bldgs 0.43 MSF,

10 Bldgs0.33 MSF,

15 Bldgs





Metro Denver Indicator Summary Indicator Monthly/Quarterly

Direction Annual Direction

Summary of Recent Changes

Nonfarm Employment Growth

⇑ ⇑ Employment up 7,800 jobs Feb to Mar; YTD employment up 2.8% through Mar 2013.

% Companies Hiring (Denver Area)

⇓ ⇑ 21% of companies expect to add workers in Q2 2013 and 69% expect no change.

Unemployment Rate ⇓ ⇓ Metro rate 7% in Mar; YTD avg. rate of 7.2% down from 2012 YTD avg (8.4%)

Initial Unemployment Insurance Claims

⇓ ⇑ Claims decreased Feb to Mar; YTD claims up 1.6% through Mar 2013.

Total Retail Sales ⇑ ⇑ Metro retail sales increased Jan to Feb; YTD sales up 2.5% through Feb 2013.

Consumer Confidence Index

⇑ ⇓ Mountain Region Index up to 68.9 in Apr from 47.1 in Mar; index down 19.8% YTD thru Apr‘13.

Hotel Occupancy ⇑ ⇑ Hotel occupancy increased Feb to Mar to 63.5%; occupancy up 2% YTD.

DIA Passengers ⇑ ⇑ Traffic increased Feb to Mar; YTD traffic up 0.5% through Mar 2013.

Bloomberg Colorado Index

⇓ ⇑ Bloomberg Colorado down 1.3% from Mar to Apr; year-to-date return at 6.4%

Dow Jones Industrial Average

⇑ ⇑ DOW increased 1.8% Mar to Apr; year-to-date return at 13.2%.

Home Sales (closed) ⇑ ⇑ Home sales increased Mar to Apr; YTD sales up 21.4% through Apr.

Median Home Price (Denver-Aurora MSA)

⇓ ⇑ Median price in Denver MSA down 2.1% Q3 ‘12 to Q4 ‘12; price up 9.1% YTD through Q4 ‘12

Foreclosures ⇓ ⇓ Foreclosures decreased Jan to Feb; YTD down 36.5% through Feb 2013.

Residential Building Permits (Total)

⇓ ⇑ Total permits decreased Jan to Feb; YTD up 55.8% through Feb 2013.

Apartment Vacancy Rate ⇓ ⇓ Vacancy down to 4.6% in Q1; avg rental rate at $993 per month.

Office Vacancy Rate (with Sublet)

⇓ ⇓ Vacancy down to 12.1% in Q1 2013 from 12.4% in Q4; avg lease rate up to $21.07/sq.ft.

Industrial Vacancy Rate (with Sublet)

⇓ ⇓ Vacancy down to 5.4% in Q1 2013 from 5.6% in Q4; avg lease rate stable at $4.66/sq. ft. (NNN)

Retail Space Vacancy Rate (with Sublet)

⇓ ⇓ Vacancy down to 6.7% in Q1 2013; avg. lease rate up to $15.10/sq. ft. (NNN)

Positive Changes 14 of 18 16 of 18

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metro denver economic summary

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