2015 Economic Growth for Colorado and Denver

2015 Economic Growth for Colorado and Denver

With the United States economy experiencing widespread improvement in 2015, you may not be surprised to learn that Colorado’s economic status is also moving in a positive direction. Historically, Colorado tends to perform better than other parts of the country, which recently resulted in the state being ranked third best by Business Insider and fourth in CNBC’s annual “America’s Top States for Business.”

Annual Employment Growth Rates

Colorado added nearly 79,000 jobs in 2014, a 3.3% growth rate, resulting in the third-fastest employment growth rate of all 50 states. Third quarter 2015 data indicated a 2.6% employment growth pace, although predictions are for even higher rates by year-end. Job growth has been the strongest in natural resources, construction, education, health services, other services, and federal, state, and local government.

  2013 2014 2015 (est.)
Metro Denver 3.6% 3.6% 3.3%
Colorado 3% 3.3% 3%
U.S. 1.7% 1.9% 2.1%

*Source: U.S. Bureau of Labor Statistics.

 

Unemployment Rates

Statistics reveal that the average unemployment rates have been steadily improving over the past few years, with Denver and Colorado as a whole faring better overall. The annual average unemployment rate is expected to fall to 4.1% in 2015, the lowest annual level since 2007. As a result, wages are also beginning to rise – both at a faster rate and with higher average salaries than competing metropolitan markets. These factors have contributed to a tightening labor market in the metro Denver area for new and expanding companies.

  2013 2014 2015 (est.)
Metro Denver 6.5% 4.8% 4.1%
Colorado 6.8% 5% 4.4%
U.S. 7.4% 6.2% 5.5%

*Source: U.S. Bureau of Labor Statistics.

Real Estate on the Rise

Construction companies should take heart. The boost in metropolitan Denver employment seems to have a direct correlation to falling commercial real estate vacancy rates and an increase in construction activity in 2015. An impressive 1.3 million square feet of space has been completed as of the third quarter and 2.8 million is still under construction, largely in the lower downtown area of Denver.

In addition, 1.5 million square feet of industrial and flex space has been added to the market so far in 2015 and another 1.6 million square feet is under construction. The retail vacancy rate is the lowest since 2006, and new construction for the retail market has remained steady, although mainly concentrated in small spaces this year.

Similarly, an increase in new Denver residents has created a strong demand for both for-sale and rental housing. Existing homes are consistently selling at a pace of about 52,000 to 54,000 homes per year. With limited new home supply, this has allowed housing prices to rapidly increase to meet the demand. The median home price was approximately $350,000 this year, a 12.4% increase over 2014 and higher than competing markets, such as Austin, Dallas, Phoenix, Portland, and Atlanta.

With many choosing to rent versus own due to the rapidly rising home prices and lifestyle preferences, the apartment vacancy rate has remained below 5% for the past four years. This demand and limited new supply has caused apartment rental rates to rise as well.

Residential developers have responded to the strong market conditions for both for-sale and rental housing. After reaching a new home construction low in 2009 (4,288 units), residential construction more than doubled from 2011 to 2012 and averaged about 17,400 units per year from 2013 through 2015.

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All of these economic indicators generally point to a strong growth trend for Colorado and Denver, in particular. A declining unemployment rate and more confident consumers, rising home prices, and increasing construction activity can mean opportunity for our construction, banking, and other business clients. If you want to discuss how your business can capitalize on the growing Denver economy, call us at 303-388-1010 or click here to contact us