Find Out More About the Denver, Stapleton and Park Hill Area Economy & Job Market 2007 Economic Forecast for Metro Denver (Expert from the Metro Denver Economic Development Corporation)  Metro Denver, like the nation, on track for modest economic growth in 2007
Metro Denver possesses key assets that make the region attractive for future business expansion, retention, and recruitment. Among the region’s key assets are recent completion of T-REX, the anticipation of FasTracks, modest home price appreciation, a top ranked international airport, passage of dedicated funding for tourism marketing at the state level, a $15 million federal workforce grant that will improve the connectivity between education and employment, the nation’s healthiest population, and a solid market for commercial real estate investment. Metro Denver Economy
The Metro Denver economy is on track for another prosperous year in 2007, although economic expansion in the seven-county region will occur at a more modest pace than in 2006. Metro Denver’s economic activity in 2007 will be influenced by the national economic slowdown, but the region still anticipates further industry diversification, an expanding employment base, continued wage growth, and modest inflation. Employment growth in Metro Denver has outpaced the nation since January 2005. All industry sectors added jobs in 2006 except for the Information sector, which has struggled with losses for six consecutive years. The strongest annual increases were reported in the Natural Resources, Mining & Construction (+4.6%), Transportation, Warehousing & Utilities (+3.2%), and Professional & Business Services (+3.1%) sectors. Metro Denver added 26,000 jobs in 2006 for an estimated gain of 1.9%.
About 22,300 jobs will be added to Metro Denver payrolls in 2007 for a 1.6% increase in total employment. All industry sectors will post employment gains, with the exception of the Information sector. On the bright side, Information employment will stabilize in 2007 with minimal job losses. Metro Denver’s job gains in 2007 will be impacted by the extent of the national slowdown.
The nonresidential real estate markets strengthened in 2006. The direct office vacancy rate fell from 13.3% in the fourth quarter of 2005 to 12.6% in the fourth quarter of 2006 even though developers added about 1.55 million square feet of office space to the seven-county region in 2006. The average least rate increased from $17.46 per square foot in the fourth quarter of 2005 to $18.54 per square foot in the fourth quarter of 2006, the highest average lease rate reported since fourth quarter 2002.
The direct industrial vacancy rate decreased from 7.8% in the fourth quarter of 2005 to 6.9% in the fourth quarter of 2006, representing Metro Denver’s lowest direct vacancy rate in more than three years. Average lease rates increased over the same period, rising from $4.70 per square foot to $4.96 per square foot. About 1.71 million square feet of industrial space was added to Metro Denver in 2006 and another 2.11 million square feet of space is currently under construction, some of which is speculative.
Metro Denver’s unemployment rate has improved steadily after peaking at 6.9% in June 2003. Continued job growth helped push the average annual unemployment rate down to 4.5% in 2006, although slightly slower job gains will allow the unemployment rate to increase to 4.8% in 2007.
Metro Denver’s population increased 1.6% in 2006, the largest annual percentage increase since 2002. As economic conditions improve, net migration follows. Net migration in Metro Denver increased to 15,400 in 2006, the highest annual influx of residents since 2001.
Improving economic conditions will push net migration to 20,800 in 2007. As a result of a projected 34.7% increase in net migration and an 8% decline in natural increase, the total population in Metro Denver will increase 1.7% in 2007 to 2.71 million.
The age composition of both Colorado and Metro Denver’s populations are changing as the baby boomer segment ages. In 2011, the first baby boomers will reach the potential retirement age of 65 years. The Colorado Demographer anticipates a steady increase over the next several decades in the share of the state’s population over the age of 65. Colorado was home to about 419,000 residents aged 65 and over in 2000. By 2030, the 65 and older category will have grown to 1.2 million, representing a three-fold increase in 30 years.
Healthy job gains and increased tourism activity led to an estimated 8.8% increase in retail sales in 2006, the strongest annual gain since 1994. Total retail sales are expected to moderate in 2007 to a 5.4% increase amid slightly slower employment growth, a cooling housing market, and slower home refinancing activity.
Sales of existing homes in Metro Denver lost strength in both 2005 and 2006 after hitting a record high in 2004. Total home sales declined 5.4% in 2006 to 50,244 sales, still the third-highest annual sales level on record. Both single-family detached home sales and condominium sales declined in 2006 for the second consecutive year, finishing 2006 at 39,208 single-family detached homes sales and 11,036 condominium sales. The total value of properties sold in 2006 slipped from $14.9 billion in 2005 to $14.5 billion, a 2.8% decline. Average unsold inventory levels increased to a record 28,789 homes on the market in 2006 from 24,534 homes on the market in 2005.
The total number of opened foreclosure cases in 2006 surpassed the previous record high of 17,122 foreclosures in 1988. Total foreclosure cases hit 19,348 in 2006, a 35.7% increase over total cases opened in 2005. However, it is important to note that some of these foreclosures cases may have been cured or withdrawn throughout the year. Foreclosures are likely to remain high again in 2007, but will fall slightly from the 2006 level. Expect total foreclosures to approach 18,800 in 2007, 3.0% lower than 2006.
Home construction activity slowed in 2005 and 2006 after historically low mortgage rates and record home sales in 2004 pushed home construction to a peak of 21,874 units. Construction activity in the single-family category declined 15.3% in 2006 due to higher mortgage rates, record unsold inventory levels, weak home price appreciation, and other contributing factors. A further 7.5% decline in single-family attached and detached construction is anticipated in 2007.
Multi-family or apartment construction activity nearly tripled from 459 units in 2005 to 1,400 in 2006, although 2005 was the slowest year for multi-family construction activity since 1990. Multi-family construction activity is expected to increase 28.6% in 2007 to 1,800 units, spurred by falling vacancy rates and rising rental rates.
The median price of an existing single-family home in Metro Denver increased a meager 2% in 2006 compared to the national increase of nearly 4%. The gap between Metro Denver and national median home prices is closing due to slow home price appreciation in Metro Denver. The median home price in Metro Denver of about $252,000 means that the region’s housing stock is now more affordable than other competitive markets.
The average annual wage increased 3.2% in 2005 to $46,466, up from $45,065 in 2004. Since Metro Denver inflation averaged only 0.1% in 2004 but increased 2.1% in 2005, the average worker saw a 3.4% real increase in wages in 2004 compared to a 1.1% real increase in 2005.
Workers in the Denver-Aurora MSA could see a 3.6% increase in pay in 2007, according to a wage-projection survey by the Mountain States Employers Council. Boulder-Longmont workers can expect a 3.7% increase compared to a 3.6% increase for all of Colorado, the state’s largest annual increase in five years.  -Patty Silverstein is the Chief Consulting Economist for the Metro Denver Economic Development Corporation. She is president of Development Research Partners, a Littleton, CO-based economic consulting firm. Request our Free Denver, Stapleton and Park Hill Relocation Package. It's packed full of useful and important information about the Denver, Stapleton and Park Hill, Colorado area. Don't move here without it! Remember: we'll send it to you for free and without obligation. Just fill out the form and we will send it right out... Want the inside scoop on the local economy? It's our job to know! Ask us any question. Or request our FREE Denver, Stapleton and Park Hill relocation package. We promise to get back to you quickly...
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