April 2009
Metro Denver real estate markets endure marked changes while rankings encourage new business
Metro Denver’s residential real estate market steadily improved while commercial construction had pronounced pullback. However, recent positive rankings in the national news are exemplified by business growth, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for April 2009.
The downturn in housing markets has curtailed residential building activity for some time, but a decline in commercial construction is a more recent development in Metro Denver. According to data from CoStar Realty Information, Inc., the total square footage of Metro Denver office property under construction in the first quarter of 2009 declined 47 percent from the construction volume reported one year ago. Industrial construction volume declined 95 percent over-the-year, flex market construction fell 37 percent, and the retail market construction declined 93 percent.
“While the pronounced declines create difficult conditions for contractors, restrained development should help control vacancy rates and promote a stronger recovery as financing and overall economic conditions improve,” stated Tom Clark, executive vice president of the Metro Denver EDC.
On a positive note, Metro Denver foreclosures continue to decline and the region’s home sales rose slightly in February. Data from the National Association of Realtors show existing home sales increased 5.1 percent between January and February as buyers – particularly first-time buyers – took advantage of low home prices and new housing policies.
Metro Denver home sales increased slightly (0.6 percent) between January and February, but the count of homes under contract – a forward-looking indicator of home sales – increased by a wider margin (+9.2 percent).
Thanks to a year-to-date decline in foreclosure filings for each of Metro Denver’s seven counties, the region’s total filings through the first two months of the year fell more than 25 percent from the same months in 2008.
Several new rankings have bolstered the region’s business profile on a national scale. Colorado ranked second in the 2009 ALEC-Laffer State Economic Competitiveness Index, which is a measure that evaluates the link between states’ policies and economic performance. Analysts say states that perform well on the index tend to have low regulatory and tax burdens and a sustainable approach to public spending. These states are also the most likely to manage economic stimulus effectively and make a solid recovery from the nationwide recession.
Several Colorado metropolitan areas ranked high on Forbes’ 2009 list of the “Best Places for Business and Careers." The ranking includes the nation’s 200 largest metropolitan areas and considers the cost of doing business, educational attainment, and other factors. The Fort Collins metro area ranked second overall, Colorado Springs ranked 10th, the Denver-Aurora region ranked 14th, and Boulder ranked 20th. Forbes spokespeople noted that Colorado and North Carolina alone accounted for 10 of the top 20 metro areas included in the ranking.
“These rankings are exemplified by the amount of business growth and expansion in the area,” said Clark. “We are experiencing activity in the energy and aerospace sectors that other regions just aren’t seeing.”
The United Launch Alliance (ULA) recently won a NASA contract to provide launch services, data tracking, and other support for four upcoming missions valued at $600 million. Additionally, Littleton-based Ascent Solar Technologies opened its new Thornton manufacturing facility in late March, and Vestas Wind Systems A/S broke ground on two manufacturing facilities in Brighton.
Overall, eight indicators improved for the month, compared to four indicators in the previous report. Two indicators in the current report moved in a positive annual direction, compared to three indicators (revised) in the prior report.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.