November 2009
Company announcements help establish base for job growth in Metro Denver
In Metro Denver, numerous company announcements over the past several months reflect the region’s strong business climate – even during recession – and will help establish a base for job growth as conditions improve, according to data compiled by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for November 2009.
Data on U.S. gross domestic product (GDP) released in October suggest the U.S. economy – with significant help from government stimulus programs – may have emerged from recession in the third quarter. While GDP growth is a positive development, several substantial challenges remain for a full recovery. Labor markets remain weak, and consumer optimism is low as households struggle to balance poor income potential with the need to manage debt and restore savings. Additional challenges are also ahead for commercial real estate and the recovery taking shape in housing markets is still fragile. Last, the economy’s ability to maintain momentum without government support remains in question.
“These challenges, however, are not necessarily cause for despair,” stated Patty Silverstein, chief economist for the Metro Denver EDC and president of Development Research Partners. “Improvements in labor markets and commercial real estate historically lag growth in output (GDP), so the current distress in these segments should slowly give way to improve trends as GDP strengthens.”
Better labor markets will help improve household income, and several more quarters of increasing home sales could help home prices grow. This slower-than-average recovery will require some patience, but positive signs are already emerging.
Metro Denver’s unemployment rate fell from 7.3 percent in August to 6.9 percent in September, and the statewide rate fell from 7.1 percent to 6.7 percent, compared to 9.5 percent nationwide.
While most consumers grew increasingly pessimistic in October as a difficult labor market weakened consumers’ assessment of business conditions and their income potential, consumer outlooks in two U.S. regions – one of which was the Mountain Region – actually improved over-the-month, according to the Conference Board’s U.S. Consumer Confidence Index.
Existing home sales in Metro Denver declined slightly (-1.5 percent) between August and September, but the market nonetheless showed other signs of improvement. September, for example, was the first month in nearly two years in which average sales prices for single-family homes and condominiums both increased on an over-the-year basis.
Redevelopment activity is in full swing at the former StorageTek campus in Louisville, according to spokespeople for Houston-based ConocoPhillips. The company began demolition last November and recently completed its efforts to recycle and remove old material. Company officials say the finished buildings could be occupied in 2013. The company’s long-term employment estimates for the campus suggest it could house as many as 7,000 workers.
Additionally, the Colorado Renewable Energy Collaboratory’s Solar Technology Acceleration Center (SolarTAC) recently broke ground at the Aurora Campus for Renewable Energy. Spokespeople say the 74-acre facility for solar testing will be one of the largest of its kind nationwide.
As energy development progresses throughout Metro Denver, the region continues to attract new energy businesses. Spokespeople for San Francisco-based SunRun Inc., for example, say the company will begin operations in Colorado. SunRun – which already operates in California, Massachusetts, and Arizona – will launch a solar panel lease program that allows homeowners to purchase electricity from panels kept on their property.
German company SMA Solar Technology AG said it will begin U.S. operations with a new manufacturing plant in Denver. The company has a 40 percent share of the global market for solar inverters. Spokespeople for the company say the new location in Stapleton will house roughly 300 workers, and the company could temporarily employ another 400 to handle busy periods. Metro Denver’s educated workforce, transportation infrastructure, and emphasis on renewable energy were key factors in their location decision, as was Colorado’s relatively low cost of doing business.
A second German renewable energy company – SGB USA, Inc. – is also planning to launch operations in Metro Denver. The company manufactures wind turbine components for companies including Vestas Wind Systems and will locate its facilities and six employees in Wheat Ridge.
Six economic indicators for Metro Denver moved positively this month, compared to eight indicators in the previous report. Two indicators moved in a positive annual direction in this month’s and last month’s report.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.