June 2010
Tourism spending and health in labor and housing markets to reflect strength of ongoing recovery
Stronger anticipated tourism spending this summer could bode well for the region's ongoing economic recovery, according to information released by the Metro Denver Economic Development Corporation (Metro Denver EDC) in its Monthly Economic Summary for June 2010.
If the AAA travel forecast for Memorial Day proves correct, a 5 percent nationwide increase in leisure trips during the holiday weekend could signal the beginning of a stronger summer travel trend. Hotel occupancy rates in Metro Denver have already been rising, and low average room rates-while not necessarily good news for hospitality businesses-suggest that room deals and discounts may still be available. A smaller-than-expected seasonal increase in gas prices has also made road trips considerably more affordable for cost-conscious consumers.
"While early indications on summer travel are positive, the final strength of the season will likely reflect the strength of the economic recovery," explained Patty Silverstein, president of Development Research Partners and chief economist for the Metro Denver EDC.
Recent reports also point to much-heralded growth in the region's residential real estate market. The number of residential building permits pulled throughout Metro Denver in March was more than four times the number pulled one year prior. Permits for detached single-family homes and condominiums and townhomes nearly tripled over-the-year, and apartment construction-which all but halted in 2009-showed gains with projects in Denver and Lakewood.
Of the 149 MSAs that reported a change in median home price between the first quarters of 2009 and 2010, 58 reported declines and 91 reported gains. The Denver-Aurora-Broomfield MSA and the Boulder MSA were both among the latter group, with over-the-year increases in median home price of 16.5 percent and 2.3 percent, respectively.
"The increase in price for the Denver MSA was particularly notable as it ranked 13th highest among the 91 metros reporting gains," said Silverstein.
In addition, Metro Denver's retail market exhibited early signs of stability in the first quarter of 2010. CoStar data show the market's direct vacancy rate declined in the first quarter to 8.5 percent, or a rate similar to the last year's level. The market's total vacancy rate also declined slightly, but further improvement will be necessary before average lease rates begin to recover and building activity rebounds. The first quarter direct average lease rate of $16.23 per square foot was 3.6 percent lower than the previous year's average.
In June's report, 15 of 18 economic indicators for Metro Denver moved in a positive monthly direction, compared to 12 indicators in the previous report. As in last month's report, 14 indicators moved in a positive annual direction. Looking ahead, labor markets and housing markets - which now enter a post-tax credit period - will be key indicators to watch.
The Monthly Economic Summary provides a snapshot of metro area economic activity, as well as its relationship to national and regional economic trends.