Winds of Change
Winds of Change
© Can Stock Photo Inc. / BettinaBlass
Global Outlook
If one does not know to which port one is sailing, no wind is favorable. - Lucius Annaeus Seneca (Seneca the Younger) Courtesy of Portland State University
2016 Midyear Economic Update for Metro Denver
Mixed Global Growth Prospects Year over Year Growth in Output 2015
2016
2017
World
3.1%
3.4% 3.1%
3.4%
United States
2.4%
2.6% 2.2%
2.5%
Canada
1.1%
1.7% 1.4%
2.1%
Mexico
2.5%
2.6% 2.5%
2.6%
Euro Area
1.7%
1.7% 1.6%
1.4%
China
6.9%
6.3% 6.6%
6.2%
Japan
0.5%
1.0% 0.3%
0.1%
United Kingdom
2.2%
2.2% 1.7%
1.3%
Source: International Monetary Fund, World Economic Outlook Update. Red values January 2016. Black values July 2016.
2016 Midyear Economic Update for Metro Denver
Real U.S. Gross Domestic Product Annual Average Growth Rates 5% 4% 3%
2.7%
2.5% 1.8%
2%
2.2% 1.6%
2.4%
2.6%
1.7%
1.6%
2.0%
1% 0% -0.3%
-1% -2% -3%
-2.8%
-4% 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e 2017f
Source: U.S. Bureau of Economic Analysis. 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
Employment The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails. - William Arthur Ward © Can Stock Photo Inc. / herreid
2016 Midyear Economic Update for Metro Denver
Colorado 5th fastest growing state in 2015; #11 through first half of 2016 Nonfarm Job Growth Rates 4.0%
#3 #7
3.0%
#1 #5
#5 #11
#3
#6 #14
2.0%
#25
1.0% 0.0% -1.0% -2.0% -3.0% #49 -4.0%
AZ
CO
KS
NE
NM
2014
2015
OK
TX
UT
WY
2016
Source: U.S. Bureau of Labor Statistics, Current Employment Statistics.
2016 Midyear Economic Update for Metro Denver
Employment growth varies across the state Nonfarm Job Growth Rates by Metro Area, 1st Half 2016 U.S.
1.8% 2.7%
Colorado
Fort Collins
3.6%
Metro Denver
2.9%
Colorado Springs
2.9% 2.0%
Pueblo Grand Junction Greeley
0.5%
0.4%
0.0%
1.0%
2.0%
3.0%
4.0%
Source: U.S. Bureau of Labor Statistics, Current Employment Statistics.
2016 Midyear Economic Update for Metro Denver
Nonfarm Job Growth Rates Metro Denver 2016 Employment = 1.6 million 2013-2015: average 52,700 jobs added per year; expect 45,000 in 2016 6% 3.7%
4%
2%
3.5%
1.9%
2.1%
2014
2015
0% 2006
2007
2008
2009
2010
2011
2012
2013
2.8%
1.8%
2.3%
1.4%
2016e 2017f
-2% -4% United States
Metro Denver
-6% Source: U.S. Bureau of Labor Statistics. 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
Key Metro Denver and Northern Colorado Industry Clusters • • • •
Aerospace
Aviation NEW
Beverage Production Bioscience • Medical Devices & Diagnostics • Pharmaceuticals & Biotechnology
• Broadcasting &
• Energy • Fossil Energy • Cleantech • Financial Services • Banking & Finance • Investments • Insurance • Healthcare & Wellness • IT/Software
Telecommunications
2016 Midyear Economic Update for Metro Denver
Metro Denver and Northern Colorado Industry Clusters, 2014-2015
Source: Development Research Partners.
2016 Midyear Economic Update for Metro Denver
Commercial Real Estate
May you have a strong foundation when the winds of change shift… - Bob Dylan, “Forever Young” © Can Stock Photo Inc. / josephpucadyilphoto
2016 Midyear Economic Update for Metro Denver
Metro Denver Commercial Real Estate Vacancy Rate (direct) 2Q 2015 2Q 2016
Lease Rate 2Q 2015 2Q 2016
Office
9.7%
9.0%
$23.88
$25.00
Industrial
2.9%
3.7%
$6.57
$7.45
Retail
5.1%
4.8%
$15.90
$16.42
Construction Activity (YTD through 2Q 2016) • Office: 0.5 MSF completed; 4.0 MSF under construction • Industrial: 2.1 MSF completed: 3.5 MSF under construction • Retail: 0.6 MSF completed; 1.0 MSF under construction Source: CoStar Group, Inc.
2016 Midyear Economic Update for Metro Denver
New Commercial Real Estate Added in Metro Denver 5.0
Office
4.5
Industrial
Retail
Millions of Square Feet
4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
Source: CoStar Realty Information 2016 estimate=DRP analysis of CoStar data
2016 Midyear Economic Update for Metro Denver
Consumer Activity
The future's in the air. I can feel it everywhere. Blowing with the wind of change. – Klaus Meine Scorpions, “Wind of Change”
© Can Stock Photo Inc. / FotoYou123
2016 Midyear Economic Update for Metro Denver
Components of Real GDP ($billions, 2009 chained; seasonally adjusted at annual rates) $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 Consumption
$6,000
Investment
$5,000
Net Exports
$4,000
Government
$3,000 $2,000 $1,000
-$1,000
1929 1932 1935 1938 1941 1944 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
$0
Source: U.S. Bureau of Economic Analysis.
2016 Midyear Economic Update for Metro Denver
Personal Savings Rate 20-year average rate = 5.0%; 2015 and first half 2016 = 5.8% 20.0% 18.0% 16.0% 14.0% 12.0% 10.0%
8.0% 6.0% 4.0% 2.0% 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
0.0%
Recession
Personal Savings Rate Source: St. Louis Federal Reserve.
2016 Midyear Economic Update for Metro Denver
Household Debt Balance & Composition
2016 Midyear Economic Update for Metro Denver
Metro Denver Annual Change in Population 2016 Population = 3.12 Million
75,000
Net Migration
65,000
Natural Increase
55,000
45,000 35,000 25,000 15,000 5,000 -5,000
2000
2005
2010
2015
2020
2025
2030
Source: Colorado Division of Local Government, State Demography Office.
2016 Midyear Economic Update for Metro Denver
Metro Denver Real Retail Trade Sales Growth Rates 8% 6%
4.0%
5.4%
4.3%
3.3%
4%
5.2%
3.1%
4.4%
2.4%
2%
2.3%
2.5%
0% -2% -4% -4.7%
-6% -8% -10% -12%
-10.6%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e 2017f
Source: Colorado Department of Revenue. 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
Residential Real Estate
My lips are chapped from the winds of change. – Sarah Vowell
© Can Stock Photo Inc. / ksenchik30
2016 Midyear Economic Update for Metro Denver
Home sales begin to slip, though remain at a reasonable level Metro Denver Existing Home Sales Closed 60,000 55,000
53,631 54,068 50,244
50,000
55,509
54,121
52,498
49,789 47,837 45,203
45,000
42,070
40,000
38,818
38,105
35,000 30,000 25,000 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e 2017f
Sources: Metrolist (2005-2010); Denver Metro Association of REALTORS (2011-2015). 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
Metro Denver ranked #18 for median home price in 2015 (Boulder #7 at $454K) Median Home Prices (in thousands)
$450
$382
$400
$354
$350 $300 $250 $200
$403
$310
$281 $250
$222
$245 $218
$150
$219 $197
$220
$172
$232
$173
$231
$166
$252
$177
$100
$197
$209
$224
United States
$237
$249
Metro Denver
$50 $0 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e 2017f
Source: National Association of REALTORS. 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
Apartment Vacancy and Rental Rates Metro Denver Vacancy Rate
11%
Metro Denver Rental Rate
$1,500 $1,400 $1,300 $1,200
7% $1,100 $1,000
5%
Monthly Rental Rate
Vacancy Rate
9%
$900
3%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015 2016e
$800
Source: Denver Metro Apartment Vacancy & Rent Survey. 2016e = DRP estimate
2016 Midyear Economic Update for Metro Denver
Multi-family represents 54% of new construction in 2016 (30+ year average = 28%) Metro Denver Building Permits* 30,000
Multi-Family (5+ units) Single-Family Attached (2-4 units) Single-Family Detached (1 unit)
25,000 20,000 15,000 10,000 5,000 0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e 2017f
* The Census Bureau tracks building permits by the number of housing units in the structure. Source: U.S. Census Bureau, Building Permits. 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
www.metrodenver.org
2016 Midyear Economic Update for Metro Denver
© Can Stock Photo Inc. / BettinaBlass
Global Outlook
If one does not know to which port one is sailing, no wind is favorable. - Lucius Annaeus Seneca (Seneca the Younger) Courtesy of Portland State University
2016 Midyear Economic Update for Metro Denver
Mixed Global Growth Prospects Year over Year Growth in Output 2015
2016
2017
World
3.1%
3.4% 3.1%
3.4%
United States
2.4%
2.6% 2.2%
2.5%
Canada
1.1%
1.7% 1.4%
2.1%
Mexico
2.5%
2.6% 2.5%
2.6%
Euro Area
1.7%
1.7% 1.6%
1.4%
China
6.9%
6.3% 6.6%
6.2%
Japan
0.5%
1.0% 0.3%
0.1%
United Kingdom
2.2%
2.2% 1.7%
1.3%
Source: International Monetary Fund, World Economic Outlook Update. Red values January 2016. Black values July 2016.
2016 Midyear Economic Update for Metro Denver
Real U.S. Gross Domestic Product Annual Average Growth Rates 5% 4% 3%
2.7%
2.5% 1.8%
2%
2.2% 1.6%
2.4%
2.6%
1.7%
1.6%
2.0%
1% 0% -0.3%
-1% -2% -3%
-2.8%
-4% 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e 2017f
Source: U.S. Bureau of Economic Analysis. 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
Employment The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails. - William Arthur Ward © Can Stock Photo Inc. / herreid
2016 Midyear Economic Update for Metro Denver
Colorado 5th fastest growing state in 2015; #11 through first half of 2016 Nonfarm Job Growth Rates 4.0%
#3 #7
3.0%
#1 #5
#5 #11
#3
#6 #14
2.0%
#25
1.0% 0.0% -1.0% -2.0% -3.0% #49 -4.0%
AZ
CO
KS
NE
NM
2014
2015
OK
TX
UT
WY
2016
Source: U.S. Bureau of Labor Statistics, Current Employment Statistics.
2016 Midyear Economic Update for Metro Denver
Employment growth varies across the state Nonfarm Job Growth Rates by Metro Area, 1st Half 2016 U.S.
1.8% 2.7%
Colorado
Fort Collins
3.6%
Metro Denver
2.9%
Colorado Springs
2.9% 2.0%
Pueblo Grand Junction Greeley
0.5%
0.4%
0.0%
1.0%
2.0%
3.0%
4.0%
Source: U.S. Bureau of Labor Statistics, Current Employment Statistics.
2016 Midyear Economic Update for Metro Denver
Nonfarm Job Growth Rates Metro Denver 2016 Employment = 1.6 million 2013-2015: average 52,700 jobs added per year; expect 45,000 in 2016 6% 3.7%
4%
2%
3.5%
1.9%
2.1%
2014
2015
0% 2006
2007
2008
2009
2010
2011
2012
2013
2.8%
1.8%
2.3%
1.4%
2016e 2017f
-2% -4% United States
Metro Denver
-6% Source: U.S. Bureau of Labor Statistics. 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
Key Metro Denver and Northern Colorado Industry Clusters • • • •
Aerospace
Aviation NEW
Beverage Production Bioscience • Medical Devices & Diagnostics • Pharmaceuticals & Biotechnology
• Broadcasting &
• Energy • Fossil Energy • Cleantech • Financial Services • Banking & Finance • Investments • Insurance • Healthcare & Wellness • IT/Software
Telecommunications
2016 Midyear Economic Update for Metro Denver
Metro Denver and Northern Colorado Industry Clusters, 2014-2015
Source: Development Research Partners.
2016 Midyear Economic Update for Metro Denver
Commercial Real Estate
May you have a strong foundation when the winds of change shift… - Bob Dylan, “Forever Young” © Can Stock Photo Inc. / josephpucadyilphoto
2016 Midyear Economic Update for Metro Denver
Metro Denver Commercial Real Estate Vacancy Rate (direct) 2Q 2015 2Q 2016
Lease Rate 2Q 2015 2Q 2016
Office
9.7%
9.0%
$23.88
$25.00
Industrial
2.9%
3.7%
$6.57
$7.45
Retail
5.1%
4.8%
$15.90
$16.42
Construction Activity (YTD through 2Q 2016) • Office: 0.5 MSF completed; 4.0 MSF under construction • Industrial: 2.1 MSF completed: 3.5 MSF under construction • Retail: 0.6 MSF completed; 1.0 MSF under construction Source: CoStar Group, Inc.
2016 Midyear Economic Update for Metro Denver
New Commercial Real Estate Added in Metro Denver 5.0
Office
4.5
Industrial
Retail
Millions of Square Feet
4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e
Source: CoStar Realty Information 2016 estimate=DRP analysis of CoStar data
2016 Midyear Economic Update for Metro Denver
Consumer Activity
The future's in the air. I can feel it everywhere. Blowing with the wind of change. – Klaus Meine Scorpions, “Wind of Change”
© Can Stock Photo Inc. / FotoYou123
2016 Midyear Economic Update for Metro Denver
Components of Real GDP ($billions, 2009 chained; seasonally adjusted at annual rates) $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 Consumption
$6,000
Investment
$5,000
Net Exports
$4,000
Government
$3,000 $2,000 $1,000
-$1,000
1929 1932 1935 1938 1941 1944 1947 1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
$0
Source: U.S. Bureau of Economic Analysis.
2016 Midyear Economic Update for Metro Denver
Personal Savings Rate 20-year average rate = 5.0%; 2015 and first half 2016 = 5.8% 20.0% 18.0% 16.0% 14.0% 12.0% 10.0%
8.0% 6.0% 4.0% 2.0% 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015
0.0%
Recession
Personal Savings Rate Source: St. Louis Federal Reserve.
2016 Midyear Economic Update for Metro Denver
Household Debt Balance & Composition
2016 Midyear Economic Update for Metro Denver
Metro Denver Annual Change in Population 2016 Population = 3.12 Million
75,000
Net Migration
65,000
Natural Increase
55,000
45,000 35,000 25,000 15,000 5,000 -5,000
2000
2005
2010
2015
2020
2025
2030
Source: Colorado Division of Local Government, State Demography Office.
2016 Midyear Economic Update for Metro Denver
Metro Denver Real Retail Trade Sales Growth Rates 8% 6%
4.0%
5.4%
4.3%
3.3%
4%
5.2%
3.1%
4.4%
2.4%
2%
2.3%
2.5%
0% -2% -4% -4.7%
-6% -8% -10% -12%
-10.6%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e 2017f
Source: Colorado Department of Revenue. 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
Residential Real Estate
My lips are chapped from the winds of change. – Sarah Vowell
© Can Stock Photo Inc. / ksenchik30
2016 Midyear Economic Update for Metro Denver
Home sales begin to slip, though remain at a reasonable level Metro Denver Existing Home Sales Closed 60,000 55,000
53,631 54,068 50,244
50,000
55,509
54,121
52,498
49,789 47,837 45,203
45,000
42,070
40,000
38,818
38,105
35,000 30,000 25,000 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e 2017f
Sources: Metrolist (2005-2010); Denver Metro Association of REALTORS (2011-2015). 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
Metro Denver ranked #18 for median home price in 2015 (Boulder #7 at $454K) Median Home Prices (in thousands)
$450
$382
$400
$354
$350 $300 $250 $200
$403
$310
$281 $250
$222
$245 $218
$150
$219 $197
$220
$172
$232
$173
$231
$166
$252
$177
$100
$197
$209
$224
United States
$237
$249
Metro Denver
$50 $0 2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e 2017f
Source: National Association of REALTORS. 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
Apartment Vacancy and Rental Rates Metro Denver Vacancy Rate
11%
Metro Denver Rental Rate
$1,500 $1,400 $1,300 $1,200
7% $1,100 $1,000
5%
Monthly Rental Rate
Vacancy Rate
9%
$900
3%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015 2016e
$800
Source: Denver Metro Apartment Vacancy & Rent Survey. 2016e = DRP estimate
2016 Midyear Economic Update for Metro Denver
Multi-family represents 54% of new construction in 2016 (30+ year average = 28%) Metro Denver Building Permits* 30,000
Multi-Family (5+ units) Single-Family Attached (2-4 units) Single-Family Detached (1 unit)
25,000 20,000 15,000 10,000 5,000 0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016e 2017f
* The Census Bureau tracks building permits by the number of housing units in the structure. Source: U.S. Census Bureau, Building Permits. 2016e = DRP estimate; 2017f = DRP forecast
2016 Midyear Economic Update for Metro Denver
www.metrodenver.org
2016 Midyear Economic Update for Metro Denver
