President, Development Research Partners

Member FDICVectraBank.com

Patty SilversteinPresident, Development Research Partners

Metro Denver2015 Economic ForecastFebruary 2015

CHANGING FACES

Photo Credit TRIAS Telematica

2012 Economic Update for Metro Denver

Millennials are largest population group

0

10,000

20,000

30,000

40,000

50,000

60,000

0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90+

Metro Denver Population 2015 = 3.05 millionMillennials730,230

Gen X688,760

Baby Boomers681,110

Silent Gen208,100

Greatest Gen

25,670

Next Gen 719,920

Source: Colorado Division of Local Government, State Demography Office.

2012 Economic Update for Metro Denver

Millennials dominate potential labor force

0

10,000

20,000

30,000

40,000

50,000

60,0000 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90+

Metro Denver Population 2025 = 3.54 millionMillennials839,710

Gen X702,570

Baby Boomers617,030

Silent Gen127,79

Future Gen 436,470

Next Gen 816,830

Source: Colorado Division of Local Government, State Demography Office.

2015 Economic Forecast for Metro Denver

Changing Workspaces


Changing Workspaces

Millennials are on track to be most educated generation in history. (Pew Research Center)

10% increase in contingent employment from 2011 to 2013, now 17.7 million in U.S. (MBO Partners)

Telecommuting rose 79% between 2005 and 2012, now 2.6% of workforce (American Community Survey)

1/2 to 2/3 of Millennials interested in entrepreneurship, and 27% already self-employed. (U.S. Chamber of Commerce Foundation)


Nonfarm Job Growth Rates

1.1%1.7% 1.9% 2.0%

0.8%

3.5% 3.2%3.0%

-6%

-4%

-2%

0%

2%

4%

6%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015f

United States Metro Denver

Metro Denver 2014 Employment = 1.5 million68K jobs lost 2009-10; 64K jobs added 2011-12; 96K jobs added 2013-14

Source: U.S. Bureau of Labor Statistics.


Proprietors are another significantcomponent of employment

592,421

792,999 816,308

837,048

500,000

550,000

600,000

650,000

700,000

750,000

800,000

850,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: U.S. Bureau of Economic Analysis.

Proprietors Employment25% of Colorado’s Total Employment (US avg = 22%)


Key Metro Denver Industry Clusters

Aerospace Aviation Bioscience

Medical Devices & Diagnostics Pharmaceuticals & Biotechnology

Broadcasting & Telecommunications

Energy Fossil Energy Cleantech

Financial Services Banking & Finance Investments Insurance

Healthcare & Wellness IT/Software


Metro Denver Industry Clusters2013-2014


Metro Denver Commercial Real Estate

Vacancy Rate (direct) Lease Rate4Q 2013 4Q 2014 4Q 2013 4Q 2014

Office 11.2% 10.0% $22.06 $22.87

Industrial 3.9% 3.0% $5.07 $6.10

Retail 6.0% 5.6% $15.40 $15.47

Source: CoStar Realty Information, Inc.


Metro Denver Construction Activity(as of 4Q 2014)

Office: 1.2 MSF completed; 2.8 MSF under construction

Industrial: 2.6 MSF completed; 1.4 MSF under construction

Retail: 0.6 MSF completed; 0.9 MSF under construction

Infrastructure

FasTracks: West, East, Gold, I-225, North Metro, U.S. 36 BRT DIA: Westin Hotel, Public Transit Center, C Concourse expansion I-70 from DIA to Eagle County Airport??


Changing Places


Changing Places

Student loan debt more than tripled in past decade, to more than $1.1 trillion. While Fannie- and Freddie-backed borrowers have an average score of 740, most Millennials have credit scores below 700. (Source: FICO)

In 2012, 36% of the nation’s Millennials were living in their parents’ home. This is the highest share in at least four decades. (Source: Pew Research Center)

Younger buyers tend to buy older homes, and are more likely to buy previously owned homes. Most often they do so because the home is a better price and better overall value. (Source: National Association of Realtors)


Consistent sales activity expected

53,48253,106

50,244 49,78947,837

42,07038,81839,387

45,203

53,643 53,71254,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015fSources: Metrolist, Inc.; Denver Metro Association of Realtors.

Metro Denver Existing Home Sales Closed


Metro Denver ranks in top 20for median home price

$195$166

$197 $207 $216

$239$219

$281$307 $325

$0

$50

$100

$150

$200

$250

$300

$350

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015f

United States

Source: National Association of REALTORS.

Median Home Prices (in thousands)


Strong demand for higher density options

Source: Denver Metro Apartment Vacancy & Rent Survey.

9.7%

8.2%7.0%

6.2%6.6%

8.1%

5.9%5.2% 4.7% 4.6% 4.6%

0%

2%

4%

6%

8%

10%

12%

14%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Metro Denver Apartment Vacancy Rate


Multi-family currently representsabout half of new construction

0

5,000

10,000

15,000

20,000

25,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015f

Multi-Family (5+ units)

* The Census Bureau tracks building permits by the number of housing units in the structure.Source: U.S. Census Bureau, Building Permits.

Metro Denver Building Permits*


Thank You!

Development Research Partners10184 West Belleview Avenue, Suite 100

Littleton, Colorado 80127(303) 991-0070

www.DevelopmentResearch.net

Patricia Silverstein, [email protected]

President, Development Research Partners

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