May 2015 Downtown Denver Economic Update

Page 1

DOWNTOWN DENVER ECONOMIC UPDATE

RESIDENTIAL DEVELOPMENT

News & Rankings

Residential development in Downtown and its City Center neighborhoods continues at a brisk pace with 1,946 residential units created in 2014. Recently completed projects include Ten10 Brownstones, 2785 Speer, Legacy 22nd and Lumina. Skyhouse Denver, one of the tallest planned rental towers in Downtown’s history, is under construction and will add 354 new rental units to the Central Business District when the 26-story project is completed in 2016. Another new 34-story rental tower, The Confluence, is also under construction in the Central Platte Valley neighborhood and will add 288 new units when it is completed in 2017. On the for-sale front, there are 119 townhomes currently under construction or planned throughout the Downtown neighborhoods. For more information about development in Downtown Denver, refer to the Quarterly Development Map Updates at www.downtowndenver. com/resources-downloads.

RESIDENTIAL DEVELOPMENTS PLANNED OR UNDERWAY AS OF MAY 2015 City Center Neighborhood

For-Sale Units

Rental Units

Number of Projects

Auraria

-

-

-

Ballpark

-

169

1

Capitol Hill

-

347

3

Central Business District

-

729

2

CPV/Denver Union Station

-

2,865

10

68

369

5

-

938

4

Highland

24

672

5

Jefferson Park

27

-

1

La Alma/Lincoln Park

-

745

2

Lower Downtown

-

-

-

Uptown

-

372

1

119

7,206

33

Curtis Park/Five Points Golden Triangle

Total

MAY 2015

Construction began on 17W in early 2015. When completed, the 640unit apartment and retail project will be home to Downtown Denver’s first Whole Foods Market.

Liberty Global announced it will relocate its headquarters from Douglas County to Downtown Denver’s new Triangle Building.

Prologis announced it will move its operations headwaters to Z Block, a mixed-use development currently under construction in LoDo.

Uniqlo, a Japanese fast-fashion retailer, announced it will open one of its first non-coastal stores in Downtown Denver at the Denver Pavilions.

Investopedia ranked Denver as the fourth best U.S. city to become an entrepreneur.

Huffington Post named Denver as one of its five must-visit cities for 2015.

Denver was ranked the sixth most active city in the U.S. by website BetterDoctor.

Sources: Downtown Denver Partnership, Metro Denver Economic Development Corporation, Denver Business Journal, Denver Post.

About This Report

A recent analysis by SelfStorage.com’s blog found that Denver is the third best city for tech startups outside of the Bay Area. The ranking looked at number of patents, access to capital, access to educated workers, amount of new tech jobs and wages. Denver is the sixth best city for IT professionals, according to a recent ranking by InformationWeek. RTD began testing of the new commuter rail cars that will run from Denver Union Station to Denver International Airport. The line will open in 2016.

This report includes the most recent quarterly data available and covers economic conditions in three areas. The first and smallest area, the Business Improvement District (BID), is the core of Downtown Denver, The second area, “Downtown,” includes the BID as well as a few surrounding districts such as the Golden Triangle. The third area, City Center Neighborhoods, includes the BID, Downtown, and surrounding residential neighborhoods such as Uptown and Highland. Data in this report was provided by Development Research Partners. For questions or comments, please contact the Downtown Denver Partnership Research Department at 303-534-6161.

DOWNTOWN DENVER ECONOMIC UPDATE MAY 2015 EMPLOYMENT

RETAIL SALES

RESIDENTIAL REAL ESTATE

OFFICE MARKET

HOTEL MARKET

This report contains the most recent economic indicators available for Downtown Denver and the Business Improvement District. According to the most recent indicators, Downtown Denver economic conditions continue to improve. Employment growth is strong, consumers are spending at a healthy pace, and the downtown commercial real estate markets reported rising average lease rates and declining vacancy.

Summary

EMPLOYMENT Employment levels continued to rise in both Downtown Denver and the Business Improvement District (BID) between the third quarters of 2013 and 2014, with employment levels rising 3.6 % and 2.2%, respectively. The natural resources and construction supersector continued to report the strongest growth, generating an additional 1,530 jobs over-the-year in Downtown Denver. The Leisure and Hospitality Industry also posted a strong 6.9% over-the-year increase in employment.

3Q 2014

Industry

Share

3Q13

3Q14

Change

3Q13

3Q14

Change

Professional & Business Services

31%

35,991

37,656

4.6%

31,530

32,569

3.3%

Government

18%

23,319

22,511

-3.5%

21,105

20,697

-1.9%

Leisure & Hospitality

16%

18,527

19,813

6.9%

12,822

13,080

2.0%

Financial Activities

12%

14,489

14,694

1.4%

11,374

11,248

-1.1%

Natural Resources & Construction

9%

9,588

11,119

16.0%

9,058

10,277

13.5%

Information

3%

4,188

4,255

1.6%

3,521

3,539

0.5%

Wholesale & Retail Trade

3%

4,058

4,072

0.4%

3,013

2,992

-0.7%

Other Services

2%

2,754

2,809

2.0%

2,244

2,368

5.5%

Education & Health Services

2%

2,695

2,808

4.2%

1,556

1,611

3.5%

Transp., Warehousing & Utilities

1%

1,490

1,535

3.0%

1,397

1,417

1.4%

Manufacturing

1%

862

911

5.6%

112

120

6.5%

Total

117,961 122,181 3.6%

97,733

99,918 2.2%

123,000

Employment Trends Downtown Denver

+3.6%

Metro Denver

+3.9%

Colorado

+3.4%

United States

+2.0%

BID

DOWNTOWN DENVER

121,000

DOWNTOWN DENVER HISTORICAL EMPLOYMENT

119,000 117,000 115,000 113,000 111,000 109,000 107,000 3Q10

1Q11

3Q11

1Q12 3Q12

1Q13

3Q13

1Q14

3Q14

Sources: Colorado Department of Labor and Employment, Quarterly Census of Employment and Wages; Colorado Department of Labor and Employment, Labor Market Information, Current Employment Statistics; U.S. Bureau of Labor Statistics; Development Research Partners; Downtown Denver Partnership.


DOWNTOWN DENVER ECONOMIC UPDATE

MAY 2015

RETAIL SALES

MAY 2015

OFFICE, RETAIL & INDUSTRIAL MARKET

Retail sales tax collections in Downtown Denver were 13.3% higher in the fourth quarter of 2014 compared with the prior year. Hotels & Other Accommodation Services, Downtown Denver’s second largest retail category, increased by over 30% for the third quarter in a row.

RETAIL SALES DOWNTOWN Industry

Share

4Q13

BID

4Q14

Change

4Q13

4Q14

Change

Restaurants

47%

$4,790,133

$5,318,163

11.0%

$3,766,926

$3,984,432

5.8%

Hotel & Other Accommodation Svcs.

20%

$1,719,136

$2,293,819

33.4%

$1,530,426

$1,863,287

21.7%

Clothing/Accessory Stores

7%

$749,314

$769,449

2.7%

$743,679

$765,106

2.9%

Miscellaneous Stores

5%

$505,459

$601,931

19.1%

$278,087

$381,802

37.3%

Manufacturing

5%

$534,049

$549,609

2.9%

$452,576

$460,762

1.8%

Information Producers/Distributors

4%

$352,865

$437,741

24.1%

$349,411

$432,040

23.6%

Motor Vehicles & Auto Parts

3%

$394,839

$375,814

-4.8%

$201,679

$169,513

-15.9%

Other Categories (under 3% each of total)

8%

$892,740

$912,871

2.3%

$583,748

$592,788

1.5%

$9,938,535

$11,259,397

$7,906,532

$8,649,730

Total

13.3%

9.4%

CITY CENTER NEIGHBORHOODS Change

1Q14

1Q15

AVG. LEASE RATE* Change

1Q14

1Q15

OFFICE BID

11.9%

9.9%

-2.0

$29.40

$32.20

9.5%

Downtown

11.4%

9.3%

-2.1

$29.11

$31.91

9.6%

Metro Denver

11.1%

9.9%

-1.1

$22.16

$23.30

5.1%

INDUSTRIAL BID **

0.0%

0.0%

0.0

-

-

-

Downtown

0.0%

1.3%

1.3

$10.00

$15.54

55.4%

Metro Denver

3.5%

2.9%

-0.6

$5.28

$6.45

22.2%

RETAIL * Vacancy and average lease rates are for direct space only. Retail and industrial rates are triple-net. ** The BID contains one industrial property, which is occupied.

BID

7.1%

5.6%

-1.4

$22.47

$32.12

42.9%

Downtown

4.9%

3.9%

-1.0

$20.61

$28.85

40.0%

Metro Denver

5.7%

5.3%

-0.3

$15.36

$15.63

1.8%

HISTORICAL OFFICE AVE. LEASE RATE $32.00

4Q13

4Q14

Change

13.5%

$29.00

10.5%

4Q14

9.0%

4Q13

Change

Total Homes Sold

137

145

5.8%

287

313

9.1%

3,095

3,760

21.5%

Ave. Sales Price

$488,300

$470,433

-3.7%

$354,366

$339,614

-4.2%

$196,573

$207,644

5.6%

Ave. Price/sf

$366

$391

6.8%

$311

$330

6.1%

$164

$179

8.9%

SINGLE FAMILY HOMES 0

0

--%

95

82

-13.7%

10,011

10,312

3.0%

Ave. Sales Price

N/A

N/A

--%

$414,082

$428,957

3.6%

$335,849

$361,642

7.7%

Ave. Price/sf

N/A

N/A

0.0%

$280

$303

8.3%

$188

$203

7.9%

ALL HOMES

$30.00

12.0%

METRO DENVER

CONDOMINIUMS/TOWNHOMES

$28.00 $27.00 $26.00

1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15

1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15

HOTEL MARKET Indicators show the hotel market in Downtown Denver started the year off strong. While occupancy rates were slightly down, Average Daily Room Rates and RevPAR both increased. Also, retail sales tax collections from Hotel and Other Accommodation Services have been posting significant increases in recent quarters. OCCUPANCY RATE

AVERAGE DAILY ROOM RATE

REVENUE PER AVAILABLE ROOM (REVPAR)

2015 Year-to-Date*

72.4%

$165.82

$120.10

Total Homes Sold

137

145

5.8%

383

395

3.1%

13,106

14,072

7.4%

2014 Year-to-Date*

74.4%

$154.14

$114.73

Ave. Sales Price

$488,300

$470,433

-3.7%

$371,386

$358,161

-3.6%

$302,959

$320,494

5.8%

Change

-2.7%

7.6%

4.7%

Ave. Price/sf

$366

$391

6.8%

$302

$323

7.0%

$184

$199

7.9%

*Data through end of March

Sources: City and County of Denver Office of the Controller, Colorado Comps.

Change

$31.00

DOWNTOWN 4Q14

VACANCY RATE*

15.0%

The residential real estate market in Downtown Denver and the City Center Neighborhoods finished the year in a strong position. The total number of homes sold increased in both Downtown Denver and the City Center Neighborhoods over-the-year, despite continuing struggles with low inventory. The average price per square foot of homes sold also increased in both areas.

4Q13

The commercial real estate market improved in the Downtown Denver market area between the first quarter of 2014 and 2015. Downtown Denver reported declining vacancy rates in both the office and retail markets, where rates fell 2.1 percentage points and 1.0 percentage points, respectively. The average lease rate for office space in Downtown Denver rose almost 10 percent, while the average lease rate for retail space rose 40 percent.

HISTORICAL OFFICE VACANCY RATE

RESIDENTIAL REAL ESTATE

Total Homes Sold

DOWNTOWN DENVER ECONOMIC UPDATE

Sources: CoStar Realty Information, Downtown Denver Partnership, Rocky Mountain Lodging Report.


DOWNTOWN DENVER ECONOMIC UPDATE

MAY 2015

RETAIL SALES

MAY 2015

OFFICE, RETAIL & INDUSTRIAL MARKET

Retail sales tax collections in Downtown Denver were 13.3% higher in the fourth quarter of 2014 compared with the prior year. Hotels & Other Accommodation Services, Downtown Denver’s second largest retail category, increased by over 30% for the third quarter in a row.

RETAIL SALES DOWNTOWN Industry

Share

4Q13

BID

4Q14

Change

4Q13

4Q14

Change

Restaurants

47%

$4,790,133

$5,318,163

11.0%

$3,766,926

$3,984,432

5.8%

Hotel & Other Accommodation Svcs.

20%

$1,719,136

$2,293,819

33.4%

$1,530,426

$1,863,287

21.7%

Clothing/Accessory Stores

7%

$749,314

$769,449

2.7%

$743,679

$765,106

2.9%

Miscellaneous Stores

5%

$505,459

$601,931

19.1%

$278,087

$381,802

37.3%

Manufacturing

5%

$534,049

$549,609

2.9%

$452,576

$460,762

1.8%

Information Producers/Distributors

4%

$352,865

$437,741

24.1%

$349,411

$432,040

23.6%

Motor Vehicles & Auto Parts

3%

$394,839

$375,814

-4.8%

$201,679

$169,513

-15.9%

Other Categories (under 3% each of total)

8%

$892,740

$912,871

2.3%

$583,748

$592,788

1.5%

$9,938,535

$11,259,397

$7,906,532

$8,649,730

Total

13.3%

9.4%

CITY CENTER NEIGHBORHOODS Change

1Q14

1Q15

AVG. LEASE RATE* Change

1Q14

1Q15

OFFICE BID

11.9%

9.9%

-2.0

$29.40

$32.20

9.5%

Downtown

11.4%

9.3%

-2.1

$29.11

$31.91

9.6%

Metro Denver

11.1%

9.9%

-1.1

$22.16

$23.30

5.1%

INDUSTRIAL BID **

0.0%

0.0%

0.0

-

-

-

Downtown

0.0%

1.3%

1.3

$10.00

$15.54

55.4%

Metro Denver

3.5%

2.9%

-0.6

$5.28

$6.45

22.2%

RETAIL * Vacancy and average lease rates are for direct space only. Retail and industrial rates are triple-net. ** The BID contains one industrial property, which is occupied.

BID

7.1%

5.6%

-1.4

$22.47

$32.12

42.9%

Downtown

4.9%

3.9%

-1.0

$20.61

$28.85

40.0%

Metro Denver

5.7%

5.3%

-0.3

$15.36

$15.63

1.8%

HISTORICAL OFFICE AVE. LEASE RATE $32.00

4Q13

4Q14

Change

13.5%

$29.00

10.5%

4Q14

9.0%

4Q13

Change

Total Homes Sold

137

145

5.8%

287

313

9.1%

3,095

3,760

21.5%

Ave. Sales Price

$488,300

$470,433

-3.7%

$354,366

$339,614

-4.2%

$196,573

$207,644

5.6%

Ave. Price/sf

$366

$391

6.8%

$311

$330

6.1%

$164

$179

8.9%

SINGLE FAMILY HOMES 0

0

--%

95

82

-13.7%

10,011

10,312

3.0%

Ave. Sales Price

N/A

N/A

--%

$414,082

$428,957

3.6%

$335,849

$361,642

7.7%

Ave. Price/sf

N/A

N/A

0.0%

$280

$303

8.3%

$188

$203

7.9%

ALL HOMES

$30.00

12.0%

METRO DENVER

CONDOMINIUMS/TOWNHOMES

$28.00 $27.00 $26.00

1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15

1Q10 3Q10 1Q11 3Q11 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15

HOTEL MARKET Indicators show the hotel market in Downtown Denver started the year off strong. While occupancy rates were slightly down, Average Daily Room Rates and RevPAR both increased. Also, retail sales tax collections from Hotel and Other Accommodation Services have been posting significant increases in recent quarters. OCCUPANCY RATE

AVERAGE DAILY ROOM RATE

REVENUE PER AVAILABLE ROOM (REVPAR)

2015 Year-to-Date*

72.4%

$165.82

$120.10

Total Homes Sold

137

145

5.8%

383

395

3.1%

13,106

14,072

7.4%

2014 Year-to-Date*

74.4%

$154.14

$114.73

Ave. Sales Price

$488,300

$470,433

-3.7%

$371,386

$358,161

-3.6%

$302,959

$320,494

5.8%

Change

-2.7%

7.6%

4.7%

Ave. Price/sf

$366

$391

6.8%

$302

$323

7.0%

$184

$199

7.9%

*Data through end of March

Sources: City and County of Denver Office of the Controller, Colorado Comps.

Change

$31.00

DOWNTOWN 4Q14

VACANCY RATE*

15.0%

The residential real estate market in Downtown Denver and the City Center Neighborhoods finished the year in a strong position. The total number of homes sold increased in both Downtown Denver and the City Center Neighborhoods over-the-year, despite continuing struggles with low inventory. The average price per square foot of homes sold also increased in both areas.

4Q13

The commercial real estate market improved in the Downtown Denver market area between the first quarter of 2014 and 2015. Downtown Denver reported declining vacancy rates in both the office and retail markets, where rates fell 2.1 percentage points and 1.0 percentage points, respectively. The average lease rate for office space in Downtown Denver rose almost 10 percent, while the average lease rate for retail space rose 40 percent.

HISTORICAL OFFICE VACANCY RATE

RESIDENTIAL REAL ESTATE

Total Homes Sold

DOWNTOWN DENVER ECONOMIC UPDATE

Sources: CoStar Realty Information, Downtown Denver Partnership, Rocky Mountain Lodging Report.


DOWNTOWN DENVER ECONOMIC UPDATE

RESIDENTIAL DEVELOPMENT

News & Rankings

Residential development in Downtown and its City Center neighborhoods continues at a brisk pace with 1,946 residential units created in 2014. Recently completed projects include Ten10 Brownstones, 2785 Speer, Legacy 22nd and Lumina. Skyhouse Denver, one of the tallest planned rental towers in Downtown’s history, is under construction and will add 354 new rental units to the Central Business District when the 26-story project is completed in 2016. Another new 34-story rental tower, The Confluence, is also under construction in the Central Platte Valley neighborhood and will add 288 new units when it is completed in 2017. On the for-sale front, there are 119 townhomes currently under construction or planned throughout the Downtown neighborhoods. For more information about development in Downtown Denver, refer to the Quarterly Development Map Updates at www.downtowndenver. com/resources-downloads.

RESIDENTIAL DEVELOPMENTS PLANNED OR UNDERWAY AS OF MAY 2015 City Center Neighborhood

For-Sale Units

Rental Units

Number of Projects

Auraria

-

-

-

Ballpark

-

169

1

Capitol Hill

-

347

3

Central Business District

-

729

2

CPV/Denver Union Station

-

2,865

10

68

369

5

-

938

4

Highland

24

672

5

Jefferson Park

27

-

1

La Alma/Lincoln Park

-

745

2

Lower Downtown

-

-

-

Uptown

-

372

1

119

7,206

33

Curtis Park/Five Points Golden Triangle

Total

MAY 2015

Construction began on 17W in early 2015. When completed, the 640unit apartment and retail project will be home to Downtown Denver’s first Whole Foods Market.

Liberty Global announced it will relocate its headquarters from Douglas County to Downtown Denver’s new Triangle Building.

Prologis announced it will move its operations headwaters to Z Block, a mixed-use development currently under construction in LoDo.

Uniqlo, a Japanese fast-fashion retailer, announced it will open one of its first non-coastal stores in Downtown Denver at the Denver Pavilions.

Investopedia ranked Denver as the fourth best U.S. city to become an entrepreneur.

Huffington Post named Denver as one of its five must-visit cities for 2015.

Denver was ranked the sixth most active city in the U.S. by website BetterDoctor.

Sources: Downtown Denver Partnership, Metro Denver Economic Development Corporation, Denver Business Journal, Denver Post.

About This Report

A recent analysis by SelfStorage.com’s blog found that Denver is the third best city for tech startups outside of the Bay Area. The ranking looked at number of patents, access to capital, access to educated workers, amount of new tech jobs and wages. Denver is the sixth best city for IT professionals, according to a recent ranking by InformationWeek. RTD began testing of the new commuter rail cars that will run from Denver Union Station to Denver International Airport. The line will open in 2016.

This report includes the most recent quarterly data available and covers economic conditions in three areas. The first and smallest area, the Business Improvement District (BID), is the core of Downtown Denver, The second area, “Downtown,” includes the BID as well as a few surrounding districts such as the Golden Triangle. The third area, City Center Neighborhoods, includes the BID, Downtown, and surrounding residential neighborhoods such as Uptown and Highland. Data in this report was provided by Development Research Partners. For questions or comments, please contact the Downtown Denver Partnership Research Department at 303-534-6161.

DOWNTOWN DENVER ECONOMIC UPDATE MAY 2015 EMPLOYMENT

RETAIL SALES

RESIDENTIAL REAL ESTATE

OFFICE MARKET

HOTEL MARKET

This report contains the most recent economic indicators available for Downtown Denver and the Business Improvement District. According to the most recent indicators, Downtown Denver economic conditions continue to improve. Employment growth is strong, consumers are spending at a healthy pace, and the downtown commercial real estate markets reported rising average lease rates and declining vacancy.

Summary

EMPLOYMENT Employment levels continued to rise in both Downtown Denver and the Business Improvement District (BID) between the third quarters of 2013 and 2014, with employment levels rising 3.6 % and 2.2%, respectively. The natural resources and construction supersector continued to report the strongest growth, generating an additional 1,530 jobs over-the-year in Downtown Denver. The Leisure and Hospitality Industry also posted a strong 6.9% over-the-year increase in employment.

3Q 2014

Industry

Share

3Q13

3Q14

Change

3Q13

3Q14

Change

Professional & Business Services

31%

35,991

37,656

4.6%

31,530

32,569

3.3%

Government

18%

23,319

22,511

-3.5%

21,105

20,697

-1.9%

Leisure & Hospitality

16%

18,527

19,813

6.9%

12,822

13,080

2.0%

Financial Activities

12%

14,489

14,694

1.4%

11,374

11,248

-1.1%

Natural Resources & Construction

9%

9,588

11,119

16.0%

9,058

10,277

13.5%

Information

3%

4,188

4,255

1.6%

3,521

3,539

0.5%

Wholesale & Retail Trade

3%

4,058

4,072

0.4%

3,013

2,992

-0.7%

Other Services

2%

2,754

2,809

2.0%

2,244

2,368

5.5%

Education & Health Services

2%

2,695

2,808

4.2%

1,556

1,611

3.5%

Transp., Warehousing & Utilities

1%

1,490

1,535

3.0%

1,397

1,417

1.4%

Manufacturing

1%

862

911

5.6%

112

120

6.5%

Total

117,961 122,181 3.6%

97,733

99,918 2.2%

123,000

Employment Trends Downtown Denver

+3.6%

Metro Denver

+3.9%

Colorado

+3.4%

United States

+2.0%

BID

DOWNTOWN DENVER

121,000

DOWNTOWN DENVER HISTORICAL EMPLOYMENT

119,000 117,000 115,000 113,000 111,000 109,000 107,000 3Q10

1Q11

3Q11

1Q12 3Q12

1Q13

3Q13

1Q14

3Q14

Sources: Colorado Department of Labor and Employment, Quarterly Census of Employment and Wages; Colorado Department of Labor and Employment, Labor Market Information, Current Employment Statistics; U.S. Bureau of Labor Statistics; Development Research Partners; Downtown Denver Partnership.


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