CREJ - Journal

Page 10

— Multifamily Properties Quarterly — April 2015

n March, the U.S. Bureau

of Labor Statistics released

revised job growth numbers

indicating that nearly 4,900

jobs were created in Colorado

Springs in 2014. This translates to a

1.9 percent employ-

ment growth rate,

which is much clos-

er to the state aver-

age and the Denver

job growth. These

revised results

coincide with

Colorado Springs’

current business

regulations that are

among the most

favorable in the

country. In fact,

Colorado Springs

ranked No. 1 in sev-

eral national rank-

ings of small-busi-

ness-friendly cities.

It is encouraging

to see these favor-

able policy deci-

sions attract quality

employers and pro-

duce the volume

of job growth that

many have been

anticipating.

These revised job

growth statistics

also intuitively cor-

respond with Colo-

rado Springs’ production in terms

of apartment fundamentals. During

third-quarter 2014, vacancy reached

its lowest level since 2001 at 4.71 per-

cent. The market also saw remark-

able year-over-year rent growth,

with average rents increasing 7.1

percent during fourth-quarter 2014.

In order for the city to maintain

these optimal conditions for apart-

ment owners, continued job growth

will be a critical component. During

first-quarter 2015, Colorado Springs

experienced several exciting devel-

opments that may be the final boost

to stabilize these apartment funda-

mentals into the foreseeable future.

In February, Colorado Springs

received invigorating news that

many are considering the most sig-

nificant development for the local

economy in the past 25 years. A

subsidiary of Sierra Nevada Corp.

recently selected the city for an $88

million facility that it anticipates will

contribute billions of dollars to the

local economy. The company plans

to employ more than 2,100 people

over the next five years with an

average annual salary of more than

$80,000. Maybe the most exciting

news of all is what this new facil-

ity will be producing. The facility

will be transforming the interiors of

wide-body aircrafts into flying offices

for high-end corporate customers.

Sierra Nevada Corp. chose Colorado

Springs over cities in South Carolina

because of favorable tax regulations

that are estimated to save the com-

pany $357 million. Colorado Springs

Mayor Steve Bach compared the

announcement to the impact that

Apple and MCI had on their loca-

tions in the early 1990s, and believes

Sierra Nevada’s new facility will have

a similar economic impact.

While this may be some of the

best news for Colorado Springs in

a quarter century, Sierra Nevada’s

announcement may be just the

beginning. This news has the poten-

tial to spark additional developments

and attract other businesses that

would launch aviation into the city’s

top industries. Sierra Nevada’s news

may increase the probability of Colo-

rado Springs landing an additional

contract that would bring a $300

million space-training facility to the

Colorado Springs airport business

park. The airport itself has long been

the second busiest in the state, serv-

ing over 2 million passengers annu-

ally. It also offers nonstop service to

16 cities and handles approximately

110 arrivals and departures daily.

Many defense contractors already

have realized the value of center-

ing their operations near the air-

port and Peterson Air Force Base.

Currently there are 3,500 workers

in the defense industry near the

airport. Some of the most signifi-

cant employers include Northorp

Grumman, Vectrus, ITT Industries,

Integral Systems Inc. and Delta Solu-

tions. Delta Solutions, through a

joint venture with Apogee Engineer-

ing, recently secured an $800 million

defense contract that should add

more jobs to the Colorado Springs

economy. Currently, ARA is mar-

keting two properties that look to

directly benefit from this boost in

job growth near the airport. Western

Hills and Landings at Aero Flats are

two apartment communities that

are within minutes of the Sierra

Nevada Corp. development and addi-

tional businesses that are expanding

near Colorado Springs Municipal

Airport. Several investment groups

expressed interest in these assets

primarily because of the recent

developments and the potential for

continued job growth.

The opportunity in the aviation

industry also sparked develop-

ment opportunities in downtown

Colorado Springs. The O’Neil Group

plans to open the Catalyst Campus

this summer on the southeast side

of downtown. A key component of

the campus will be focused on lur-

ing existing aerospace companies

and defense contractors to relocate

to Colorado Springs and its small-

business-friendly climate. In addi-

tion, the facility is designed to act as

a breeding ground for some of the

industry’s top talent by providing

on-the-job education and training

that younger professionals will not

find at colleges and universities. One

of the campus visionaries, Frank

Backes, CEO, Braxton Technologies

(part of the O’Neil Group) describes

the community as an avenue that

could redefine the city’s identity.

“We want Colorado Springs to be

branded as the place to do com-

mand and control, satellite opera-

tions, and satellite design and man-

ufacturing,” said Backes in a recent

newspaper article.

While the aerospace industry has

significant long-term potential,

additional blue-chip companies

have already reinforced their con-

fidence in the Colorado Springs

economy. Progressive Insurance

recently added over 100 workers to

the Colorado Springs workforce. In

January, FedEx broke ground on a

$20 million distribution center that

will be triple the size of its current

facility. In February, Home Depot

announced the hiring of an addi-

tional 350 workers in its five Colo-

rado Springs stores. After adding

250 workers in 2014, T-Mobile plans

to hire an additional 100 employees

this year. These announcements,

along with the developments in

the aerospace industry in the first

quarter of the year, bode well for

an even stronger year for Colo-

rado Springs employment growth

in 2015. If the city continues to

capitalize on this recent job growth

momentum, apartment owners are

poised to benefit with an expanding

pool of qualified renters for years to

come.

Boost in employment impacts thriving market

Colorado Springs Update

Saul Levy

Associate, ARA,

A Newmark

Company, Colorado

Springs

Kevin McKenna

Vice president,

ARA, A Newmark

Company, Colorado

Springs

This map shows the locations of some of the largest employers in Colorado Springs.

Landings at Aero Flats is an apartment community within minutes of Sierra Navada’s development.

Western Hills apartment complex will benefit from new companies moving to Colorado

Springs.