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Page 4 — Office Properties Quarterly — September 2017
Market Update
ROBERT WHITTELSEY | KATY SHEEHY
COLLIERS INTERNATIONAL
4643 S. Ulster Street | Suite 1000 | Denver, CO 80237
+1 303 745 5800
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OWNED & OPERATED BY:
A s the current economic
expansion continues, people
start to question where we
are in the business cycle.
The “official” declaration of
U.S. expansions and contractions
comes from the National Bureau of
Economic Research. As of August,
the current economic expansion
has been underway for 98 months,
which currently ranks as the third-
longest expansion since tracking
began in 1854. Where we are in the
business cycle is an important con-
sideration for most companies as
they plan and budget for changing
sales and staffing expectations.
While national business cycles
are tracked using measures such as
gross domestic product, personal
income, industrial production and
employment, these measures may
not be available at the state level or
are released with such a lag as to
not be useful. Therefore, employ-
ment statistics, which are released
on a monthly basis, are closely
watched at the state and local lev-
els as the key indicator of an area’s
economic health.
After ranking fifth for employ-
ment growth in 2015 and 13th in
2016, Colorado ranked 11th for
employment growth as of mid-2017.
Nevada and Utah currently hold the
top spots in the country with a 3.3
percent increase in employment.
Colorado employment growth is
expected to average 2.1 percent in
2017, representing the addition of
about 55,000 jobs.
Six of the seven metropolitan
statistical areas in Colorado posted
increased employment from the
first half of 2016 to the first half
of 2017. The
lone exception
was the Grand
Junction MSA,
where employ-
ment declined
0.4 percent. The
Fort Collins MSA
grew the fastest
in 2015 and 2016,
and that trend
continued into the
first half of 2017
as the region’s
employment base
increased 4.3
percent. The big-
gest shift in posi-
tion was in the Greeley MSA. After
employment decreased by 1.3 per-
cent in 2016, primarily due to the
decline in oil and gas, employment
expanded by 2.6 percent in the first
half of 2017, ranking the Greeley
MSA as the second-fastest growing
MSA in Colorado.
Nearly 1.7 million jobs are located
in metro Denver, defined as the
Denver MSA plus the Boulder MSA.
Dividing the employment base into
11 supersectors reveals that nine
of the categories in metro Denver
increased through the first half of
the year, with the exceptions of the
information and manufacturing
supersectors. The education and
health services supersector report-
ed the largest percentage increase
in employment and added the most
new jobs, averaging a 4.1 percent
increase in employment in the first
six months of the year, or the addi-
tion of 8,500 jobs. The professional
and business services supersector
is the largest of the 11 supersectors
and added 7,200 jobs over the peri-
od. The natural resources supersec-
tor recorded the smallest increase
in employment over the year, rising
0.5 percent with the addition of 500
jobs.
Looking ahead, the Manpower
Employment Outlook Survey
expects that the percentage of com-
panies hiring in the Denver MSA
will increase 3 percentage points
between the second and third quar-
ters, with 30 percent of companies
planning to expand their employ-
ment levels. By comparison, only
about 24 percent of U.S. companies
expect to add workers in the third
quarter.
According to the survey, job pros-
pects are positive in most sectors of
the economy, including transporta-
tion and utilities, wholesale and
retail trade, information, financial
activities, professional and business
services, education and health ser-
vices, leisure and hospitality, other
services, and government. Hiring in
construction and manufacturing is
expected to remain unchanged.
Employment in metro Denver is
forecasted to increase by 2.3 percent
in 2017, representing the addition of
about 37,000 jobs. The employment
growth rate in metro Denver in 2018
is likely to fall slightly as compa-
nies continue to struggle to find the
workers needed as the region posts
an average annual unemployment
rate in the 2.5 to 3 percent range.
• What does this mean for commer-
cial real estate? A simplistic analysis
of employment by supersector high-
lights expected changes in office,
industrial and retail uses.
Supersectors dominated by office
users include professional and busi-
Patricia
Silverstein
President and
chief economist,
Development
Research Partners,
Littleton