Colorado Real Estate Journal - February 18, 2015

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The Metro Denver Economic Development Corp. recently released its ninth annual Industry Cluster Study, an in-depth analysis of the industries creating new jobs and investment in the nine-county metro Denver and Northern Colorado region.

The study, completed by Metro Denver EDC Chief Economist Patty Silverstein and Senior Economist Lisa Strunk of Development Research Partners, evaluates eight major industry clusters in the region: aerospace, aviation, bioscience, broadcasting and telecommunications, energy, financial services, health care and wellness, and information technology-software. One-year employment figures factor data through the third quarter of 2014.

“While three industry clusters and subclusters experienced slight employment contractions that are mostly in line with national trends, the region’s overall outlook is very positive as we continue to expand the diversity of our economic base,” said Silverstein.

According to Silverstein, the nine-county region has come a long way in recovering jobs within its largest industry clusters following the 2008 to 2010 recession. She noted that in the 2010 study, only clean tech posted positive annual job growth, while in 2014, employment expanded in nine of 12 clusters and subclusters.

The energy industry – including fossil fuels and clean tech – continues to be a powerhouse contributing to economic expansion in the region, posting five-year job growth of 38 percent and 22.5 percent, respectively.

Now more
than ever
before, we
see the
benefits of
our balanced
energy
approach.'

– Tom Clark,
Metro Denver EDC

“Now more than ever before, we see the benefits of our balanced energy approach,” explained Tom Clark, CEO of the Metro Denver EDC. “This industry with both its elements represents much of Colorado’s economy today with a combined $6.4 billion annual payroll. We are also encouraged with the increased growth in financial services, especially in the investment and insurance subclusters, demonstrating our rebound from the disruptive financial elements of the Great Recession.” The study also cites the future impact of the permanent satellite office of the U.S. Patent and Trademark office, the continuing build-out of FasTracks and new nonstop international flights as having positive impacts to all industries in the region.

The metro Denver cluster analysis includes industry descriptions and employment trends, major companies, employment concentration rank compared to the 50 largest U.S. metropolitan areas, comprehensive workforce profiles, and detailed industry news and developments.

Additional information can be found at www.metrodenver.org.

Updates…

The Metro Denver EDC and the Denver Metro Chamber of Commerce presented the 2015 Metro Denver Forecast at Vectra Bank’s 22nd annual Economic Forecast Breakfast.

The 2015 Economic Forecast is researched by Silverstein and reviews the events of the past several years as well as highlights emerging trends for this year. The forecast includes national-level information and includes estimates for statewide indicators as well.

“Metro Denver will continue to benefit from solid economic performance in 2015. Even as we experience increasing employment and confident consumers, we need to recognize that our aging and retiring baby boomers and well-educated and ready-for-the-workforce millennials are changing the face of our community and influencing housing patterns and how we do business,” said Silverstein.

Compared with the national average, metro Denver's employment growth in 2014 was more than 1.3 percentage points higher at 3.2 percent, which included gains in each supersector except information. Silverstein forecasts job growth in 2015 to be 3 percent, which represents the addition of about 45,000 jobs.

According to Silverstein, four supersectors of the regional economy should post strong employment growth in 2015: natural resources and construction (5 percent), education and health care services (4.1 percent), professional and business services (4 percent), and leisure and hospitality (3.6 percent).

Silverstein also highlighted the demographic shifts that are changing the face of metro Denver’s workforce. She noted that millennials (born between 1981 and 1997) now compose the largest population group in metro Denver.

“While Generation X and baby boomers dominate the workforce today, the millennials are making their mark on the workplace and will represent the largest component of the labor force within 10 years,” she explained.

Changing demographics have implications not only for future labor force growth patterns and consumer spending, but also residential real estate purchases.

The Metro Denver EDC's CEO, Tom Clark, said that with limited supply in the residential real estate market and aboveaverage population growth, home prices and appreciation are rising and construction activity is picking up.

“While increased residential construction activity is very positive for our economy, we do see challenges related to millennials and baby boomers seeking affordable, owneroccupied housing due to almost flat construction of condos and a historic rise in apartment construction,” said Clark. “We are working with the state Legislature on construction defects legislation to address this critical gap.” The forecast for metro Denver includes the seven counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson. Economic indicators analyzed include: population trends, employment by industry, unemployment, retail sales growth, commercial real estate and residential activity.