Most recent economic update on current real estate and economic trends.

1. S E P T E M B E R 2 0 0 9
Economic Summary
Consumer confidence vs. spending will complicate quick recovery
Many analysts agree that recovery from the the largest percentage declines in natural
recession in coming quarters will be slower resources and construction, manufacturing,
than recoveries from previous downturns, and professional and business services.
partly because consumer spending seems Still, recent monthly increases in professional
unlikely to rebound quickly, according and business services employment could
to data collected by the Metro Denver indicate a stabilizing job market. The indus-
Economic Development Corporation (Metro try includes temporary and contract worker
Denver EDC) in its Monthly Economic employment, and an increase in these jobs
Summary for September 2009. tends to foretell a better labor market.
Improvement in the Mountain Region Metro Denver’s unemployment rate was
Consumer Confidence Index suggests 7.8 percent in both June and July. Despite
local consumers have an increasingly pos- recent increases, Metro Denver’s current
itive economic outlook, although survey unemployment rate is roughly two percent-
respondents are still voicing concern over age points lower than the nationwide rate.
uncertain job prospects and less-than-stellar
The decline in residential real estate seems
income growth.
to be slowing. According to the National
“Consumers are largely anticipating better Association of Realtors (NAR), a 7.2 per-
conditions, but that optimism has yet to cent increase in U.S. existing home sales
change their willingness to spend,” stated between June and July was the largest
Patty Silverstein, chief economist for the reported gain dating back to 1999.
Metro Denver EDC and president of
Metro Denver existing home sales increased
Development Research Partners. “This will
more than 6 percent between June and
hold recovery back, as consumer spending
July but remained 13.3 percent below sales
drives 70 percent of U.S. economic activity.”
from July 2008. The region’s average home
Consumers’ ability to spend is also in prices—while still below the prior year’s
question as the economy recovers, because levels—are beginning to firm as home sales
consumer wealth and access to credit has accelerate.
declined significantly. These factors are
Joe Hubert Looking ahead, consumer behavior indica-
certainly weighing on Metro Denver retail
tors and other economic drivers are likely
Office 720-529-1616 sales, which were down more than 13
to show mixed signals. Slow improvement
Cell 303-550-7989 percent year-to-date through May.
from one month or quarter to the next will
jhubert@ltgc.com
Metro Denver employers cut 9,400 jobs likely still result in weakened trends from
5690 DTC Blvd. between June and July, but seasonally prior years, at least until positive labor
Suite 650E adjusted data suggest the loss was market prospects and improved financial
Englewood, CO 80111 smaller than expected for this time of year. markets give consumers and businesses the
Office 303-770-9596 Year-to-date growth rates remained nega- resources they need for growth.
Fax 303-290-9040 tive in Jully for each of the 11 Metro Denver
Economic indicators for Metro Denver are
industry supersectors except education,
www.LTGC.com currently showing this mixed behavior.
health services, and government, with

2. Page 2 Eleven of the 18 indicators moved in a Commercial Real Estate
positive direction for the month, while only According to CoStar Realty Information,
Economic Summary
three indicators moved in a positive annual Inc., Metro Denver’s direct office market
direction. In last month’s report, seven vacancy rate for the second quarter of 2009
indicators moved in a positive monthly did not change from the first quarter at 13.6
direction and three indicators moved in percent. Average second quarter lease rates
a positive annual direction. were also flat over the quarter at $21.04 per
The Monthly Economic Summary provides square foot, and office market construction
a snapshot of metro area economic activity, activity rose slightly from the first quarter.
as well as its relationship to national and Compared to construction volume in the
regional economic trends. Key highlights second quarter of 2008, however, the
include: second quarter 2009 volume was down
more than 45 percent.
Consumer Sector According to CoStar data, Metro Denver’s
The Mountain Region Consumer Confidence direct industrial market vacancy rate rose
Index rose in August as respondents’ in the second quarter of 2009 to 7.2
assessments of present conditions and their percent. Average industrial market lease
near-term outlooks improved. rates declined slightly to $5 per square
Data available through May show the decline foot in the second quarter, and industrial
in Metro Denver retail sales accelerating construction halted.
through early summer. Specifically, retail Trends in Metro Denver’s flex market
sales across all industries in Metro Denver were flat between the first and second
were down almost 20 percent over the year quarters of 2009, according to CoStar.
in May, and statewide sales were down The region’s direct flex market vacancy
almost 19 percent. rate was unchanged between the first and
The stock market continued to rise in second quarter at 14.5 percent, and
August. The Dow Jones Industrial Average average lease rates declined slightly to
and NASDAQ posted year-to-date returns of $9.52 per square foot.
8.2 percent and 27.4 percent, respectively, Vacancy and lease rates in Metro Denver’s
and the year-to-date return on the Bloom- retail market weakened further in the second
berg Colorado Index reached an even higher quarter of 2009, according to CoStar. The
27.9 percent. direct retail vacancy rate rose in the second
quarter to 9.2 percent, or a rate roughly
Residential Real Estate one-percentage point above last year’s level.
Metro Denver foreclosure filings increased Average lease rates fell to $17.05 per square
roughly five percent between June and foot in the second quarter from $17.11 per
July. Despite moderate increases in foreclo- square foot in the first quarter and are now
sure activity over the past several months, down $0.88 per square foot from last year.
foreclosure filings have declined on a year-
to-date basis in each of the seven Metro ______________________________________
Denver counties except Boulder County, the
This article was shortened for length and
City and County of Broomfield, and Douglas
reprinted with permission of the Metro
County.
Denver Economic Development Corpora-
Metro Denver residential permit activity tion. For a full version of this report, visit the
increased slightly between May and June as Metro Denver EDC at www.metrodenver.org.
builders began more detached and attached
single-family projects. Permits pulled through Disclaimer: This publication is designed to provide accurate and
authoritative information in regard to the subject matter covered. It is
June for all types of residential buildings fell distributed with the understanding that the publisher is not engaged in
68 percent from the number pulled in the rendering legal, accounting, or other professional service. If legal or
accounting advice or other expert assistance is required, the services of
first six months of last year. a competent professional should be sought.
© Copyright, 2009, Land Title Guarantee Company