Aurora Economic Development Council

Economic Update

Third Quarter 2009 - Released January 2010

A third quarter increase in U.S. gross domestic product suggests the recession may have ended. While an early sign of improvement is certainly welcome, the sheer magnitude of the recession’s damage will make for a recovery that is longer and slower than those of the past.

Employment Activity

The U.S. recession technically began in December 2007, but metro Aurora/Denver employment grew until the global financial crisis unfolded in the fourth quarter of 2008. Job losses in that quarter were moderate, but rapid layoffs in the following months pushed the region’s over-the-year employment loss to 4.5 percent in the third quarter of 2009. Put another way, slightly less than one in twenty jobs that existed in the third quarter of 2008 were gone one year later.

Metro Aurora/Denver’s 4.5 percent rate of job loss in the third quarter was roughly equal to the statewide rate (-4.6 percent) but was slightly faster than the U.S. rate (-4.3 percent). Sources: Colorado Department of Labor and Employment and U.S. Bureau of Labor Statistics.

Rapid job losses drove Metro Aurora/Denver unemployment rates substantially higher in 2009. The region’s third quarter average unemployment rate of 7.3 percent was up more than two percentage points from third quarter 2008.

In the third quarter of 2009, the Adams County unemployment rate averaged 8.5 percent, and the Arapahoe County rate averaged 7.3 percent. While significantly above long-term norms, third quarter unemployment rates in the two counties and in Metro Denver were lower than the comparable U.S. rate (9.6 percent). Sources: Colorado Department of Labor and Employment and U.S. Bureau of Labor Statistics.

Fourth quarter hiring expectations for Aurora/Denver area employers were some of the weakest ever reported in the Manpower Employment Outlook Survey. Nine percent of employers in the Denver-Aurora-Broomfield MSA planned to add jobs in the fourth quarter of 2009, compared to 12 percent of employers nationwide. Source: Manpower Inc.

Consumer Activity

Between summer and fall, consumers’ hopes for an economic recovery gave way to concerns over a difficult job market. The Conference Board’s Consumer Confidence Index for the Mountain Region fell 10.4 percent between the second and third quarters of 2009. The nationwide index rose over the quarter, but preliminary data for October suggests the gains were short-lived. Source: The Conference Board.
Retail sales in the city of Aurora declined substantially in the first half of 2009. Data from the Colorado Department of Revenue show first quarter sales down 31 percent over-the-year and second quarter sales down 33 percent. Source: Colorado Department of Revenue.
City of Aurora tax revenues have declined as consumers shop and spend less. In the third quarter, city tax revenues were down 6.9 percent from revenues in the third quarter of 2008. The third quarter decline marked the fourth consecutive year-over-year drop in revenues. Source: City of Aurora, Office of Budget and Financial Planning.
Considerable reductions in leisure and business travel have left more hotel rooms unoccupied. In the South and Southeast Denver market – which includes the I-225 corridor – September 2009 hotel occupancy declined to 64.4 percent from 70.8 in September 2008. Occupancy in the Northeast Denver market – which includes Stapleton and Denver International Airport – fell to 65.2 percent in September 2009 from 74.7 percent in the prior year. Thanks to lower occupancy, September room rates in both markets fell below year-ago levels by $15 to $16 per night.

September average room rates for all of Metro Denver fell roughly $17 per night from September 2008, and the region’s September occupancy rate of 66.1 percent was down from the 73.1 percent rate reported at the same time last year. Source: Colorado Hotel & Lodging Association, Rocky Mountain Lodging Report.

Nearly 14 million travelers passed through Denver International Airport in the third quarter of 2009, which represented a 1.5 percent increase from the third quarter of 2008. That increase was the first reported since the fourth quarter of 2008, when passenger traffic rose a negligible 0.02 percent from traffic in the prior year.

Source: Denver International Airport, Traffic Statistics.

Residential Real Estate

Average home prices in the city of Aurora showed signs of stability in the third quarter. The third quarter average sales price for existing single-family homes ($176,000) was 2.6 percent higher than the average from the third quarter of 2008. Similarly, the third quarter 2009 average sales price for Aurora condominiums rose 1.6 percent over-the-year to $99,900.

Higher prices, however, are not necessarily the result of more home sales. In fact, Aurora home sales in the third quarter fell 18.4 percent from sales at the same time last year. The apparent conflict between home sales and prices could reflect a change in the housing inventory: if the most discounted properties were some of the first to sell, the average price of the remaining homes would shift higher.
For the entire metro Aurora/Denver region, third quarter existing home sales fell 12.5 percent over-the-year. Average sales prices for single-family homes and condominiums declined over-the-year by 0.6 percent and one percent, respectively. Source: Metrolist.

Small improvements in housing markets may not immediately translate into better construction trends. A total of 132 building permits were issued in Aurora in the third quarter of 2009, and the count of permits issued through the first three quarters of the year fell more than 38 percent from the count for the same quarters in 2008. Notably, all Aurora permits issued thus far in 2009 have been for detached, single-family homes. Total Metro Denver permits issued through the first three quarters of 2009 fell nearly 63 percent year-to-date, and the region’s count of apartment permits fell by an even larger 85 percent. Source: Home Builders Association of Metro Denver.
Metro Aurora/Denver foreclosures increased through the first half of 2009 as bank moratoria expired and unemployment forced more homeowners to default. The third quarter count of filings rose more than 63 percent over-the-year, although some of the increase reflected the artificially low filing activity that occurred as moratoria took effect in late 2008. Third quarter filings in Adams County increased almost 32 percent over-the-year and Arapahoe County filings increased more than 76 percent. Source: County Public Trustees and Colorado Division of Housing.
Third quarter apartment vacancy rates in the city of Aurora ranged from seven percent in the southeast portion of the city to rates near and above 12 percent in the city’s central and northeastern neighborhoods. The comparable Metro Denver rate reached 7.4 percent in the third quarter. The third quarter average rent in Adams County ($848) was down 3.9 percent over-the-year, while the average rent in Arapahoe County ($862) was up 1.3 percent. The average rent for all units in metro Aurora/Denver fell from $892 in the third quarter of 2008 to $881 in the third quarter of 2009.

Source: Apartment Association of Metro Denver, Denver Metro Apartment Vacancy and Rent Survey.

Commercial Real Estate

The city of Aurora’s direct office market vacancy rate rose from 17.4 percent in the third quarter of 2008 to 20.2 percent in the third quarter of 2009. As vacancy rose, the market’s direct average lease rate fell 2.4 percent over-the-year to $15.92 per square foot in the third quarter of 2009.
Industrial market vacancy rates in the city of Aurora rose through the first half of 2009. The trend shifted and vacancy declined in the third quarter thanks to the appeal of low lease rates and the completion of large transactions, one of which was the purchase of warehouse space by Drake-Williams Steel. The city’s direct industrial market vacancy rate was 8.5 percent in the third quarter, compared to a year-ago rate of 9.8 percent. The Aurora industrial vacancy rate was slightly higher than the third quarter rate for all markets in metro Aurora/Denver (7.1 percent), and the city’s average lease rate of $4.30 per square foot was lower than the metro Aurora/Denver rate ($4.85). Source: CoStar Realty Information, Inc.
Vacancy rates in the Aurora retail market rose from 8.9 percent in the third quarter of 2008 to 9.8 percent in the third quarter of 2009. Average lease rates rose roughly $0.70 per square foot over-the-year to end third quarter at $14.35. While construction activity has slowed dramatically, new properties may still be placing upward pressure on the city’s average lease rates despite an overall decline in leasing activity. In metro Aurora/Denver, the direct retail market vacancy rate rose from 7.8 percent in the third quarter of 2008 to nine percent in the third quarter of 2009, and average lease rates fell from $17.43 per square foot to $16.56.

Source: CoStar Realty Information, Inc.

Economic Development Project Highlights

Members of the Solar Technology Acceleration Center (SolarTAC) along with business and government leaders from the metro area convened in Aurora recently to mark a milestone in "Powering Up" one of the world’s largest solar test and demonstration facilities. Since announcing the initial launch of SolarTAC approximately one year ago, the site infrastructure development has progressed to the point where members can now break ground for their planned solar technology implementation and testing. SolarTAC occupies 74-acres adjacent to the 1,762-acre Aurora Campus for Renewable Energy.

Leneartz Distribution, an industrial shipping material provider, recently purchased a 44,000-square-foot facility at 725 Ventura Street in Aurora where it will relocate 25 jobs. The Aurora Economic Development Council assisted Leneartz with expediting its permit/plan review with the city. Bradco Supply, one of the nation’s largest distributors of building materials, selected Aurora for its latest expansion. The New Jersey company will create 50 new jobs at the 17808 E. 24th Drive location. The Aurora Economic Development Council assisted Bradco with site selection and city code issues.

Drake-Williams Steel, Inc. recently announced it purchased a 52,000-square-foot facility at 20400 E. 26th Avenue in Aurora. The Omaha, Nebraska company with regional offices in Colorado and Iowa, furnishes fabricated structural steel, stair systems and miscellaneous fabricated steel, steel joist/deck, and fabricated concrete reinforcing steel for all types of building projects. Drake-Williams plans to hire 18 employees in the first 18 months of operations and eventually employ a staff of 50. The Aurora Economic Development Council provided the company, which is owned and operated by fourth generation members of the Williams family, with site selection assistance.