Aurora’s economy continued to record improving economic conditions through the first quarter of 2015. The Aurora unemployment rate fell 1.9 percentage points over-the-year to 5 percent. Employment levels throughout Metro Denver rose 3.6 percent compared with the previous year, representing a 52,900-worker increase over the previous year’s level. The natural resources and construction and the education and health services supersectors reported the largest percentage increases in employment between the first quarters of 2014 and 2015, rising 13 percent and 5.9 percent, respectively.
Aurora’s home sales continued to improve through the first quarter of the year and the apartment rental market continued to tighten. Sales of existing homes rose over-the-year for the fourth consecutive quarter, reaching 1,372 total sales in the first quarter of 2015. Apartment vacancy rates fell in three of the six Aurora submarkets, and five of six submarkets reported increases in the average lease rate.
As for commercial real estate, three of the four property types – office, industrial, flex, and retail – reported vacancy rates that were lower during the first quarter of 2015 than the first quarter of 2014. All four property types continued to record increases in the average lease rate over-the-year. Aurora’s industrial and retail markets continued to add rentable square footage to the market during the first quarter of 2015 compared with the prior year, with the industrial market adding nearly 592,900 square feet.
Aurora Economic Headlines
According to Tech America Foundation’s Cyberstates 2015, Colorado was ranked third for its technology employment concentration (9.2 percent) in 2014, third for the tech industries’ contribution to Gross State Product (GSP) in 2012 (11.3 percent), and ranked ninth for the average wage for technology employees ($101,842). The tech sector added 5,900 jobs between 2013 and 2014 and there were 14,425 tech company establishments. Colorado ranked 13th for the number of technology patents granted (1,062 grants in 2013), a 7.4 percent increase between 2012 and 2013, and ranked ninth for the amount of venture capital funding awarded.
Business Insider ranked Colorado’s economy as the third best in the country. The list was based on six measures: recent change in housing prices, nonfarm payroll growth, unemployment rate, GDP per capita, average weekly wage, and state government surplus and deficit. The report stated that Colorado fared well across all measures, with a December 2014 unemployment rate of 4 percent and a housing price increase of 6.96 percent between the third quarters of 2013 and 2014. North Dakota was named the number one economy and Texas was ranked second, with both states’ success attributed to their strong energy industries.
Denver was ranked the third best city for tech startups and workers in the nation by SelfStorage.com. The company considered local innovation, access to capital, access to educated workers, strength of the local tech startup scene, and local wage premium. The article stated Denver saw strong growth in utility patents and tech-startup jobs, with a decent pool of local scientists, engineers, and businesspeople. The top spot went to Raleigh, N.C. and Austin, Texas ranked second.
According to NerdWallet, the Denver-Aurora-Broomfield, CO MSA ranked as the 13th best city for tech jobs. The study considered the nation’s 370 largest MSAs based on criteria including the number of tech jobs per 1,000 employees and annual mean salary for tech jobs. The Denver-Aurora-Broomfield MSA was reported to have 48 tech jobs per 1,000 and an average salary of $94,000 annually.
Coldwell Banker Commercial Affiliates ranked Denver as the nation’s top commercial real estate market. Considering more than 80 markets, the ranking was based on the percentage change in vacancy and rental rates for the office, retail, and multi-family sectors between the third quarters of 2013 and 2014. The company attributed Denver’s ranking to record-breaking job growth as well as construction and economic expansion in energy, healthcare, and technology.
Rent.com ranked Denver the third best city for college graduates. The list analyzed job potential, percentage of millennials, lifestyle, and unemployment rate. The report stated that millennials make up 26 percent of Denver’s population, there are 80 jobs available per 1,000 residents, and an unemployment rate of 4.5 percent, making the city ideal for college graduates. Washington, DC was ranked the best place for recent graduates and Minneapolis-St. Paul, Minn. was ranked the second best city.
Apartment List released a list of the 13 best communities for raising a family in Colorado, and Aurora ranked 10th. The ranking considered each community’s safety, housing costs, school quality, and child friendliness.
Denver was named as one of the best U.S. housing markets in 2015 for single-family home sales by Auction.com. The list considered the 49 largest U.S. housing markets and was based on current and expected future housing fundamentals. The Denver market was said to be among the most robust in the nation. Further, given the active local economy and growing population base, housing demand is expected to drive prices up even further in the coming years. San Antonio, Texas, Nashville, Tenn., Fort Lauderdale, Fla., and Dallas, Texas were also among the top five.
BetterDoctor.Com released the Fit Cities Index, a ranking of the most active and most sedentary cities in the country. The ranking found that Aurora was the most fit city in the country. The criteria for the list included park expenditure per resident, park acres per 1,000 residents, and the percentage of residents at a healthy weight. Aurora was noted as having 31.4 park acres per resident and having 83 percent of its residents that had exercised in the past 30 days.
Employment and Unemployment
Employment—Metro Denver reported first quarter 2015 employment of 1.5 million, rising 3.6 percent above the previous year’s level. This represented an increase of 52,900 jobs over-the-year. The natural resources and construction supersector reported the largest over-the-year increase in employment (+13 percent) and created the most jobs during the period, generating 11,500 additional jobs. The education and health services supersector and the other services sector reported the significant over-the-year percentage increases in employment, rising 5.9 percent and 5.3 percent, respectively. The information sector recorded the only decline in employment, falling 3.2 percent between the first quarters of 2014 and 2015. Only three of the 11 supersectors reported over-the-quarter employment growth, but employment declines between the fourth and first quarters is a typical trend due to loss of seasonal employees. Colorado employment rose 3.1 percent over-the-year, creating 74,800 jobs, while U.S. employment rose 2.3 percent. Manpower Employment Outlook Survey—Hiring expectations in the U.S. and Metro Denver rose through the second quarter of 2015 compared with the prior year. The percentage of employers planning to increase employment levels rose 3 percentage points between the second quarters of 2014 and 2015 in both areas, with 23 percent planning to hire more employees in Metro Denver. The majority of Metro Denver companies intend to maintain staff levels through the second quarter of the year. Only 1 percent of companies plan to reduce their workforce, the lowest level of layoffs since the second quarter of 2012.
Unemployment—The average unemployment rate for the first quarter of 2015 in Aurora declined compared with the previous year, falling 1.9 percentage points to 5 percent. However, the unemployment rate in Aurora was 0.5 percentage points higher than the fourth quarter (4.5 percent) of 2014, a typical seasonal trend. Aurora’s first quarter unemployment rate was the lowest first quarter level since the first quarter of 2007 when the rate was 4.9 percent. Both Adams County and Arapahoe County posted declines in their unemployment rates between the first quarters of 2014 and 2015. Adams County (5.2 percent) recorded an over-the-year decrease of 2.1 percentage points, while Arapahoe County (4.4 percent) reported a 1.6 percentage point decline during the same period. Metro Denver recorded an unemployment rate of 4.4 percent, the lowest first quarter level since the first quarter of 2007. The first quarter unemployment rate was 1.5 percentage points lower than the previous year. The U.S. unemployment rate declined 1.1 percentage points over-the-year to 5.8 percent.
The Conference Board – Consumer confidence rose during the first quarter of 2014, increasing 9.3 percent over-the-quarter to 101.3 for the U.S. index. The U.S. index also recorded a 25.8 percent increase in consumer confidence between the first quarters of 2014 and 2015. The Mountain Region index, which includes Colorado, also increased compared with the fourth quarter of 2014. The Mountain Region index increased to 109.4, an over-the-quarter increase of 19.3 percent and an over-the-year increase of 28.6 percent.
Aurora Sales Tax Collection—Sales tax collections throughout Aurora were 10.5 percent higher during the first quarter of 2015 than the first quarter of 2014. The first quarter was also 6.4 percent higher than the fourth quarter, with approximately $41.1 million sales tax collections. (Note: The two charts, Aurora Retail Sales by Industry and Aurora Sales Tax Collections, do not necessarily reflect the same tax base, so trends may differ.)
Retail Sales—Aurora recorded an 8.1 percent increase in retail sales between the second quarters of 2013 and 2014. The health and personal care industry reported the largest total sale increase over-the-year, selling an additional $21 million, an increase of nearly 59 percent. Eleven of the 13 industries reported growth in sales in the second quarter of 2014 compared with the previous year. During the period, non-store retailers posted the largest percentage increase in retail sales, rising 192 percent. The sporting goods and hobby stores and services stations industries reported the only over-the-year declines in retail sales, falling 3.7 percent and 0.7 percent, respectively.
Second quarter retail sales in Metro Denver were 8.4 percent higher than the prior year’s level. The largest over-the-year increase was reported by miscellaneous retailers, rising 23.8 percent. The only sector reporting a decline was service stations, declining 3.4 percent over-the-year.
Denver International Airport— Spokespeople for Denver International Airport reported that passengers through the first quarter of 2015 were 1.4 percent lower than the first quarter of 2014. The airport served over 12.2 million passengers during the first quarter 2015, 167,500 fewer passengers than the previous year.
Rocky Mountain Lodging—The South and Southeast Denver markets ended the first quarter with a hotel occupancy rate of 69.2 percent, 11.3 percentage points lower than the end of the previous quarter. The market’s average room rate was $119.20 per night. The Northeast market reported an occupancy rate of 78.5 percent and an average room rate of $101.65 per night, 12.4 percent higher than the prior quarter. Metro Denver reported a hotel occupancy rate of 71.4 percent and an average room rate of $127.69 per night.
Construction of the 1,500-room Gaylord Rockies Hotel began in April 2015. The project has a 36-month construction schedule, with a planned opening targeted for Thanksgiving 2018.
Residential Real Estate
Existing Home Sales—Total sales in Aurora during the first quarter of 2015 (1,372) were 2.8 percent higher than sales reported in the first quarter of 2014, reflecting the sale of 38 additional homes. Single-family attached home sales (condominiums and townhomes) increased 28.6 percent over-the-year to 522 sales. Single-family detached home sales fell 8.4 percent to 850 sales.
Metro Denver reported 9,679 total home sales during the first quarter of the year. The first quarter sales level was 3.4 percent higher than the previous year, but 21.8 percent lower than the fourth quarter of 2014.
Aurora and Metro Denver reported similar increasing trends in the average sales price for both single-family detached and single-family attached markets over-the-year. Compared with Metro Denver, Aurora reported slightly larger increases in the average sales price for both markets during the first quarter.
Residential Building Permits—Building permits issued in Aurora have been heavily concentrated in the single-family detached market for four consecutive quarters. Aurora reported a 52.5 percent decline in total building permits during the first quarter of 2015 compared with the same period the prior year. However, first quarter permits were nearly 11 percent higher than the fourth quarter.
Metro Denver recorded an 11.2 percent decrease in total building permits during the first quarter of 2015 compared with the prior year. However, first quarter permits were 0.3 percent higher than the prior quarter.
Apartment Vacancy—During the first quarter of 2015, the apartment vacancy rate for three of the six Aurora submarkets decreased.
The largest over-the-year decrease was in the Aurora-North submarket, where the vacancy rate fell 3.7 percentage points to 0.0 percent. Indeed, the Aurora-North submarket was the only submarket in Metro Denver that was fully rented. Aurora-South and Aurora-Central Southeast also reported over-the-year declines, falling 1.8 percentage points and 0.4 percentage points, respectively. The Aurora-Central Northwest reported the largest over-the-year increase in vacancy, rising 1.7 percentage points. The Aurora-Central Southwest and Aurora-Central Northeast submarkets also reported over-the-year increases, rising 0.9 percentage points and 0.4 percentage points, respectively.
The vacancy rate was 0.7 percentage points lower in Adams County (4 percent), but 0.4 percentage points higher in Arapahoe County (4.9 percent) between the first quarters of 2014 and 2015. The vacancy rate in Metro Denver fell 0.2 percentage points over-the-year to 4.9 percent.
Apartment Rental Rates—Five of the Aurora submarkets reported significant growth in the average rental rate between the first quarters of 2014 and 2015. Aurora-Central Southwest ($1,089) and Aurora-Central Southeast ($1,089) reported the largest over-the-year increases in the average rental rate, rising 19.3 percent and 17.3 percent, respectively. The Aurora-North submarket reported the only over-the-year decline, falling 22.2 percent to $777 per month. In Metro Denver, the average rental rate increased 12.1 percent over-the-year to $1,204, marking the 20th consecutive quarter of increase in the average apartment rental rate.
Foreclosure Activity— Adams and Arapahoe Counties reported declines in foreclosure activity through the first quarter of 2015 compared with the prior year. The two counties also reported over-the-quarter decreases in foreclosure activity, with both Adams and Arapahoe Counties falling 33 percent during the period.
Total foreclosure filings reported in Metro Denver during the first quarter of 2015 were 48.3 percent lower than first quarter of 2014 and fell 32.2 percent compared to the fourth quarter of 2014.
Commercial Real Estate
Commercial Activity—The Aurora commercial real estate market improved across three of the four property types through the first quarter of 2015. The flex market vacancy rate declined 1.3 percentage points over-the-year, while the average lease rate rose 22 percent to $7.99 per square foot. The office market reported the largest decrease in the vacancy rate over-the-year, falling 3.4 percentage points, while the industrial market reported the largest increase in the average lease rate (+ 50.6 percent).
Metro Denver continued to recorded declining vacancy and rising average lease rates across all property types between the first quarters of 2014 and 2015. The largest increase in average lease rate was in the industrial market, growing 22.2 percent to $6.45 per square foot. Flex space reported the largest decline in vacancy rate, falling 1.4 percentage points over-the-year.