DENVER METROPOLITAN AREA ANALYSIS
Metropolitan Denver is east of the foothills and mountains, providing good access to the state’s many natural recreational amenities for local residents and tourists. The area’s early settlement and development utilized the plains setting for agriculture and ranching. Under the land’s surface are coal, natural gas, and oil. The arid setting relies on deep aquifers, mountain snow, and surface reservoirs for water.
Geographic factors have significantly affected development patterns in the Denver Metropolitan Area (DMA). The foothills of the Rocky Mountains have limited westward development. During the past 20 years, individual communities have melded through infill development into today’s metropolitan character.
The City of Denver is located on the Front Range of Colorado, east of the Rocky Mountains, in the northeastern portion of the state. Denver is 102 miles south of Cheyenne, Wyoming; 449 miles northeast of Albuquerque, New Mexico; 485 miles southwest of Lincoln, Nebraska; 536 miles southeast of Salt Lake City, Utah; 601 miles northwest of Kansas City, Missouri; and 877 miles northwest of Dallas, Texas. Within Colorado, Denver is 8 miles northwest of Aurora, 29 miles southeast of Boulder, 69 miles north of Colorado Springs, 113 miles north of Pueblo, 65 miles south of Fort Collins, and 65 miles southwest of Greeley. The Denver Metropolitan Area consists of the City of Denver, and the adjacent counties of Adams, Arapahoe, Broomfield, Douglas and Jefferson.
Original areas of Denver are located in and around the Platte River valley. Denver is generally associated with an elevation of one mile above sea level, although elevations vary significantly through the metropolitan area. The area’s latitudinal location, high altitude, proximity to the Rocky Mountains, and high-plains setting result in a unique blend of weather conditions. Metropolitan Denver’s location provides an arid climate, with very warm and cold temperatures possible. Most of Denver’s precipitation comes through winter snow, supplemented by sporadic spring and summer rain.
Since the 19th century, Denver has been a point of departure for those traveling west into the Rocky Mountains. In the years following World War II, when the ski industry developed, Denver continued its tradition as a gateway to the Rockies. Now, tourists pursuing winter sports and summer vacations in the mountains pass through Denver International Airport (DIA) and the City of Denver. According to the Bureau of Economic Analysis (BEA), the Denver Metropolitan Area is the 18th largest metropolitan area in the nation, and the largest in the Rocky Mountain Region.
Transportation
Denver is the largest metropolitan area in the Rocky Mountain region, and the 18th largest in the United States. Today, the metropolitan area is benefiting from one of the busiest airports in the county, a substantially completed loop highway system, an improved Interstate 25 corridor, an expanded light rail system, and long-range plans for further light rail expansion to the north metropolitan area connecting Northglenn, Westminster and Thornton to downtown Denver. The most recent light rail route to open was to Denver International Airport, which has been completed and is open and operational as of April of 2016, with the exception of minor issues at gate crossings. The expansion of light rail has also led to infrastructure investment near light rail stations. For example, the City of Westminster and the Adams County Housing Authority are nearing completion on $75 million in public investments in the area of the Regional Transportation District’s B Line station in Westminster near West 70th Avenue and Federal Boulevard, including a 40-acre park and a mixed-use affordable housing project.
Four highways in the Denver area are part of the interstate highway system. North-south transportation uses I-25, which extends from I-10 in southern New Mexico to I-90 in northern Wyoming. East-west travel is primarily done through I-70, which extends from I-15 in southern Utah to I-695 in metropolitan Baltimore, Maryland. A southwest-northeast route is I-76, which extends from I-70 in metropolitan Denver to I-80, just beyond the northeast corner of Colorado in Nebraska. I-225 connects I-70 and I-25 on the east side of metropolitan Denver. The principal route between Denver and Boulder is US-36, a highway originally constructed as a toll way. Beginning in mid-July 2015, one toll lane has been added in each direction of US-36.
Interstate 25 was expanded to 10 lanes from Lincoln Avenue on south to Broadway in the north in order to alleviate traffic congestion in southeast Denver and southeast suburban areas. The project (named T-Rex) commenced in 2001 and was completed in 2006. This significantly improved transportation to the southeast part of the DMA, which has historically experienced the highest traffic volumes.
A peripheral highway system has been built surrounding the DMA (aside from the western portion through the City of Golden, which has not obtained approvals). Colorado 470 (C-470) has been completed around the southern, eastern and northern portions of the DMA. This highway extends from I-70 on the western fringe to I-25 on the southern fringe, loops around to again connect with I-70 on the eastern fringe, and then extends north to I-25. The eastern portion of the highway (E-470) is a toll road, and directly accesses the Denver International Airport (DIA). The Northwest Parkway opened in 2003 and connects I-25 on the north to Highway 36 toward the northwest near Boulder. A connection from Highway 36 to I-70 through Golden would complete the loop. A coalition met in April 2015 to discuss finishing the project, although no dates for beginning construction have been set.
Air transportation is also excellent due to the 1995 completion of the Denver International Airport. This is among the largest and busiest airports in the nation, providing extensive passenger and freight service. There are also numerous regional and county airports serving the area, including Centennial Airport, one of the busiest commuter airports in the country.
Public transportation continues to improve as well, as the Regional Transportation District provides bus and light rail transportation throughout the Denver Metropolitan Area region. Light rail lines have been built from downtown Denver to the southwest and southeast, as part of the T-Rex project. A third line to the western part of the DMA was completed in 2014. Rail transportation is also extensive, with multiple passenger and freight rail lines converging in the DMA; the rail line connects to DIA from Union Station. Denver is also major hub for freight rail transportation.
With the convergence of several interstate highways, major rail hubs, Denver International Airport, major regional airports, and extensive public transportation, Denver has become one of the primary central locations for passenger and goods transportation in the country.
General Economic Trends
Portions of the information below have been extracted from the Colorado Legislative Council December 2016 Economic Forecast.
Inflation
Core Colorado inflation, as measured by the Denver-Boulder-Greeley consumer price index, rose 4.5 percent in the first half of 2016 over the first half of the prior year. Headline inflation rose more modestly at 3.0 percent due to low energy prices. Colorado inflation was double that of the nation in the first half of the year, due primarily to strong appreciation in the housing component. Recreation and apparel components also outpaced nationwide price growth in the first half of the year, while education and medical care cost increases were more subdued than the nation as a whole. The Denver-Boulder-Greeley consumer price index for the second half of the year becomes available early in February 2017, but continued increases in home prices and Front Range rents are projected to drive inflation through the forecast period.
Industry
Energy
The oil and gas industry accounts for 8,932 jobs in Colorado, with over 6,000 of those jobs in the DMA alone. The Denver-Julesburg Basin, located primarily in Weld County provides jobs for many residents of the northern DMA suburbs in the oil and gas industries. With the precipitous fall in oil prices that began toward the end of 2014, new drilling activity, as measured by active drilling rigs, dropped off dramatically in the U.S. and Colorado. New drilling activity has crept up slightly over the past six months as oil prices have stabilized and trended modestly upward. While new drilling has been rising, crude oil production continues to fall, reflecting shifts made by producers to curb production in areas that are more costly to drill. Natural gas remains relatively less expensive to produce in northern Colorado, and Colorado continues to be a contributor to the industry overall. Natural gas prices rose at the start of December on expectations of a cold winter. Prices, however, remain low relative to historical prices. The coal industry does not have a significant presence in the DMA.
Residential Real Estate
Residential real estate continues to be in short supply in the DMA relative to demand thanks to an influx of residents relocating into the state. While pace may slow, it is anticipated sale prices will continue to increase through 2017 and 2018. As measured by the Case-Shiller home prices index for Denver, home prices rose 8.8 percent in September over year ago prices. Comparatively, the 10- and 20-city composite indices, which represent prices across 10 and 20 other major U.S. metropolitan areas, rose 4.3 percent and 5.1 percent, respectively. Prices among lower value homes continue to see the steepest rise in the Denver metro area. Strong in-migration to Colorado has sent rental vacancy rates downward over the past seven years. U.S. rental vacancy rates have also declined since the Great Recession, but are nearly double the vacancy rates of Colorado.
Commercial Real Estate
Nonresidential building activity continued at historically high levels in 2016. Lower cost projects were undertaken, as the value and number of projects decreased through September while the square footage of projects rose. Meanwhile, metro Denver vacancy rates for both offices and industrial space increased in the third quarter of 2016. According to data published by CoStar Group, the vacancy rate for offices increased from 9.7 percent in the second quarter to 10.0 percent in the third quarter, while the rate for industrial space increased from 3.5 percent to 3.7 percent.
Assessed value of commercial real estate is expected to increase through 2017 and 2018. Commercial real estate coupled with residential real estate assessed values are expected to increase 2.9 percent through 2017 and 2018.
Retail
Low gasoline prices dampened retail sales in the area in 2015, nonetheless, retail sales in the DMA have outpaced the nation overall. Fueling this growth is the increase in the value of residential real estate, coupled with historically low unemployment.
Employment
According to the Colorado Department of Labor and Employment, the civilian labor force for the Denver-Aurora Metropolitan Area totaled 1,560,290 workers, or approximately half of the state’s workforce. Of this number, only 45,070 or 2.9 percent are unemployed. This is lower than the state unemployment rate of 3.2 percent. The area is a draw for skilled employees, with 42.03 percent of all job openings requiring a bachelor’s degree.
The top 10 employers in the DMA are as follows:
- HCA Holdings, Inc.
- Dish Network, LLC
- Centura Health
- SCL Health
- Denver Public Schools
- University of Colorado
- University of Colorado Hospital
- Safeway Inc.
- Lockheed Martin Corporation
- Denver Health & Hospital Authority
According to the BEA personal income rose 1.9 percent in 2015 (most recent available) and GDP grew 4.0 percent in the DMA.
Demographics
The following are 2016 and 2021 estimates for the Denver-Aurora-Lakewood Metropolitan Statistical Area and were provided by the CCIM/STDB (from December 2016):
Population
In the identified area, the current year population is 2,778,258. In 2010, the Census count in the area was 2,543,482. The rate of change since 2010 was 1.42% annually. The five-year projection for the population in the area is 3,026,079 representing a change of 1.72% annually from 2016 to 2021.
Households
The household count in this area has changed from 1,004,696 in 2010 to 1,089,587 in the current year, a change of 1.31% annually. The five-year projection of households is 1,183,210, a change of 1.66% annually from the current year total. Average household size is currently 2.52, compared to 2.50 in the year 2010. The number of families in the current year is 683,557 in the specified area.
Housing
Currently, 57.6% of the 1,160,803 housing units in the area are owner occupied; 36.3%, renter occupied; and 6.1% are vacant. Currently, in the U.S., 55.4% of the housing units in the area are owner occupied; 32.9% are renter occupied; and 11.7% are vacant. In 2010, there were 1,078,837 housing units in the area – 59.9% owner occupied, 33.2% renter occupied, and 6.9% vacant. The annual rate of change in housing units since 2010 is 3.31%. Median home value in the area is $303,816, compared to a median home value of $198,891 for the U.S. In five years, median value is projected to change by 3.04% annually to $352,857.
Income
Current median household income is $65,777 in the area, compared to $54,149 for all U.S. households. Median household income is projected to be $76,246 in five years, compared to $59,476 for all U.S. households Current average household income is $89,956 in this area, compared to $77,008 for all U.S. households. Average household income is projected to be $98,447 in five years, compared to $84,021 for all U.S. households Current per capita income is $35,661 in the area, compared to the U.S. per capita income of $29,472. The per capita income is projected to be $38,844 in five years, compared to $32,025 for all U.S. households
Conclusion
The Denver Metropolitan Area economy has several tailwinds that will continue to serve it well through 2017 and 2018. Increasing real estate prices, low unemployment, and high income will continue to boost the local economy. The area continues to draw a well-educated workforce skilled to work in a variety of industries. This diversity will further buffer the area from any substantial loss in one particular industry in the years to come.