Economic Development Roundtable

Regional Economic Experts Predict a Strong, Steady Year Ahead

Colorado Construction magazine asked six economic development CEOs from around the state to assess the current state of affairs and offer their forecasts for the year ahead.

Ann Driggers President Grand Junction Economic Partnership		Tom Clark Executive Vice President Metro Denver Economic Development Corp.
Julie Bender President-CEO DIA Business Partnership		Rocky Scott CEO-President Greater Colorado Springs Economic Development Corp.
Dick Hinson Vice President Aurora Economic Development Council		J.J. Johnston President-CEO Northern Colorado Economic Development Corp.

Colorado Construction Magazine: How would you summarize the current status of the economy in Colorado?

Driggers: "Generally,I would say the Colorado economy is doing fairly well, though this varies with each industry sector and location within the state."

Clark: "The Colorado economy is poking along. While consumer spending is up, jog growth continues to lag in the western U.S. and the nation. There are no strong signals to the market that Colorado is coming back, except in the energy field."

Bender: "FasTracks puts Denver and the northeast metro region on the map. Having just returned from the annual meeting of the Urban Land Institute, I can tell you that there is national excitement about the metro area's passage of FasTracks. The participants at the meeting received a copy of ULI's annual real estate forecast; in this forecast, ULI says that metro Denver needed a 'new theme to incubate an upturn and spur job growth … the area sorely needs a catalyst.' With FasTracks, we have that theme and catalyst.

FasTracks benefits the growing businesses and communities throughout the northeast region and connects the city's economic engine, DIA, with the metro area. The northeast corridor is mostly a clean slate for development. Now with the three northeast transit lines - East Corridor, North Metro and I-225 - moving ahead, the region can plan today for tomorrow's growth."

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Scott: "Steadily improving. Solid, but excessive growth is not likely."

Hinson: "It appears the Colorado economy is beginning to show signs of a recovery. I don't believe we have substantially overcome what could be termed a collapse of the information technology industry. There are still a large number of former IT employees looking for work.

Office markets are soft and we're probably looking at excess office capacity for a number of years to come. The industrial market - at least in Aurora - is solid if not strong. Public investment in infrastructure, such as T-Rex, the [Denver] Convention Center expansion, and the Fitzsimons project, has provided a shot in the arm for the construction industry.

State government revenues are beginning to increase again, so that may be the signal that the recovery is truly taking place on a broad scale."

Johnston: "Last year we reported approximately one billion dollars in announced new capital construction projects in northern Colorado ... Approximately five million sq ft of new commercial, industrial and mixed-use construction projects are under way in the region."

CCM: What are the current strengths and weaknesses of the economy in your area?

Driggers: "In the Grand Junction metro area, overall, the economy is strong. As a regional hub, the retail sector continues to perform, with sales tax returns continuing to grow. Residential and retail construction is also strong. Vacancy rates are very low in the industrial and commercial sectors, but the market is taking its time in catching up.

Small, home-grown manufacturing companies are showing expansion but some larger national manufacturing has been subject to the off-shoring and outsourcing trends observed across the nation. Tourism and niche industries are doing well, especially the wine industry. Although little drilling is occurring in Mesa County, we are seeing the positive effects of increased gas exploration of the Piceance Basin."

Clark: "Our strengths [in metro Denver] are growing consumer spending and optimism in the housing construction industry with building permits and projects up substantially from last year. Growth in defense and aerospace jobs from Homeland Security and other space initiatives are warm spots in a cool economic picture.

Our weaknesses include a lack of presence in the national marketplace. A disturbing and unresolved state budget crisis. The high cost of housing reduces the number of companies seeking to relocate or establish a presence in metro Denver particularly."

Bender: "Strengths in the northeast metro Denver economy are airport-related uses - DIA is experiencing record passenger traffic - growth in the life sciences and health care industries and the overall growth of the northeast area. Due to population and employment growth in the area, a number of different real estate sectors are expanding, including residential, retail, civic, medical, hotel, recreation, education and industrial. Both new development and redevelopment projects are hot.

A weakness in the [northeast] market is general purpose office. There are, however, bright spots in the office market with the announcements of the ProLogis and Neoplan headquarters, the expansion of Frontier Airlines, new medical office buildings and the plan to build a new Adams County Administration Building in Brighton."

Scott: "All indicators are improving. Housing will have had a record year in 2004. Some decline will be expected in 2005. Defense continues solid growth. Customer service (inbound call centers) is a growing sector, particularly in insurance."

Hinson: "Aurora is very fortunate to have a number of economic generators in our backyard. DIA, on our northern border, has experienced increased passenger growth each month this year and should continue to grow in importance to the nation's air transportation system.

At a time when military bases are being closed around the country, Buckley Air Force Base has assumed a critical role in the nation's space defense network... The base employs over 8,000 direct and indirect employees (contractors) in Aurora and has an annual economic impact of over $800 million to the region. Over $100 million in construction projects are planned on base in the next five years.

There are a number of other companies involved in the space industry in Aurora too. Northrop Grumman, Lockheed Martin, The Boeing Co., and Aurora's largest employer, Raytheon, all have major government contracts in areas ranging from systems integration work to the development of command and control satellite software. Due to government reliance on satellites for military intelligence, communication, GPS systems, weather monitoring, etc., this industry is in a growth mode that will not likely end in the foreseeable future.

The relocation of the University of Colorado Health Sciences Center from Colorado Boulevard to the former Fitzsimons Army Medical Center has been a boon to Aurora, the metro area and the state of Colorado.

Consider this: when Fitzsimons is built out in five years, there will be over $4 billion of investment and over 30,000 employees in a one-square-mile site. These are comparable to the investment and employment numbers at Denver International Airport on a 53-square-mile site.

Quite clearly, Aurora is extremely fortunate to have the strong economic generators described above to assure a positive economic future."

Johnston: "Health care is a hot industry in northern Colorado. The Medical Center of the Rockies has broken ground on a five-story, 570,000-sq-ft hospital scheduled to open in 2006. Banner Health Systems and McKee Medical Center are completing a $68.3 million, 230,000-sq-ft expansion project with a scheduled opening in the spring. The Northern Colorado Rehabilitation Hospital has broken ground on a 48,000-sq-ft hospital, scheduled to open in the summer.

Retail is also strong. Two major 'lifestyle centers' have broken ground - the 668,000-sq-ft Shops at Centerra and a 400,000-sq-ft shopping center in Fort Collins.

Industrial and technology employment provides plusses, minuses and reason for optimism. The most significant projects include the 550,000-sq-ft Owens-Illinois bottling facility near Windsor. Heska will move into a new 60,000-sq-ft headquarters in 2005 [and] Group Publishing will finalize its 48,000-sq-ft expansion.

Another reason for optimism includes several advanced research expansions under way at Colorado State University, including the Center of Disease Control's new 155,000-sq-ft, $70 million Vector-Borne Infectious Disease Laboratory."

CCM: What is your economic forecast for 2005?

Driggers: "I anticipate we will see an even stronger economy in Mesa County and continued growth in the construction sectors. I hope we will see more development of industrial and commercial properties to meet the demand we are currently experiencing. The gas industry will also be a big driver."

Clark: "Continued growth in consumer spending will buoy the economy. A slowing rise in housing prices will stimulate demand and serve to attract new jobs to Colorado. Rising national prominence following passage of FasTracks will increase interest in Colorado locations from outside the state. But rising interest rates and projected national budget deficits will keep the economy bumping along until 2006."

Bender: "The DIA Partnership is seeing an increase in activity with potential investors/land developers that are considering new capital investment in northeast metro Denver. These investors have been predominately looking at real estate investment opportunities in the area adjacent to DIA. In addition, there are number of new industrial projects currently in the site selection process. Lastly, the partnership has been working with several clients that are considering investments for new locally oriented retail locations to serve the northeast population."

Scott: "A moderate growth rate, continuing adjustments to globalization - some layoffs, some restructuring, some gains from local incoming companies not subject to global competition and those that have found a way to be successful in global competition. Increasing difficulty in filling some skilled positions, a condition that will become even more challenging for employers over time."

Hinson: "Colorado should continue to experience a gradually improving economy in 2005. There is nothing like an oil industry or IT industry that is going to pop up out of nowhere and generate a boom economy for our state. We're going to have to build on our strengths, and the result should be an increasingly stronger, diversified economy."

Johnston: "Continuing consolidations and expansions in financial services will create new branch bank locations throughout the region. Access to historically low-cost capital will fuel a steady demand for new mortgages and consumer loans. Northern Colorado will see a continuing expansion of the Fort Collins/Loveland Airport.

A new 11-story, 250-room Embassy Suites Hotel will provide 80,000 sq ft of convention center space [and its] 27,000-sq-ft ballroom will accommodate 2,400 guests, including corporate meetings. Numerous smaller developments are scheduled to break ground near the $62.5 million Larimer County Fairgrounds and Budweiser Events Center, which just completed its first full year of operation."

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