How Can I Sign Colorado Banking Presentation

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hi everybody did you have a good year are you looking forward to another good here well alright let's talk about we know what we what we see here in the metro Denver area and we're going to talk about it in terms of transitions or or changes you know and most people will say oh we don't like change but I think that that there's many changes that happen all the time that we're dealing with all the time whether it be the leaves changing that's something that we know and expect and so as long as we know and expect what is happening we are better able to cope with any of those types of changes I'm going to talk about these changes in terms of two broad categories we're gonna talk about what's happening in terms of our consumers that's how you and I get out and spend our dollars and then we'll talk about in terms of the business community what type of industries do we see growing and changing here in the metro Denver area so just at the stage though to recognize we are a hundred and sixteen months into our economic expansion and all indications are that we will make it through this whole expansion until June at least and that will be the longest economic expansion in history and we'll move beyond that so I think we are definitely in the midst of the longest economic expansion in our US history so with that kind of standpoint let's talk about what we see going on with our consumers so many different influences many different changes that are impacting our consumer base here in the metro Denver region and in most cases I should note I am talking about what we're seeing here in the metro Denver area Alex will be covering more of the national scene and everything but I'm going to focus in just on what we have happening here in terms of our consumers we are seeing some slower population growth now an aging of the population we're seeing some consumer expenditure patterns that have been influenced by the tax cuts and Jobs Act and housing affordability of course remains one of those things that we are quite concerned with within our region so in terms of our population growth here in Colorado we are the seventh fastest growing state in terms of population right now here in the metro Denver region we have continued to grow and expand at a pretty steady pace but notice though that our rate of expansion is indeed changing in this chart what that show is along the green bar is the natural increase in our population so we add about 20,000 net new people on average here in the metro Denver region each year because our births are greater than our deaths so we have that natural increase the wild card in our population growth is always that net migration the number of people moving in less the number of people moving out notice that 2015 then was kind of our peak population growth year we expanded by a little over 2 percent in metro Denver that means we added about 62,000 net new people into our area as we look out into 2019 2020 our expectation is more than it'll be about a one point three percent increase will be adding just about just under forty thousand net new people in the metro Denver region so certainly that whole kind of slowing of our overall population base what is also interesting and also really driving our base is this aging of our consumer base here so in this chart here we're taking a look at between those green bars those are the prime working ages that's 14 percent increase that we have had this takes a look at from 2010 to to 2020 so kind of what we've already experienced we've seen this 14 percent increase in our prime working ages 24 years to 54 years that's huge that's great that is oh so critical to keep our economy moving driving forward but notice also 61 percent increase during that same period of time the population that is 65 years and over break that down you know you look at those percentages and think wow let's take a look at those in absolute numbers what that means is that 24 to 54 we had about a hundred and eighty thousand net new people in the metro Denver region during that period of time a hundred and seventy three thousand were added in the sixty five-plus so yes a slightly smaller increase in that population base but nonetheless definitely rivaling what we see as that those prime working ages this is important from a business standpoint what type of goods what type of services do you need to be providing because the spending patterns of somebody that's 30-something is definitely going to be very different than the spending patterns of those folks that are in that 65 plus category so that's where we were but let's move forward to where we're going to be so again that blue line represents 2020 looking at the orange line now is 2030 notice that we still expect about a 14% increase in those prime working ages again very critical to our whole economic base very critical for our labor force and still significant increases in those 65 plus although that pace of growth slowing just a little bit but nonetheless a 43% increase and again in terms of actual absolute numbers about 10,000 more people in that 24 to 54 category than what we will be adding in that 65 plus so again very important markets here and definitely the whole what is that is driving a lot of the activity that we have here those kind of concentrations at the higher age groups as well as in the prime ages so we consumers who are pretty happy people and when we take a look at that consumer confidence index we have seen it increased throughout 2017 by about a 20 percent increase or so we maybe weren't quite as perky in 2018 or 2019 nonetheless that consumer confidence has been increasing by a four to five percent rate which also translates then into about a five percent increase that we've been seeing in terms of our retail spending our consumer activity that's really important for businesses of course but also important for our governmental entities here because it's providing that sales tax revenue that is necessary to keep the goods and services really moving forward and providing that quality of life that we want here what consumers are not necessarily very happy about would be the fact that home prices have been rising at a much faster pace than our wages you know we look out over time and we see that historically wage increases keep up with about the Consumer Price Index or the rate of inflation and over you know since 2011 we have seen our prices go up by about 2.7 percent we have seen our wages go up by about 2.7 percent although in 2018 we saw a nice 4% increase in our wages and we expect given the tight labor market that those wage increases will indeed continue but housing costs ohmygosh the median home price has gone up on average a little over eight and a half percent in the metro Denver area so certainly as we're looking out there looking at those home prices increase that's one of the things that consumers are trying to balance what if my wages aren't going up as fast as what we are seeing in terms of those home prices and home price increases as I say have been been very significant in the metro Denver area and then the bull just the Boulder MSA just Boulder County we have seen those home price increases reach those double-digit rates we expect that's going to moderate though to about a 6% increase moving out into 2019 nonetheless the recognition that Boulder is the seventh most expensive metropolitan statistical area the country ouch Metro Denver were no great bargain ourselves again we currently ranked at number 12 in terms of our median home prices here but again the good news is we are expecting some moderation in those home prices so while we had had prices that were increasing in those double-digit rates our expectation in the metro Denver region is that we will see increases more along the 5% rate apartments also are a little pricey so in case you are not in the home ownership mode as of yet you know looking at the the apartment market we have seen again double-digit increases in some of those average monthly rental rates but now we're starting to see that pullback as well so again looking at more of a three to four percent increase in those monthly rental rates as we look out into 2019 and that vacancy rate starting to tick up just a little bit because we have certainly been very successful in bringing a lot of new product onto our marketplace here and that has been oh so critical to be bringing that new product on there were years when remember we have a growing population but there were years that we were building next to nothing when it came to the housing so when you take a look at that 2009 2010 type of period now we have been filling the void that has been happening there so on average if we're building around 17,000 net new units were generally keeping up with our population growth we've been surpassing that a little bit over the last few years which again was making up for some of that lost time we do expect it that we'll see a slight decline in the number of new units permitted in 2018 as well as into 2019 and now some changing mixes as well so while we had a lot more of the multifamily activity that was happening indeed over 50 percent of the permits that were being offered in that multifamily market we're starting to pull back and see more interest the single-family market once again because the Millennials which are oh so important here again from a labor force side from a whole consumer base side those oldest Millennials now are in their mid 30s to late 30s there and guess what they're out there buying homes and so certainly the expectation as we look out into 2019 and some of the experts are saying that 45% of the new mortgages are going to be written for those Millennials in the coming year so that's definitely influencing a lot of the residential side on the business side then lots of changes what I I guess if there were any sorts of words of advice I would say have your growth plan absolutely there are very strong fundamentals here in the metro Denver region and in Colorado but also have a plan for if things slow down faster than expected again this is a year of transition this is a year to be ready this is a year to be vigilant so knowing your own businesses what your key indicators are and keep very close tabs on them so that you are able to shift adjust as needed here so in terms of employment growth we do expect that employment will slow employment growth will slow in the metro Denver region and in Colorado in 2019 but still we expect that we will add about 30,000 net new positions a little over that in 2019 in the metro Denver region about 50,000 net new jobs in Colorado so still some good growth rates albeit at rates that are lower than what we have seen in 2018 and indeed in some of the prior years as well nonetheless still outpacing the national average one of the things that has been of great interest or great importance to our businesses is whether or not you can find the labor that is needed out there we are looking at unemployment rates that are still in credibly incredibly low here so in Colorado we expect our unemployment rate will go from about a 3% rate up to three and a half percent in Metro Denver about the same as well but what is keeping us moving forward is the fact that we have seen some really nice increases in our labor force participation rate so this is basically the percentage of folks that are sixteen years old and over that are actively seeking a job or already working and there are reasons why people don't participate in the labor force maybe they're a student maybe there are a caregiver maybe they have some type of health issues whatever that that reason we have seen our participation rate increasing and that has helped to fuel the employment growth that we have had here within our region and we expect that that will continue to be a key fuel or if you will of our employment growth as we look out into the the near future but we need to recognize employment growth does indeed vary all across our state so our metropolitan statistical areas those are basically the urbanized areas of the state there are 17 counties here in Colorado that are part of these urbanized metropolitan areas and growth rates have certainly been very different amongst these areas really or Weld County our neighbor to the north there has been the fastest growing area certainly driven a lot by oil and gas but also by other renewable energies and a whole diversification of their economic base Colorado Springs coming in next Wow I don't remember the last time that we saw Colorado Springs coming in at kind of a second pace second place pace of growth here been fueled a lot by military activities of course but also sorry JJ but this is they're being regarded as kind of that lower cost alternative to metro Denver and certainly we have seen a lot of companies that are expanding some of their operations down and they're because of the that lower-cost structure Fort Collins has Fort Collins has been increasing very rapidly that whole Larimer County area driven a lot by technology Denver and Boulder I'm gonna dig into those in a little more detail here just a moment Grand Junction look at that Grand Junction is finally finally growing yay ah it's been a tough haul for the folks on the western slope but we're definitely seeing some nice expansions there but then Pueblo is kind of the the the the lagging area in terms of our metropolitan areas there are 64 counties in Colorado 37 of our counties are their employment level in the first quarter of 2018 is still below where it had been prior to the Great Recession so a lot of this growth a lot of this influence that we've been seeing is happening really more in our urbanized areas of the state in taking a look at employment by sector then this this really digs into the metro Denver region then looking at what sectors have been growing and expanding so we look at these are all based on the the federal federally defined industry codes our information sector is our smallest sector moving on up to the top of that chart they're professional and business services which is everything from legal and accounting to engineering we have seen nice growth in all of our various industry groups with the exception of other services which is more of a data and anomaly almost than anything else and our expectation is moving into 2019 that we will continue to see growth in all of those industry groups albeit at slower rates but a couple of standouts here first of all information at the bottom so our information sector this includes broadcast scene includes newspaper all the print media telecommunications and yes it is now including many of those IT software companies and that's why that industry has really been experiencing some very tremendous growth after about a decade of lagging activity in that sector Natural Resources and construction will continue to be one of our great expanding areas certainly on the whole Natural Resources side both at that oil and gas as well as renewable energies that will continue to influence our activity here and the construction sector as we saw residential construction continuing at a strong pace and we'll look at commercial construction here in just a moment the other key driver here in Colorado and certainly in Metro Denver would be the gig economy and we estimate that through what is called proprietors employment here we have 900 60,000 proprietor positions throughout the state of Colorado that's a huge force if we were to take all of those proprietors and add them into what we looked at in terms of wage and salary employment because they're not how did in that wage and salary employment we add them in together and we see that almost 26 percent of Colorado's employment base is based on these gigs that are happening 960 thousand positions out there this can be you know an individual can be in here multiple times you can drive for lyft you can sell your craft product on Etsy you can be doing some computer coding on the side so you can be in here multiple times but again this is a very important force indeed Colorado has the fourth strongest concentration of proprietor employment in the country so if we're gonna be adding all these workers we better be adding some space to put them into so ooking at our commercial real estate markets then we see that the office markets still quite healthy but definitely showing some signs of change there as we're starting to see some rising vacancy rates just as tad the lease rates that are pretty flat we built a lot of space we saw 3.8 million square feet of office space that was constructed that's that red line on that chart 3.8 million square feet constructed completed in 2018 66 percent of that space within the City and County of Denver and most of that right here in the downtown core although we're certainly seeing activity all throughout the metro region our expectation is that we'll see a little bit of a pullback in that construction activity as we look out into 2019 but still at a very healthy pace it was a record level of industrial construction that we experienced in 2018 five point seven five million square feet of industrial space was completed throughout the metropolitan area nearly 80% of that though was in Adams County so along that i-70 corridor along the North I 25 corridor Amazon a huge influence of that 2.4 million in the city of Thornton that was completed in 2018 again same type of story here we expect the construction activity will continue at a strong clip albeit at a slightly slower pace the retail market has been one that has been really interesting to watch because we keep hearing of all of these retailers that are downsizing and all but our retail market being one that is considered to be an equilibrium a very very solid performance there we've been building not a whole lot which has helped to keep that whole market moving forward looking forward one of the expectations is that whole ninth and Colorado area that we will see that we will see being redeveloped there so 2018 a record year for commercial construction activity in metro Denver eleven point two million square feet delivered that is as I say a record year for our area our expectation moving out into 2019 is that it will still be a strong level about eight and a half million square feet all of that continues to fuel our economic growth the other thing that's phew our economic growth is our infrastructure spending one of the things that we've always said in those in those years of perhaps slowdown when the private sector can't take it forward boy we rely very heavily upon the public infrastructure and we've got a lot going on with a new activity at Denver International Airport Denver Water in the midst of one of their largest projects ever the fast tracks construction continues centralized 70 Denver bonds that are building schools and other governmental facilities so again good solid level of activity here to keep moving us forward throughout 2019 best of luck to all of you take care [Applause] you