The Colorado Springs economy will continue to grow in 2014, but don’t expect anything spectacular. That’s the synopsis from UCCS economist Tom Zwirlein, who presented an analysis about the Pikes Peak region during the 17th annual Southern Colorado Economic Forum on Thursday.
“We’re better off than we were a year ago. We’re growing, slowly but surely, but the growth in 2014 won’t be anything like we’ve seen in the past, and it’s certainly not where we need to be right now,” Zwirlein said. “We’re adding jobs, but they’re not the kind of jobs we need, and it’s not happening at the pace we need to see right now.”
Even so, Zwirlein said, upward growth is better than the backsliding of recent years. While sequestration and other federal cuts will hamper growth, the economy will be bolstered by the growing health care industry and a homebuilding boom, fueled in part by the Black Forest fire in June, which consumed nearly 500 homes.
The Southern Colorado Economic Forum examines a handful of key economic indicators each year to offer a snapshot of the region’s overall economic health and provide useful information for businesses planning their strategy for the coming year.
Here’s a look at what 2014 might offer in employment, wages, spending and growth in the health care and real estate sectors.
While job creation is on the upswing in El Paso County, it’s still well below its peak levels of six years ago, Zwirlein said.
The Quarterly Census of Employment and Wages for El Paso County indicates that 4,757 jobs were added in 2012. Zwirlein said it was the second year of job growth following three years of losses between 2008 through 2010. However, 2012 employment totaled nearly 6,000 fewer jobs than 2007’s peak.
The most significant job gains came from the health care sector, which saw the addition of 1,313 jobs.
“Health care led everything, no doubt about it,” Zwirlein said. He said much of that growth can be attributed to ownership changes at Memorial Hospital that led to a hiring spree — as well as the subsequent efforts of its competitor, Penrose St.-Francis Health Services.
“There’s no question that Memorial has played a large role in local job creation,” Zwirlein said. “And all the hiring they were doing prompted Penrose to add jobs just to stay in the game.”
Among the other positive job-creation sectors were administrative and waste services, construction, accommodation and food services, finance and insurance, and arts-entertainment and recreation.
Zwirlein said the Forum expects per capita personal income will increase to $40,794 in El Paso County — 4.5 percent below the U.S. and 9.6 percent below the Colorado per capita personal income.
Wages increased 2.2 percent in El Paso County during 2012. Manufacturing salaries grew $3,640 to reach an average of $61,880. Wholesale trade went up $1,768 to $58,968. Finance and insurance increased $3,120 to $56,680.
The strong residential building rebound that started in 2011 will continue to grow in the wake of the Waldo Canyon and Black Forest fires. From July 2012 through June 2013, 2,836 single-family permits were issued in El Paso County, an increase of 916 permits, or 47.7 percent.
“We expect that 3,000 single-family permits will be issued by the end of 2013,” Zwirlein said. “But rebuilding in Mountain Shadows and Black Forest will probably mean more than 3,700 permits will be issued in 2014.”
Multi-family permits will also continue to increase in 2014, Zwirlein said, topping 600 units for the third consecutive year, thanks to low vacancy rates and an average countywide rent of $780 per month.
Home sales overall have been strong amid low mortgage rates and attractive prices. The median price of a single-family home is expected to increase to $222,300 in 2013 from $209,700 in 2012, Zwirlein said. Sales are expected to reach 11,000 homes in 2013 and 12,000 homes in 2014, as foreclosures continue to decrease. Through June, the county had 1,049 foreclosures, down from 1,777 for the same period in 2012.
The Forum projects El Paso County will have a total of 2,100 foreclosures for all of 2013, dropping to a forecast of 1,700 foreclosures in 2014.
Commercial vacancy rates improved to 13.7 percent compared to 14.9 percent last year, while triple net lease rates dropped slightly. Commercial real estate brokerage firm Hoff & Leigh reports a similar overall vacancy rate of 13.2 percent with an average asking rate of $11.07 per square foot; in June 2012 the asking rate was $11.04 and vacancy rates averaged 14.4 percent, Zwirlein said. Vacancy rates are the highest in the central part of the city at 21.6 percent and lowest in the west at 3.3 percent.
The industrial vacancy rate decreased to 9.1 percent in June 2013 from 9.8 percent in June 2012. Hoff & Leigh reports the lowest asking rates are in the south of the city with the highest rate in the north. Vacancy rates are highest at 13.4 percent downtown and lowest at 4.9 percent in eastern sections.
Shopping center vacancy rates increased from 12.0 percent in June 2012 to 12.3 percent in June 2013. Average rents increased about 20 cents per square foot.
Zwirlein said retail sales increased 4 percent, up $600 million to $14.5 billion in 2012, thanks in large part to strong motor-vehicle sales. Sales of electronics, appliances and furniture increased slightly, but sales of general merchandise declined.
Employment in the retail trade sector increased 78 jobs from 29,218 in 2011 to 29,296 in 2012, while annual wages increased $676 to $27,196.
City sales and use tax collections increased 5.6 percent from $121.8 million in 2011 to $128.7 million in 2012. Collections are expected to increase 7 percent this year and another 5.5 percent in 2014.
However, federal budget cuts and sequestration continue to cast a dark cloud over retail spending prospects.
Zwirlein said that if Congress is unable to resolve the budget impasse, restore military expenditures and agree to a host of federal transfer payments in the region, sales will decline.
“We’re still in the same boat,” Zwirlein said. “About 51 percent of our economy is dependent on federal government spending. We’re counting on that. And, we just need to add more jobs faster, plain and simple.”
• Even with two years of gains, 2012 employment totaled 241,295 – 6,000 jobs below 2007’s peak.
• Per capita personal income is expected to increase to $40,794 in El Paso County in 2014 – 4.5 percent below the U.S. and 9.6 percent below the Colorado per capita personal income in 2012.