Cold weather jokes and unemployment despair were plentiful during this morning’s 20th annual Institute of Real Estate Management Economic Forecast Breakfast.
About 300 people gathered at the Doubletree Hotel to hear community and business leaders talk about the year ahead, and one issue dominated the presentations: unemployment.
Five speakers from different sectors of the economy offered takes on the Colorado Springs economic outlook for 2011, here’s a round-up of what you can look forward to (and what you have to fear):
Doug Carter, Managing Director, Doug Carter LLC
Carter started off with some interesting anecdotal evidence related to recent real estate market performance. Just four years ago there were 550 industry professionals at the IREM Economic Forecast Breakfast, meaning attendance has since dropped nearly 50-percent.
Moving on to the hard numbers, Carter noted that the Springs is down to the lowest apartment vacancy rates since 2001, and he made an interesting connection on this front. The apartment market improved despite high troop deployment in 2010, and he speculated that rentals likely benefitted from the myriad problems in the housing market.
Carter forecasts continued slow improvement in population growth, which will lead to the “next up-cycle” in rentals. He said savvy investors are buying apartment buildings in preparation for that up-swing.
Find further analysis on the rentals market in this week’s Business Journal.
Kent Mau, Senior Managing Director, Sierra Commercial Real Estate
Mau had the best analogy of the day, although it wasn’t weather-related.
“Working the commercial real estate market has been like trying to drive a car with four flat tires,” he said. “But we’re finally starting to see some inflation.”
Mau expects the industrial market to stabalize through positive absorption, the retail market to be mixed, and the office market to increase for the second year in a row. He expects the office market to lead the way out, in part because it hasn’t seen the wave of foreclosures that have long been anticipated.
Of course, this all hinges on job growth, and even with this stabalization Mau expects the recovery will take another three to five years.
Bruce Betts, Owner, RE/MAX Advantage
“The temperature outside was negative four degrees this morning,” Betts said. “And that’s about the temperature of the real estate market.”
Betts backed this up by predicting a peak in foreclosures for El Paso County in 2011, and he said shadow inventory, rising interest rates, tougher mortgage guidelines, unemployment, and a general lack of confidence will contribute to a sluggish residential recovery.
“If unemployment fell back to 4.6-percent tomorrow, it would still take us two to three years to recover,” he said.
Lisa Bigelow, Budget Manager, City of Colorado Springs
Bigelow might have had the most upbeat presentation. The city exceeded revenue estimates in 2010 by nearly $10 million, which means street lights will be back on and other civic programs restored.
This was accomplished despite Colorado Springs ranking nine out of ten in property tax and sales tax percentage in comparison to other front range cities.
Bigelow said here group is working on numerous economic development projects, including Copper Ridge and the South Academy Boulevard revitalization.
But will the city have the resources to pursue these projects? Read my article about how budget cuts have wiped out the city’s economic development team.
Mike Kazmierski, President, Greater Colorado Springs Economic Development Corporation
Every speaker before him bemoaned the region’s 9.4-percent unemployment (that’s over 28,000 people in the county), so Kazmierski made that his focus.
To combat this, the EDC will focus on organic growth by connecting with existing local businesses. Still, Kazmierski said the EDC will continue to look outside the region for new companies.
“California has been very helpful in pushing their companies out of state,” he quipped.
The good news is that the EDC has made significant headway already in 2011. Kazmierski said the region has landed almost the same amount of capital investment so far this year ($2.5 million) as it did in all of 2010 ($2.75 million).