As the momentum of economic expansion advances from Denver to along the Front Range and across the state of Colorado, Colorado Springs is poised to be the next significant growth area.
As the city with the second best job growth in the state, next to Fort Collins, an affordable housing market and a strong and educated workforce, Colorado Springs is ready to enjoy its own boom.
While gaining momentum more slowly than the Front Range, economists forecast continued growth and new opportunity ahead for El Paso, Teller and Pueblo counties.
At a recent Vectra Bank economic event, Jason Schrock, chief economist with the Governor’s Office of State Planning and Budgeting, and Dr. Tatiana Bailey, executive director of the Southern Colorado Economic Forum, both forecasted an upward economic trend for the region, due in part to a strong and growing workforce population and increasingly diverse and healthier industry makeup.
Bailey noted that Colorado Springs is one of the places in Colorado where people can best afford their own home, without too much of their wealth going toward housing. In addition to affordable housing and more jobs, both in- and out-of-state tourism are growing. Hotel occupancy is up 6 percent and is on an upward trajectory, and the city is poised to be a popular destination as the Summer Olympics is on the horizon.
Schrock reported that unemployment rates for Pueblo and Colorado Springs fell faster than in any other city in the state. While growth lagged due to the declining oil and gas industry, Colorado Springs is becoming home to a large number of diverse industries that help economies stay stable through down markets.
One of the largest growth industries for Colorado Springs and Colorado in general is professional services. Also notable was the region’s growing high-tech industry, and science and math-skilled industries. Schrock noted that having a high concentration of STEM jobs will help sustain the region’s growth moving forward. This includes more advanced manufacturing, computer system design and software manufacturing.
All that growth means more need for commercial office space. The Colorado Springs office market (Quantum Commercial Market Report) began strong this year with a total net absorption of 119,532 square feet for the quarter, and vacancy rates dropped 0.06 percent to 11 percent. Average asking rental rates were $16.54 per square foot per year at the end of the first quarter, which was a 3.7 percent decrease from the end of last year. Low absorption rates in the office market and affordable current lease rates are one reason why there is no new commercial office construction taking place.
Yet one thing Bailey was most excited about for El Paso County is that it is one of four counties expected to see a population increase of 380,000 between 2010 and 2040. High numbers of 65 plus, but also 30- to 49-year-olds in their family years, are projected to move into El Paso County. The largest job growth is expected to sit in the health, professional services and technology industries. Combine that with affordable housing compared to Denver and per capita personal income increasing, and Bailey predicts the future looks promising for housing in the Southern Colorado region.
While no new office space was completed in the Colorado Springs market area by end of first quarter this year, Colorado is a mecca for entrepreneurs and startups, so with this influx of working people, we see new businesses on the horizon as well. As commercial real estate fills in, there will be room for growth in this area of construction. Usually the last to emerge from a down market, the industrial market’s vacancy rate is unchanged from the end of last year.
It’s no secret that the Denver multifamily housing market is at risk of being overbuilt. That means more multifamily investors are eyeing Colorado Springs. Potential for higher returns is heating up the commercial lending market for both local and national investors. The lack of new commercial construction investment buyers will seek out the existing, well-located properties that have potential as the market continues to improve.
In short, the economic experts at the conference have confirmed what businesses and residents in Colorado Springs have already known. We are seeing more tourism, more high-quality jobs and more economic vitality in the market. We feel like Colorado Springs is about to take off.