Peter Merrion
Vice president, JLL, Denver
We’ve all seen the numbers; Colorado’s population grew by nearly 102,000 people in 2015. Denver is the fastest-growing major American city after Austin, Texas, and ranked No. 1 in U.S. News and World Report’s 2016 Best Places to Live and No. 1 on Forbes’ list of best places for business and careers in 2016.
Despite our booming population, our unemployment rates remain among the lowest in the nation at 3.8 percent, more than a point below the 4.9 percent national average, according to Bloomberg data. And the outlook remains rosy. The Mile High City is expected to add 130,000 net new jobs by 2020.
So how do we keep the streak alive and ensure that Colorado remains a great place to live for all of our residents, as well as a continued draw for business and investment? And from a real estate perspective, we must consider how we can keep pace and create conditions for sustained growth in the market.
As we look at market dynamics and metrics such as gross metropolitan product, population growth, net migration, unemployment, personal income growth and housing permits, there are a few key factors Colorado needs to address if we want to make the streak stick.
Address the “Colorado Paradox”
Denver consistently ranks among the top metro areas for attracting well-educated workers from out of state. We recently ranked 16th out of 150 large cities in the WalletHub’s “2015 Most and Least Educated Cities” report.
The problem is, we’re not doing a great job of supporting that educational attainment at home. While we are in the top for well-educated residents, we are 46th in terms of the percentage of those born in Colorado with bachelor’s degrees or higher. The fact that we attract well-educated workers but few of them are actually educated in state is known as the “Colorado paradox.”
The way we invest (or, more accurately, don’t invest) in education starting at the earliest levels may have something to do with it. Colorado ranks 47th in the preschool poverty gap, according to stats from nonpartisan educational activist organization Great Education Colorado. We rank a dismal 43rd in per-pupil spending and 38th in spending on education overall.
It’s not shocking then that the Denver Business Journal reported earlier this year that our state’s public schools ranked 119 out of 150 large metro areas for school quality and enrollment levels.
At the college level, the picture is similar, and our booming economy doesn’t seem to have translated into education funding.
In fact, between 2008 and 2015, per student appropriations fell 16.3 percent. Colorado currently ranks 46th in the nation in terms of state funding support for higher education, according to a study from the Colorado-based State Higher Education Executive Officers Association and Illinois State University. Additionally, Colorado’s public colleges and universities retain and graduate students at below the national average rate, potentially indicating a problem with college prep and readiness among freshman.
Unless we address this paradox and the pipeline problem we’re creating at home, it will be challenging to continue to attract and retain the educated millennial workforce, particularly as they look to raise families of their own. From a real estate perspective, this ultimately will impact office-using jobs and leasing volume.
Continue fostering engagement. We all know Colorado’s outdoor attractions are huge draws for tourists and locals alike, but you may not have guessed the state also ranks No. 1 in the nation for participation in the arts, according to data from the National Endowment for the Arts. The industry represented $1.8 billion in economic activity in 2015.
The impact of a vibrant arts culture can be hard to quantify in terms of direct impact on the overall economic vitality of a city, but we know that it can boost tourism, build a sense of community, elevate our national reputation and improve quality of life among residents.
There also is strong evidence that the young, well-educated workforce who is attracted to Colorado is more likely to value a vibrant cultural scene. People ages 18 to 24 participate in the arts at higher rates than older adults, according to the NEA study, and higher levels of education correlate with arts engagement.
Just as with education, in order to ensure continued vitality, it’s important that we look at how we’re supporting culture and arts engagement in the next generation. Children who visited art museums are about five times as likely to visit as an adult.
Supporting cultural engagement and activity is part of creating a great quality of life here in Colorado now and for years to come. We would be wise to remember that as our population grows and continue to support a robust arts and cultural community.
Invest in forward-thinking infrastructure. Bloomberg recently cited Colorado as a success story for infrastructure spending. From Denver International Airport to FasTracks, from the National Western Center to Brighton Boulevard, the state has made and continues to make significant investment in improving infrastructure in Colorado.
Bottom line: If you build it, they will come. Take Union Station, for example. The initial $500 million investment in the Denver Union Station complex has yielded over $2 billion in private investment. That is a massive multiplier that has led to more jobs and an increase in commercial space from apartments to office buildings.
Recognizing the impact of infrastructure investment, Gov. John Hickenlooper recently said his administration sees it as the central element around which Colorado will build its new economy.
So what does that look like? What essential structure is Colorado or Denver still missing, and what does the next generation need and want in the way of infrastructure?
Evidence suggests that cities that attract and retain residents increasingly are going to be those that support multimodal lifestyles with multiple transit options. That means a greater focus on moving people vs. moving cars.
A 2013 American Public Transportation Association study found that nearly 70 percent of millennials use multiple travel options several times each week. This 18-34 age group cares less about how they get from A to B than the efficiency and practicality of the solution.
By supporting alternative transit options, such as biking – in which Colorado will invest $100 million over four years – car- and ride-sharing, and pedestrian-friendly streets, we can improve mobility and address traffic congestion (a major concern for any rapidly growing metro) for significantly less in the way of investment compared to traditional car-based infrastructure.
