SMPS Luncheon: 2020 Economic Forecast

By Katie Rapone, editor of Mile High CRE

On Thursday, Jan. 16, SMPS Colorado held their 2020 Economic Forecast Luncheon at a modern new venue, the Kimpton Hotel Born in downtown Denver. Industry experts discussed economic, labor, real estate, and global trends shaping our economy and the construction industry in 2020.

Chris Akers, economist with the State Demographer’s Office.

Chris Akers, economist with the State Demographer’s Office, covered the economic and labor forecast. Jessica Ostermick, Industrial and Logistics Director from CBRE, discussed factors affecting commercial and industrial real estate, as well as changes in the global economy. Joshua Putterman, an international development finance risk specialist and CEO of Extreme Event Risk, offered insight into the risks presented by extreme weather events, and discussed advanced quantitative tools to address qualitative business planning challenges affecting the architecture, engineering, and construction (AEC) industry.


  • Population Growth is slowing and concentrated along Front Range
  • The economy is experiencing the longest (and slowest) expansion in history
  • Racial & Ethnic diversity is increasing
  • Labor Force is tight
  • We are aging rapidly
  • Affordability remains a concern


Jessica Ostermick, Industrial and Logistics Director from CBRE.

According to Chris Akers, the population is slowing both nationally and in Colorado, however Colorado is growing much faster than the nation is overall. The Colorado population is approximately 5.76 million, up 67,449 or 1.2 percent in the past year. Colorado ranks 8th in national percentage growth behind: ID, NV, AZ, UT, TX, SC, WA.

“To put this in perspective, if we go back to 2015, we added over 100,000 people—our growth pressures are a lot slower right now because our natural increase is a lot weaker than it was 10 years ago,” said Akers.

Racial and ethnic diversity is increasing rapidly, which is most evident within our elementary schools.

Colorado’s Baby Boomer population is opting to stay in the state instead of moving elsewhere for retirement, which is causing our population to grow older.

National Economy

  • From 2012 to 2019 average growth was 2.4 million jobs (1.7%)
  • 2020 projections (Moody’s Baseline): 1.5 million jobs (1.0%)

Colorado Economy

  • Our state economy is expanding at 2.6% annually, the sixth fastest in the U.S.
  • Denver’s economy grew 3.7% in 2018, compared to the 2.9% National Metro Average
  • Colorado has the 5th lowest unemployment rate in the nation, 2.6% unemployment rate recorded in Nov 2019
  • According to a CBRE Investor Intentions Survey, 2019, Denver is the 5th most preferred market for commercial real estate investment in the Americas.

“Given the mature state that we are in from an economic standpoint, our in-house economists are calling for a much slower economic expansion but still positive growth. We are not calling for a R-word (recession) in the next couple of years,” said Jessica Ostermick, Industrial and Logistics director from CBRE.

“Looking forward over the next 10 years, transportation and warehousing is going to be our fastest growing industry, growing more than double the pace of the state overall. That’s driven both by a lot of growth at DIA and a tremendous about of ecommerce growth,” said Akers. “Construction is going to be [important] too if we are going to continue to add to our population at the rate we are at (70k/year). We will need to build a lot more houses, apartments and dorms and we are also going to need to improve our infrastructure.”

Construction Pipeline

Courtesy of CBRE Research

CBRE Research states that $11 billion of construction has been delivered in Denver since 2017. Multifamily takes the biggest slice of the pie with 55 percent completed in Denver. However, it is worth noting that the percentage of multifamily square footage currently under construction has actually decreased.

Concerns over affordability remain going into 2020. “Our affordability woes are still a problem. We have more in common with costal communities than some of the peer communities that we actually compete with,” says Ostermick. “With continued construction and increase in supply with slower population growth, I feel like there might be a little more generosity given and slower appreciation in rental rate growth. Which is good for our market and maintaining some of those competitive advantages.”

Industrial square footage is up with 6.5 million square feet under construction, the biggest number seen since 1997. According to Ostermick, development costs have increased. In particular, land prices have gone up across all markets but particularly for the industrial. “For industrial infill development, the price of land had gone up 166 percent in five years to $20/square foot, compared to $4 or $5 a few years ago.”

E-commerce is having a huge impact on the industrial market. According to Ostermick, about a quarter of all industrial leasing activity across the U.S. is e-commerce. In Denver there is currently 3 million square feet of industrial built and that is protected to increase, especially given the fact that the cold storage and food delivery sector of the market is still yet to take effect.

Click here for CBRE’s Q4 2019 MarketView reports analyzing year-end performance for metro Denver’s office, industrial and retail sectors.

Climate Risk

According to, more than 40 billion-dollar natural disasters have impacted the U.S. over the last three years. Much of the CRE community does not fully understand the risks that their buildings face and need more information to address their resilience and adaptation.

“We can’t plan for the future by only looking to the past,” said Joshua Putterman, founder and CEO of Extreme Event Risk. The company gives businesses an advantage in assessing catastrophic weather by incorporating future climate data.

Key takeaways:

  • Current approaches to planning for extreme weather employ only historical and real-time weather analysis. These analyses fail to account for changing climate, as was the case in 2013 when the Boulder community was hit with a catastrophic flood.
  • Climate change costs businesses billions of dollars in loss.
  • Colorado is a Top 10 State for natural disaster 20 year rate of increase. Colorado recorded a 1350% rate of increase between 2000-2017, according to
  • Extreme Event Risk analyzes time of event from beginning to end (ex.rainfall leading to flood) to present the extreme event with the greatest probability.


Photos courtesy of The Unfound Door

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