The Denver metro area also ranked as the fourth most competitive out of the 50 largest metropolitan areas, according to a Beacon Hill Institute study. The study rates the ability of states and metro areas to attract workers and business capital.

The Metro Denver Chamber of Commerce's monthly economic indicators also reported positive news for the industrial real estate market.

The report shows the industrial vacancy rate remained stable during the third and fourth quarters of 2002, holding at 7% direct vacancy and 8% with sublease space. Industrial construction activity increased to about 2.8 million sf introduced in 2002, compared to 2.2 million sf completed in 2001.

"The favorable national study rankings and positive real estate news confirm that Colorado remains an attractive place to live and work, in many respects," says Denver Metro Chamber president Joe Blake. "While there is still much work to be done in terms of turning this region's and state's 'economic tide', these indicators show that metro Denver is maintaining its competitive advantage."

However, retail, hotel and the office markets didn't fare as well last year.

Total retail sales declined to $4.8 billion in the Denver metro area, down from $5.3 billion in September. Total retail sales through the first 10 months of 2002 remain about 1% below last year's level. Retail activity is lower this year compared to last year in all of the counties except Douglas County, which is posting a 3.3% increase.

Also, the average hotel occupancy rate fell to 50.8% in November, bringing the average occupancy level for the year to 61.6%. The average hotel room rate is down 2.6% in 2002, averaging just under $85 per night.

In addition, the office vacancy rate throughout the Denver metro area has been increasing steadily since the second quarter of 2001. The direct vacancy rate increased to 14.9% in the fourth quarter of 2002, nearly 3.5 percentage points higher than the fourth quarter of 2001.

Market analysts expect that the office vacancy rate may increase another three to five percent over the next six to nine months before slowly recovering.

Also, office construction activity has slowed. About 2.9 million sf of office space in 82 office buildings was added to the Denver metro market area in 2002. This is down significantly from 2001 when 7.75 million sf was completed during the year.