Economy Shows Some Signs of Life

Also, eight indicators show annual gains compared with seven indicators moving in a positive annual direction in April.

Notable increases in passenger traffic at Denver International Airport, coupled with gains in the average hotel occupancy rates and per night hotel charges in metro Denver point to improvement in the area's tourism industry. The local tourism industry expects further gains when the expanded Colorado Convention Center opens late this year.

"Metro Denver and its businesses are benefiting from increased travel and tourism spending," says Tom Clark, executive vice president of the Metro Denver EDC. "These are reasons to be optimistic that recovery is also headed toward Colorado."

But commercial real estate remains in a slump, even as many sectors of the economy are picking up. The metro Denver direct office vacancy rate increased to 15.3% in the first quarter of 2004, up from a revised 14.8% in the fourth quarter of 2004, the report notes. The rate with sublease space was relatively stable, rising to 17.4% in the first quarter of 2004 from 17.2%.

Rising vacancy rates continue to be accompanied by falling average lease rates. The average direct lease rate for all classes of space was $16.97 per sf at the beginning of this year, down from an average of $17.31 per sf at the end of 2003.Fuller and Co. estimates that the first-quarter industrial direct vacancy rate for metro Denver was 8%, slightly higher than the 2003 year-end rate of 7.9%. The southeast and northwest markets reported the highest vacancy rates of 13.4% and 12.6%, respectively, while the southwest and south markets remained at low rates of 4.2% and 6%. Industrial lease rates were flat and at a 10-year low.

Both the occupancy rate and the average hotel room rate for metro Denver increased in March, rising to a 60% occupancy rate and an average of $81.53 per night. The industry has been showing signs of improvement since mid-2003, but March is the first month that experts saw real strength.