Wednesday, December 12, 2007

10 Economic Development Issues, Events, Trends and Questions to Watch for in Denver in 2008

2008 promises to be another exciting year for economic development in the Denver Region. Here are 10 issues, events, trends and questions to watch for:

1) Democratic National Convention. Will the convention go off smoothly? Can Metro Denver capitalize on the convention and raise the area’s profile as an international business and leisure destination? How much will the event contribute directly to Denver’s economy in 2008?

2) FasTracks & Union Station. The design and construction of the FasTracks system and its central hub, Union Station, is a key event in the economic history of Metro Denver and 2008 will be an important year for this massive infrastructure project. The Union Station final design, approval, and commencement of construction are scheduled to occur in 2008. Planning and construction on the West Corridor light rail line from Union Station to Jefferson County will accelerate in 2008 and planning for other corridors will continue.

3) Downtown Denver Construction Boom. Can the downtown construction boom in residential, hotel and office properties continue in the face of uncertain macro economic conditions and the credit squeeze?

a) Condo Projects. The fate of the Spire project (http://www.spiredenver/), a well conceived, nicely located condo building, targeting an under served niche - young, middle income buyers - will be a key signpost indicating whether the local downtown residential construction boom will continue or tail off in the face of economic and credit market headwinds. Construction started at the Spire site near the convention center but was suddenly halted in September when the German construction lender suddenly pulled out. The Great Gulf Group’s 1401 Lawrence Street ( , a 51 story luxury condo tower with a is another bellwether downtown residential project. If these two developments move forward it will be a powerful indication that Denver’s downtown residential boom can survive the current economic conditions.

b) Office Properties. There have been almost no new speculative office towers built in the Central Business District (CBD) of Denver since the 1980s oil bust. In recent years Denver’s office vacancy rates have been moving steadily downward in as the regional economy finally grows into the existing inventory. Another factor which should support office sector expansion in Metro Denver is the boom in oil and natural gas prices (see number 4 below) which is leading to increased employment in this sector. However, given the recent turbulence in real estate lending markets, the possibility of a recession, prospective increases in cap rates and other factors which could potentially reduce demand for and the value of commercial real estate, a cloud of uncertainty hangs over new office construction in many parts of the United States. Currently, there are several high rise office projects in Denver’s CBD which are in the pre-construction stages. If projects like Tabor Center II ( at 17th and Larimer Streets are able to move forward it will be a key milestone in Denver’s economic recovery from the 1980s commercial real estate downturn.

4) The Price of and Demand for Oil, Natural Gas and Other Resources. The price of oil, natural gas and other resources has several effects on Metro Denver economic development. High oil prices could lead to inflation and a slow down in the U.S. economy by forcing the Federal Reserve to raise interest rates which could reduce overall U.S. economic growth. However, as oil and natural gas prices increase, regionally-based extractive companies, which are highly concentrated in Denver relative to the U.S as a whole, are likely to increase their operations and the metro area economy will get a boost from this increase in activity. As a point of reference, the oil and gas extraction sector employs more than 3,000 people in Metro Denver and is the second most highly concentrated industry cluster in Denver (see my July 4, 2007 blog entry for more information

5) The Development of a Renewable Energy Cluster in Metro Denver and Colorado. The high energy prices (mentioned above in number 4) provide a strong market incentive for continuing investments in the alternative energy sector which is also well represented in Metro Denver and Colorado. The region has public facilities like the Natural Renewable Energy Laboratory ( in Jefferson County, the University of Colorado and the Colorado School of Mines and private companies like Danish wind-blade manufacturer, Vestas (, in Weld County and Denver based ethanol producer BioFuel Energy Corp ( With these types of resources, the Metro Area is poised to attract additional alternative energy businesses. However, despite having a supportive governor who sponsored a helpful package of state legislation in the Spring of 2007 to promote renewable energy, competition is fierce to host green energy clusters. In addition to Metro Denver, Boston, Austin, Silicon Valley, New Jersey, Arizona and Toledo, are all working to attract these businesses. Right now Denver is behind several of these other regions.

6) Who is Buying the Former Storage Technology Headquarters in Louisville from Sun Microsystems? It was announced in November 2007 that the former Storage Technology headquarter campus is under contract to be purchased for $60 million by a closely held “mystery” buyer. Rumors include Google (who purchased Boulder’s @Last Software in 2006), Apple, or E-bay. An acquisition of this strategic property by any of these technology heavy-hitters would be huge news and a boon to Metro Denver’s technology cluster.

7) Merger Questions: Will the U.S. corporate headquarters of MillerCoors, the joint venture of Molson Coors ( and SABMiller to be finalized in 2008, be located in Denver or Milwaukee? Will the potential tie-up between United Airlines and Delta be consummated and how will it impact United’s Denver hub? Is AT&T going to acquire Englewood-based EchoStar Communications Corp? What other mergers are out there that will impact Metro Denver headquarters and jobs.?

8) Progress on Museums.
As the Clifford Still Museum design and planning process ramps up for its 2010 opening we should get more detailed information on the building next year. Additionally, there should be a final decision in 2008 on the new location for the Colorado History Museum, currently proposed to be sited in the city-owned McNichols Building in Denver's Civic Center Park.

9) Spending City and County of Denver Infrastructure Property Taxes and Bond Revenue from November Election. The recent successful passage of Questions 1-A through H for the City and Country of Denver will raise millions of dollars in public funds which will help boost infrastructure and promote economic activity in Denver. The city and county should begin to spending some of this revenue in 2008. Over time these funds will go toward maintaining, repairing and upgrading city parks, buildings, roads, libraries, health and human services facilities, and cultural facilities (such as the Botanic Gardens, Boettcher Concert Hall, the Museum of Science and Nature).

10) NCAA Mens Hockey Frozen Four. In 2008 Denver will host the NCAA Men’s Division I Hockey National Championship. This event is a natural fit for Denver given its status as a prominent hockey town with the University of Denver’s national powerhouse hockey program and the NHL's Colorado Avalanche. This event is being heavily promoted by the Metro Denver Sports Commission (

The images in this blog entry are from the Callahan Capital Partners, National Renewable Energy Laboratory, Molson Coors, and the Denver Sports Commission web sites as referenced above in the text. The image of Union Station is from the Wikepedia entry on the station. All Rights Reserved.

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