Friday, October 31, 2008

Short Term Turbulence for DIA

Happy Halloween. It has been a truly ghoulish month for the economy.

(photo provided courtesy of Denver International Airport)

One of the central themes of this blog is that Denver International Airport (DIA) serves as a powerful economic engine for the Denver Region and Colorado. However, as jet fuel costs have increased, airlines have scaled back their flights and the U.S. macro economy declined, it has been a tough stretch for DIA and other airports around the country.

1) Frontier entered bankruptcy and reduced its flight schedule.

2) DIA's international ambitions have been curtailed, at least temporarily, as Lufthansa has ended its daily non-stop flight between Munich and Denver and United ends its daily non-stop service between Denver and London. British Airways will continue to fly the Denver to London route and Lufthansa will provide daily non-stop service between Denver and Frankfurt.

3) DIA has put its plans to expand Concourse C on hold in anticipation of declining flights and passengers as airlines cut back their routes. Additionally, the construction of an airport hotel will likely be delayed and/or scaled back.

Despite these developments, there are still reasons to be sanguine about the airport's prospects. First, DIA has achieved record monthly air volumes in 2008 including breaking the 5 million passengers per month threshold for the first time ever in July. Southwest continues to expand its flights at and destinations served from DIA. Also, to date, the airport has not lost any major hub carriers unlike some other airports around the country. Recently DIA's bond's have been given strong ratings indicating the airport is financially well positioned to weather the current turbulence.

In the long term, as the broader U.S. economy improves, I believe DIA will continue to be a powerful economic growth driver for the region and the airport will resume its upward financial and operational trajectory.

Sunday, October 19, 2008

Venture Capital & Hotel Development Funds Driven by Green Energy in Colorado

The impact of the credit crunch and the likely recession is slowing down capital flows, job creation, real estate development and many other positive economic development indicators in the Denver Region and around the U.S. However, among the gloom, I have noticed two related positive trends, recently reported in the Boulder Daily Camera which link back to the emerging green energy cluster in Metro Denver.

First, there appears to be a wave of hotel development forming which will hit the U.S. 36 Corridor in Broomfield sparked by the ConocoPhillips plans for the former Storage Tech site. Despite the fact that the hotel business is one of the most cyclical sectors of the real estate market which tracks very closely with the macro economy, there are as many as eight different hotel projects in various stages of planning in this area. These plans are clearly driven by the large number of business travelers who are expected to come to the Interlocken area as part of the ConocoPhillips international training and alternative energy research facilities.

Second, despite a national downturn in venture capital deals, compared to the third quarter of last year, Colorado either held steady or increased its flow of funds according to two reports cited in the Camera. This was due to investments in alternative energy companies such as AVA Solar Inc. with operations in the state.

A View of the Rockies
believes the development of renewable energy will change the U.S. economy as profoundly as the emergence of the Internet or the railroad network did in the previous times. It won't be an easy transition and its hard to predict when critical mass will be reached and the changes will ramp up to full effect. However, when the green energy revolution does come, it will dramatically boost the economic wealth and power of the cities and regions that play host to this sector.

In the immediate term, the U.S. economy appears to be headed for lean economic times with contractions occurring in many sectors of the economy. However, the Denver Region can outperform the U.S. as a whole if it can continue to build an alternative energy economy. In the longer term, the development of this sector holds transformative possibilities for Colorado.

Saturday, October 4, 2008

Rebchook Reprints Marilee Utter

John Rebchoock's October 1 Rocky column is an article by Marilee Utter which contains a lot of wisdom.

"By curtailing sprawl and sharing facilities regional and local jurisdictions can create affordable infrastructure. This infrastructure includes water, wastewater treatment, roads, transit, power, emergency services, snow removal, schools, fire and safety departments and more. The end of suburban sprawl cuts government service operating costs by 25 - 40+% because there is less physical area to maintain and service.There are many descriptive phrases: 'cluster zoning'; 'connected communities'; 'new ruralism'; 'new urbanism'; 'transit villages'. What it all comes down to is creating compact development in circumscribed areas while devoting a great majority of land to open space that can be used for active and passive recreation. But, what we aim for in 'connected communities' (to use one phrase) is to have a range of housing that goes well beyond the single-family model."