September showed a significant drop in rate of employment growth for the Rocky Mountain region. Declining rates in Colorado, South Dakota, and Wyoming offset modest increases in the remaining three States, dropping the region’s annual growth rate to less than 1 percent for the first time since the 1980s. Annual growth rates in the region’s two largest States, Colorado and Utah, have dropped steadily throughout the past 12 months and are both now at less than 1 percent. Wyoming’s annual rate for the period of 2.1 percent was the largest in the region. Unemployment rates remain low throughout the region. North Dakota’s 1.7-percent rate in September was the lowest in the United States. In contrast, rates in Colorado and Utah are a full percentage point higher than 1 year ago, equal to the increase in the Nation’s unemployment rate since September 2000.

Building permit activity in the region remains ahead of 2000’s pace in all States except South Dakota. Almost 90 percent of the region’s multifamily activity is in Colorado and Utah; gains in this sector in both States have pushed the region’s permit total for 2001 through September up 8 percent compared with the same period 1 year ago. The region’s foreclosure rate inched up again in the second quarter of 2001, pushed up by a surge in Utah’s rate to 1.2 percent, up from 0.8 percent in the second quarter of 2000.

Construction activity in the Salt Lake City area continues to slow, because nearly all of the major projects related to the 2002 Winter Olympics have been completed. By August 2001, employment in the construction sector had declined by 1,600 jobs from 2000’s total, slowing the annual rate of wage and salary employment growth in the area to 1.6 percent. The $375 million Gateway project slightly west of downtown is one of the few major projects still under construction. The retail portion of the 2-million-square-foot mixed-use development featuring movie theaters, restaurants, and specialty stores is expected to open in November. To date, 75 of the 90 retail spaces had been leased. The residential portion of the development is scheduled to open by December. The project’s 388 residential units will house media personnel during the Winter Games and will be released for general occupancy afterward.

The 4.2-percent unemployment rate recorded in August 2001 was up by 0.7 percent from 1 year ago. However, despite the slower economy, the residential housing market has been moderately balanced, even in the face of increased construction activity. Through August 2001, the number of permits for new housing units increased by 14 percent compared with this time in 2000. The Wasatch Front Multiple Listing Service reported a 2.1-percent increase in existing single-family home sales during the first 9 months of the year compared with this time in 2000. The rental market continues to firm; Hendricks & Partners’ second-quarter 2001 survey showed a vacancy rate of 2.8 percent compared with 4.3 percent recorded a year earlier. The market should continue to tighten through the Winter Games, followed by a short-term adjustment period when Olympic workers depart the area and units are released to the market.

Layoffs in the high-technology industry continue to slow employment growth in the Colorado Springs area. As of August 2001, the 12-month average rate of growth in employment had declined to 2.3 percent. The full effect of recent layoffs has yet to occur; some of the announced reductions have not been fully implemented, and severance pay has cushioned the impact of others. Helping to offset some of these losses likely will be increased military spending and contracting, primarily at the Peterson Air Force Base (AFB) complex and Shriever AFB. Both bases are crucial to the military satellite network and the missile defense initiative.

According to the Pikes Peak Regional Building Department, residential construction for the first 9 months of this year was up 14 percent. The rental market is balanced overall and still strong for tax credit and other affordable developments but has weakened considerably for luxury products. The third-quarter apartment survey by Doug Carter, LLC still shows a modest vacancy rate of 4.3 percent but also notes that rents have leveled off and incentives are becoming more common.

In other regional news, the U.S. Army Corps of Engineers began construction on a $305 million dike in Grand Forks, North Dakota, to prevent a reoccurrence of the devastation caused by the flood of 1997. This earlier flood was one of the most damaging natural disasters in U.S. history, causing more than $2 billion in property damage. Building of the dike will help bolster long-term confidence in the local economy and housing markets.

Spotlight on Grand Junction, Colorado

Grand Junction is the largest city and only metropolitan area on Colorado’s Western Slope. It is a regional retail trade and service center for much of western Colorado and eastern Utah. Approximately 60 percent of the employment in the metropolitan area is in the trade and services sectors. Although mining and agriculture remain important to the local economy, their influence has declined in the past 10 years. A significant proportion of income supporting the local economy comes from retirees. The largest employers in the metropolitan area (excluding local government and schools) include St. Mary’s Hospital with approximately 2,000 employees and City Markets, Inc. and Mesa State College, each with 1,200 employees.

The rate of growth in local employment increased steadily through the mid-1990s and peaked at 5.4 percent in 1996. Job gains slowed over the next few years. The annual growth rate remained in the 3- to 4-percent range until 2000, when it dipped to 2.5 percent. The labor market firmed up in the mid- and late-1990s. By 1999, the unemployment rate had dropped below 4 percent, where it has stayed for most of the past few years. The Grand Junction area is unlikely to sustain employment growth rates above the 3- to 4-percent range as statewide job gains ease back, but future employment growth should remain close to 3 percent.

The population of the Grand Junction metropolitan area increased steadily throughout the 1990s. By 2000, the population of the metropolitan area increased 25 percent to 116,255. Approximately 84 percent of the increase was the result of in-migration. Population gains in the Grand Junction area for the short term will continue but at a lower rate. Continued in-migration at 1999 and 2000 levels indicates a current estimated population for the metropolitan area of approximately 119,000.

During the first 8 months of 2001, total building permit activity in the Grand Junction area was up 6 percent from 2000’s level; both single-family and multifamily activity are ahead of 2000’s pace. Total residential building activity peaked in 1999 at almost 1,362 units and stayed slightly below this level in 2000. Single-family activity steadily increased throughout the 1990s; by 1998, singlefamily permit activity was more than 1,000 homes annually, a level not seen since the early 1980s.

In contrast, multifamily building permit activity remained virtually dormant for most of the late 1980s and early 1990s. Activity increased in subsequent years but never approached the levels of the early 1980s. The modest rebound in multifamily activity in recent years has resulted from increased condominium construction, which accounts for almost 60 percent of the multifamily units permitted since 1995. Apartment construction remains very limited.

The Grand Junction area rental market has been balanced to moderately tight through much of 1990s. But in early 1999, the rental vacancy rate jumped to more than 7 percent, following a substantial increase in rental production in 1997 and 1998. The rate has declined to a very low 3.5 percent as of the third quarter of 2001 after 2 years of limited rental construction. Typically, the return of college students brings a decline in the vacancy rate each fall.

The average rent in the Grand Junction market area has remained well below the State average in the 1990s and lower than all metropolitan areas on the Front Range except Pueblo. Typical monthly rents for a one-bedroom apartment are in the $350–$500 range, whereas most two-bedroom units are in the $375–$525 range. Newer complexes, most of which were built in the early 1980s, offer two-bedroom units for $600 to $650. Rent at this level begins to overlap with single-family rentals in the city. Rent concessions are not widespread, but some of the larger complexes have used them to bolster leasing. Similarly, some have withdrawn rent increases after meeting some resistance to higher rents.

Sales activity has stabilized in the past 3 years at slightly more than 3,000 units per year. Price increases have moderated since increasing more than 10 percent in 1998. The average sales price for 2000 was slightly less than $139,000, a 6-percent gain from the prior year. The dominance of singlefamily homes in construction activity, coupled with completion of multifamily condominium units and a major increase in the manufactured home inventory, have resulted in a significant shift to homeownership in the area. The homeownership rate increased from 64.9 percent in 1990 to 72.7 percent in 2000, the largest shift among metropolitan areas in the Nation.