Average nonfarm employment in the region for the 12 months ending June 2003 fell 0.4 percent, a significant change from the 1-percent rate of loss typical of 1 year earlier. Growth rates ranged from 0.3 percent in North Dakota to 0.9 percent in Montana. A 0.9-percent loss in Colorado and a 0.5-percent decline in Utah overshadowed the moderate gains in the other four states in the region. Low unemployment rates still dominate most of the region as of June 2003, remaining below 4 percent in both North and South Dakota. At 5.7 percent Colorado was the highest in the region.
Although the pace of layoffs has slowed, the region is not immune to further cutbacks. In addition to declines in the private sector, state and city governments recently announced layoffs. The decline in revenues at Colorados casinos indicates that even this industry is not immune to recession. Colorados ski season failed to meet expectations after an early surge in activity. However increased snowpack and spring rains have improved the prospects in agriculture. Crops were planted on time, and a small resurgence may be under way in the beleaguered cattle industry. Oil and gas drilling activity is up, and the prospect of continued high natural gas prices is likely to keep rigs active throughout much of the region.
Rocky Mountain residential building activity further slowed in the second quarter of 2003. The total number of permits issued through June 2003 in the region is down 9 percent compared with the same period last year. Single-family activity is down 2 percent, the net result of declines in Colorado and South Dakota that offset gains in the other states. Multifamily permit activity is down 30 percent; increases in most states were offset by the 54-percent cutback in Colorado, which resulted from a virtual halt in Colorado Springs and significant declines in other Front Range markets.
Conditions are balanced and relatively healthy in the sales markets of most of the regions major metropolitan areas, but the rental markets in these areas remain soft. According to the Salt Lake Association of REALTORS®, existing home sales for the first half of 2003 were up 9 percent from last year at this time, but the average sales price increased 1.5 percent. In addition new single-family building permit activity has increased 23 percent in the first 6 months of this year compared with last year at this time. The Salt Lake City rental market remains weak, although an apartment vacancy rate of 9.5 percent in a survey by EquiMark Properties in June 2003 was an improvement from the 10.9-percent rate recorded earlier in the year. However the same survey indicates that average rent declined by 4 percent, and the majority of properties still offer concessions.
In Colorado Springs the combination of cutbacks in homebuilding and continued low interest rates helped keep the existing sales market balanced. For the first 6 months of 2003 resales of homes were up 2 percent and the average sales price increased by 5 percent compared with the comparable period in 2002. The rental market has not fared as well. The shift of renters to homeownership and the impact of troop deployments from Fort Carson Army Base to the Middle East have affected the market. According to a survey by Doug Carter, LLC, as of the second quarter of 2003 the apartment vacancy rate was 14 percent, the highest rate recorded since 1989. The report also notes that rents continue to decline and lease-up concessions remain widespread. Although multifamily construction is down significantly from last year the bulk of the nearly 2,000 units issued building permits in 2002 have yet to come on the market. As a result vacancy rates are expected to continue to increase over the next several months.
Over the past year economic growth in the Fort Collins-Loveland and Greeley metropolitan areas has been weak, and conditions in these rental markets have softened considerably. In the face of an overall slowdown builders are searching for niche alternatives in the central business districts of these markets. Greeley, Loveland, and Fort Collins all have condominium loft development projects planned for historic buildings in their downtown areas. Two projects, both with a combination of ground-level retail and residential lofts, are under way in Greeley. The conversion of an old hotel into 21 apartments and retail shopping is under way in downtown Loveland, and a nearby drug store site is targeted for either an upscale senior housing development or market-rate apartments. Fort Collins has several downtown projects in different stages of development, the largest of which is a new 160-unit highrise condominium development. A 20-unit, high-end condominium project and two other proposals for 10 loft-style units are in the works, as is a conversion of an old creamery located in downtown Fort Collins.
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