Forecast sees slow, steady growth in Colorado

Denver Business Journal - by Neil Westergaard

The new year likely won't herald a big economic recovery in Colorado or the rest of the nation, with slow, steady growth predicted to continue in 2011, according to a new forecast.

That's the view of University of Colorado economist Richard Wobbekind. He's scheduled to present his annual forecast on Monday.

In a preview Friday put out by the Economic Development Coalition of Colorado, Wobbekind is quoted as saying employment growth will continue to lag next year.

"I think the overall economic picture for Colorado in 2011 is slow, steady growth much like the national economy," Wobbekind said. "We would all like a more rapid recovery, especially in terms of jobs, but we're just not going to see that yet."

His forecast is a big improvement over the 140,000 jobs lost in the state between 2009 and 2010. Wobbekind pegs total job gain in 2011 at about 10,100 jobs.

Wobbekind will expand on his predictions Monday during the 46th annual Colorado Business Economic Outlook Forum, hosted by CU-Boulder's Leeds School of Business and BBVA Compass Bank.

Strongest employment sectors appear to be professional and business services, including engineers, computer systems designers and scientific research and development groups. The sector is expected to add 7,000 jobs in 2011, well off of the 16,100 jobs the sector added in 2007, before the recession.

The construction, manufacturing, information and government sectors are likely to shed jobs, according to Wobbekind.

Leisure and hospitality, education and health services and trade, transportation and utilities sectors jobs are expected to add 9,800 new jobs, but together they can't completely offset job losses in the other categories.

"All the job growth in these sectors is still subpar in a historical context," Wobbekind said. "It will not be enough to bring down the unemployment rate in any meaningful way or create great momentum in the state economy, but at least it's moving in the right direction. It is just moving at a slower pace than we would like."

Colorado's jobless rate was 8.4 percent in October, the most recent month reported. The national rate was 9.8 percent in November.

Looking back on 2010, Colorado did not see the recovery in employment anticipated by many economists, the new forecast says. From that perspective, the state lagged the nation in recovery.

"We went in thinking we would be in the top 15 or states for job growth in 2010, but came out in the bottom 10," Wobbekind said.

The financial recession has caused many businesses to do more with less. Until businesses are sure that revenues are back up, it's unlikely to see large increases in total employment, he said.

"We've seen tremendous investment in capital in the economy in the last year and a half," Wobbekind said. "Companies are buying machines as opposed to hiring people. In the long run this is great for the U.S. economy, but in the short term it is very painful in terms of unemployment rates."

Until banks and other lenders start lending again, economic growth is going to be blunted, he said.

"As we've seen, we're out of the recession a year and a half now and we're still not seeing lending back at pre-recession levels," Wobbekind said.

One somewhat bright spot is Colorado's tourism and hospitality sector. Most categories are predicted to remain level or increase slightly.

"Unfortunately, there remain a number of concerns in the tourism sector," Wobbekind said. "The hassle factor is coming up to the top of the list. It's not only driving to the high country, but in terms of flying, between security issues and rising ticket costs, a lot of people just don't know if they want to take it on anymore. But, overall, we're expecting a pretty good year for tourism."

SmartCo Foods to close all Colorado Stores

Denver Business Journal - by Paula Moore

SmartCo Foods to close all Colorado stores after just a few months
Denver Business Journal - by Paula Moore

SmartCo Foods opened in Colorado earlier this year, and now all five of its grocery stores in the state will close in December because of “disappointing sales,” according to the retailer.

SmartCo Foods is a chain of value-oriented grocery stores owned by discount grocery company Smart & Final Stores LLC of Commerce, Calif.

“Despite our best efforts, the level of sales achieved in the SmartCo Foods stores, after several months, did not meet our goals, and is not sufficient to sustain continued operations,” Dave Hirz, president of Smart & Final Stores, said in a statement.

The retailer didn’t reveal Colorado sales figures.

Smart & Final said earlier this year it hoped in the next few years to add another 20 to 25 stores in Colorado to the five it opened in 2010.

The company said it will provide severance to Colorado employees who get laid off, and encourage them to apply for positions at other company stores in western states. Earlier this year, Smart & Final said it planned to employ 100 people per store, for a total of roughly 500 store personnel.

Closing sales will start Wednesday at the local SmartCo Foods stores.

Smart & Final announced its debut of stores in the Front Range area in March, opening its first location here at 1442 S. Parker Road in Denver in June. The retailer opened another four stores along the Front Range this year, at the following locations:

• 5141 Chambers Road, Aurora;

• 1750 N. Main St., Longmont;

• 16746 E. Smoky Hill Road, Centennial;

• 3615 W. Bowles Ave., Littleton.

Started nearly 140 years ago, Smart & Final now operates more than 280 stores nationwide, under the names Smart & Final, Cash & Carry Smart Foodsevice, Henry’s Farmers Market and Sun Harvest Markets.

Smart & Final was acquired in 2007 by an affiliate of Apollo Management LP, a New York-based private equity firm that formerly was majority shareholder of Colorado’s Vail Resorts Inc. (NYSE: MTN).

Retail Space In South Fort Collins Filling Up

New tenants plan to move into two long-vacant big-box stores at Harmony Road and College Avenue, boosting one of Fort Collins' major intersections and filling some of the city's 800,000 square feet of empty retail space.

Harbor Freight Tools, a longtime tenant at 105 W. Prospect Road, has signed a lease for about half the former Circuit City building, or about 14,000 square feet, on the northeast corner of Harmony Road and College Avenue. The move doubles its retail footprint and provides more visibility, said Realtor Debbie Tamlin with SullivanHayes Commercial Real Estate in Fort Collins.

Sitting empty behind Circuit City is Linens 'N Things, which closed in December 2008 when its parent company went bankrupt.

A national retailer is interested in signing a lease for much of that building, according to David Spriggs, a Realtor with Legend Retail Group of Denver, which is marketing the building. Spriggs declined to name the store.

"We've picked our horse ,and we're going with it," Spriggs said.

Harbor Freight will occupy about half of its building, leaving 14,000 square feet vacant at the Circuit City site.

Tamlin has a second retailer interested in sharing the building with Harbor Freight, although there is no signed lease yet, she said.

The move to one of the city's busiest and recently reconstructed intersections with more than 70,000 cars passing by each day is part of Harbor Freight's new business model intended to compete with home-improvement stores Lowe's and Home Depot, Tamlin said.

"They have not been a drive-by location that people think to stop and see what they have," Tamlin said.

Harbor Freight, tucked next to Chuck E Cheese at College Avenue and Prospect Road, "was more of a destination location," Tamlin said.

The new location "will give them a higher presence of mind that they're here in Fort Collins. They didn't get that before. You saw it if you took your kids to Chuck E Cheese, but that's not the time to think about buying a new drill."

If Legend Retail nabs a new tenant for Linens 'N Things, it will help fill a large percentage of retail space that has languished unoccupied for almost two years and boost retail activity at the intersection that has suffered under the weight of three large, empty buildings including Walmart, Circuit City and Linens 'N Things.

"Getting any of that vacant space retenanted along College is only going to have positive effects," said Josh Birks, the city's economic adviser. "Harbor Freight is the shifting of one place to another, so it's not as positive as some of the other national tenants considering the space, but filling vacant space ... can only do good things."

The Harmony/College intersection is a key component of the recent midtown corridor study that looked at redevelopment opportunities along College Avenue from Prospect Road to Harmony Road.

BY PAT FERRIER • PatFerrier@coloradoan.com • October 19, 2010

September Retail Sales Rise For Third Consecutive Month

Washington, D.C. ( October 15, 2010 ) The Commerce Department reported Friday that retail sales rose 0.6% in September, the third month in a row of sales gains. In August, sales rose 0.7%, the biggest advance since March.

Excluding autos, sales rose 0.4% in September after a 1% August gain. Auto sales, which had fallen 0.5% in August, rose 1.6% in September, the best showing since March.

The furniture category had a strong showing, as furniture retail sales rose 0.5%, the best showing since July. Electronic and appliance stores posted a 1.5% rise, the best since February. Sales at hardware stores rose 0.6%, the biggest increase since April.

Sales at general merchandise stores, which includes department stores and the big discounters such as Wal-Mart and Target, were flat in September. But the zero gain followed a 0.5% jump in August, which had been fueled by back-to-school shopping and discounting by many retailers.

Sales at specialty clothing stores dropped 0.2% in August after posting a 0.5% rise in July.

Even with the solid overall gain in September, economists remain concerned that consumer spending will not rebound until households have the income growth to spend at a faster pace. And the income growth will not come until businesses start hiring back laid-off workers at a faster pace.

Unemployment has been at or above 9.5% for a year and two months, the longest stretch since the Great Depression.

Retail sees promise - Strong September sales bode well for important holiday season

By Mae Anderson
The Associated Press

NEW YORK» Americans proved in September they are willing to spend, as long as the price and the product are right. Stores including Abercrombie & Fitch, Limited Brands and Macy’s posted strong September sales figures, helped by customers lured to malls by back-to-school discounting. That strength was partly offset by erratic weather in the last week of the month, including a heat wave on the West Coast and tropical storms on the East Coast.

The results are a positive sign that shoppers will be willing to spend during the upcoming holiday season. “I think the doom and gloom that many of us anticipated for the quarter appears unfounded,” said Stifel Nicolaus analyst Richard Jaffe. “Credit goes to the U.S. consumer and the U.S. retailer for sleuthing out what she wants and giving it to her.”

The International Council of Shopping Centers’ index of September retail sales rose 2.6 percent, near the low end of its forecast that ranged from 2.5 percent to 3 percent growth.

But the number is stronger than it appears, since retailers were up against year-ago results that were the first positive numbers in a year, making comparisons more difficult.

Mike Niemira, ICSC director of research and chief economist, said he expects holiday sales to rise 3 percent to 3.5 percent, slightly better than results in September, which is the third-largest sales month in terms of volume.

Still, results remain moderate compared with pre-recession performance. Analysts do not expect any major sales surge until unemployment, housing and consumer-confidence sectors markedly improve.

“Our holiday projections are not for a gangbuster season,” Niemira said.
A hot August and a late Labor Day helped push more back-to-school sales into the month.
In Denver, some young shoppers acknowledged that they had postponed some of their back-to-school purchases.

Breanna Seaton, a student at East High School, said she waited because there tend to be more sales in September.

Outside Forever 21 in downtown Denver, other shoppers agreed. “I’ve been barely starting to get stuff for school,” said Claudia Adame, a college student in Denver.

Nationally, top performers were stores that offered attractive prices or unique items that consumers feel are “must-haves.” Bright spots included teen retailers and luxury stores.

Fed's Beige Book sees 'modest' growth in Colorado region

Denver Business Journal - by Mark Harden

The economy in Colorado and six neighboring states saw "modest" growth in late July and August, the U.S. Federal Reserve reports in its latest "Beige Book" survey of the region’s business executives.

The Fed's 10th District, which includes Colorado and some or all of six neighboring states, was one of five Fed districts nationwide, most of them in the West, that saw modest growth during the six-week period covered by the latest report.

Growth was slower in eastern states, the Fed reported.

The Fed’s 10th District is based in Kansas City. Each district released its own Beige Book Wednesday.

The Beige Book is based on interviews with a sample of business executives representing key industries in each district. The reports are anecdotal and do not contain statistics, but they are widely followed and help the Fed to set national economic policy.

The latest report is based on information collected through Aug. 30.

During late July and August, consumer spending in the 10th District "increased slightly from the previous period, and high-tech and transportation firms reported moderate growth," the local Beige Book said.

Energy activity "continued to expand solidly, and agricultural conditions improved with higher crop prices. Manufacturing production was flat, and factory orders declined slightly."

The Beige Book said the downturn in commercial real estate across the 10th District "eased somewhat, while residential real estate markets weakened further."

It said that bankers "reported steady loan demand and an unchanged outlook for loan quality."

The region's business executives interviewed for the Beige Book "were moderately optimistic about future sales, but few planned to change employment or capital spending levels in the months ahead. Retail prices were largely unchanged from the previous survey, and wage pressures in most industries remained limited due to soft labor markets."

The Fed’s 10th District includes Colorado, Kansas, Nebraska, Oklahoma and Wyoming as well as western Missouri and northern New Mexico.

Formally known as the “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” the Beige Book is published eight times a year. The nickname refers to the color of its cover.

New medical New medical office building planned for Denver's Uptown hospital

By Margaret Jackson
The Denver Post

Rapid growth in the health care industry is fueling the development of a 95,000-square- foot medical office building on the southern edge of the Uptown hospital district.

A major Denver medical practice has agreed to lease 25 percent of the building, said Glen Sibley, president of Denver-based Fleisher Smyth Brokaw, which is developing the project. He declined to disclose the practice because employees have not been notified.

"The real drivers are the growth in the health care industry because of the aging baby boomers and the anticipated expansion of health care that comes with insuring another 35 million Americans," Sibley said.

In 2008, physician office visits by people ages 45 and older accounted for a greater proportion of all office visits than in 1998 (57 percent vs. 49 percent), according to a report by the National Center for Health Statistics.

Designed by Denver architects Mulhern Group, the building will have floor plates of up to 25,000 square feet on floors 5 through 8 and will be able to accommodate an ambulatory surgery center, imaging services and a variety of other medical services. Retail and restaurant space is planned for the ground floor. Structured parking for more than 300 cars is planned for the project.

Groundbreaking for the project at the southwest corner of East 17th Avenue and Lafayette Street is slated for the middle of next year. It is expected to take a year to complete.

The project will be the seventh medical office building for Fleisher Smyth Brokaw, which focuses on the acquisition, investment and development of office and medical office properties throughout Colorado.


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