Known for its mountain vistas, the Colorado Rockies are part of the North American Cordillera, a range of mountains that sweep across a western swath of the continent, from Alaska to northern Mexico. This range gives much of the Mountain Region — comprised of the states of Colorado, Idaho, Montana and Wyoming — its name and distinctive environment. Colorado alone boasts 58 named peaks with an altitude of more than 14,000 feet and has the highest average altitude in the nation at 6,800 feet.
Like much of the rest of the country, this fast-growing region is looking to bounce back after hitting a speed bump in first-quarter 2022 when the economy slowed considerably. After a strong 2021, the annualized gross domestic product (GDP) for all four states turned negative in the first three months of this year. Idaho suffered the least at -1.1%, followed by Colorado (-1.9%), Montana (-3.8%) and Wyoming (-9.7%), while the overall U.S. economy shrank at an annualized rate of 1.6% during the quarter.
A main factor in the economic decline for Wyoming, which has an annual GDP of about $42 billion, is the mining, oil and gas industries. Mining alone is down about 4,000 jobs from pre-pandemic days and only has 1,500 jobs left. On the positive side, Wyoming has seen modest population increases in recent years, and statewide sales and tax collections were up nearly $10 million (or 16%) year over year in June 2022.
The mining sector also is dragging in Colorado, the region’s largest economy by far with a GDP of about $441 billion in 2021. As one of the fastest-growing economies in the country, Colorado is best known for its outdoors activities and tourist attractions. But the state also is a center for manufacturing companies such as Vestas, which makes wind blades and turbines, and NASA suppliers such as Ball Aerospace and Technologies Corp. About half of the state’s 66 million acres are used for agricultural purposes, including cattle ranching. Colorado is the fourth-largest exporter of frozen and fresh beef in the U.S. About 25% of its farmland is used for crops such as apples, hay and wheat.
Idaho, the second-largest economy in this region with a GDP of $94 billion, is best known as a leading grower of potatoes. The state produces nearly 33% of the nation’s potatoes, and it’s also a sizable producer of cattle and sheep. Known as the Gem State, Idaho has a mining industry that focuses on molybdenum, silver and lead. Manufacturing (including food processing, forest products and mining products) is another major industry.
In the Big Sky Country of Montana, the $59 billion economy is dominated by agriculture, forestry and energy production. Cattle, sheep, wheat, barley, fruit and potatoes are just some of the state’s ag commodities. Timber production and coal mining also are major industries. And tourism in the state has showed renewed strength, growing by 22% from 2020 to 2021. ●
Office vacancies in the Denver metro area had stabilized near the end of 2021 and through first-quarter 2022, but then rose by about 70 basis points in the second quarter to an average of nearly 21%, according to Cushman & Wakefield. Still, even with the uptick in vacancies, asking rents for the Denver area continued a gradual upward movement in Q2 2022, reaching $31.36 per square foot, a slight increase over the prior quarter and a jump of 2.1% from one year earlier.
Cushman & Wakefield reported numerous key lease transactions in submarkets such as the central business district, northwest corridor and the southeast suburban area. There were four major office-sales transactions priced at $34 million or more in the second quarter, led by a $106 million acquisition of a 223,000-square-foot property in the southeast suburbs.
Net absorption, however, dropped by 842,900 square feet during the quarter. Cushman & Wakefield reported that office downsizing continues and that more vacant sublease space is coming on the market. This increase, along with overarching recessionary concerns, are expected to continue to weaken the Denver office market.
Focus: Tourism
From hurtling down any of the 5,286 skiable acres in Vail, Colorado, to rafting along the Snake River in Idaho’s Hells Canyon, tourism and outdoors activities have long been synonymous with the Mountain Region.
In Colorado, with its four national parks and 26 ski resorts, the tourism industry was responsible for about $22 billion in revenue in 2021. Direct travel-generated employment reached 161,000 jobs, although this number is still below the 184,000 jobs supported by the industry before the pandemic. Idaho also is a favorite of hikers and skiers with its 18 resorts. It has more than 100,000 jobs in industries related to recreation and tourism, which adds $3.7 billion to the state’s economy.
Montana, which is home to Glacier National Park, has about 43,000 people working both directly and indirectly in tourism and recreation, which pumps about $4.4 billion per year into the state’s economy. Neighboring Wyoming, which is known for Yellowstone National Park, saw the travel and recreation industry generate $4.3 billion and employ 31,000 people in 2021.
What the locals say
“The commercial conditions for Boise and the Treasure Valley market are very strong, with record pricing across the board. Industrial is particularly strong, with a lot of new projects being leased prior to completion. Our industrial vacancy rate is about 1.2%. … The investment market is good, with very few properties on the market and high demand. We have a lot of buyers from California, Oregon and Washington who are looking to invest in southern Idaho. The only caveat to all this is that we are not totally immune from macroeconomic trends, including rising interest rates, which are giving some buyers a cause for pause.”
John Stevens
Partner and sales manager
TOK Commercial Real Estate
3 Cities to Watch
Missoula
Located in the Northern Rockies at the confluence of three rivers, Missoula is Montana’s second-largest city with a population of 75,000. The city is known for its trout fishing and proximity to wilderness areas. Missoula’s largest employer is the University of Montana, which has a student enrollment of about 10,000. The city serves as a regional destination for shopping, dining, arts and culture. Other major employment sectors in the city include professional services, restaurants and entertainment.
Casper
Originally known as Fort Caspar, a site where the Oregon Trail and the Pony Express route met, the second-largest city in Wyoming has a population of 59,000. Casper has a history of mining and oil exploration. It’s also known for its cattle and sheep ranching industry along with a large medical sector that includes a U.S. Department of Veterans Affairs clinic and the Wyoming Medical Center. And Casper has developed a vibrant tourism industry, with rodeos, Wild West weekends and other outdoors activities.
Coeur d’Alene
The city on the shores of breathtaking Lake Coeur d’Alene in northern Idaho owes its name to French trappers who traded with the local native tribe in the 1800s. With a population of nearly 56,000 people, the city is generally known as a recreation center. But it’s also the economic hub for north Idaho and is home to a large mining sector that includes public companies Coeur Mines and Hecla Mining Co., the nation’s largest silver producer.
Sources: 5280.com, Britannica.com, Casper Area Convention and Visitors Bureau, City-Data.com, Coeur d’Alene Convention and Visitor Bureau, Coeur d’Alene Regional Chamber, College Tuition Compare, Colorado Office of Economic Development and International Trade, Cowboy State Daily, Cushman & Wakefield, Destination Missoula, Encyclopedia.com, Encyclopedia of the Great Plains, Energy News Network, Forbes, Hecla Mining Co., History.com, Idaho State Department of Agriculture, Missoula Chamber of Commerce, Montana Business Quarterly, OutThere Colorado, Petroleum Association of Wyoming, State of Colorado, The Center Square, TravelWyoming.com, Uncover Colorado, U.S. Chamber of Commerce, WalletHub, Western River Expeditions, WorldAtlas.com, Wyoming Center for Business and Economic Analysis, Wyoming Office of Tourism, Wyoming State Geological Survey
