At halfway point of 2019, cautious optimism prevails

Phil Castle, The Business Times

While C.J. Rhyne follows the usual metrics in tracking how the Grand Valley economy performs, he pays more attention to what he hears from the business owners with which he talks. “I want to get it straight from them.”

As director of business retention and expansion at the Grand Junction Area Chamber of Commerce, Rhyne regularly meets with business owners to discuss the problems they face and try to help them. That gives Rhyne a unique perspective about what’s on the collective mind of the local business community.

What Rhyne says he hears halfway through 2019 is a mix of concern and encouragement. “They’re moving along cautiously optimistic.”

Business owners are concerned about the potential effects of state regulatory changes on the energy sector and, in turn, the overall business climate. Recruiting qualified employees remains a challenge, as does transporting goods to and from the region. But there’s also confidence in the economy, enough so for some owners to expand operations, Rhyne says.

Rhyne isn’t alone in his assessment.

Curtis Englehart, director of the Mesa County Workforce Center in Grand Junction, says a tighter labor force makes it more difficult to find workers. But a lower unemployment rate and growing labor force constitute promising trends.

Robin Brown, executive director of the Grand Junction Economic Partnership, says the average annual wage of $42,000 in Mesa County remains too low. Otherwise, Brown says she’s excited about the economy as well as prospects for bringing additional businesses and jobs to the Grand Valley. “We’re feeling good about the year.”

Lynn Thompson, president of Bray Real Estate in Grand Junction, says low housing inventories continue to slow real estate transactions, but the residential market remains healthy overall.

Dale Beede, a senior broker associate with Coldwell Banker Commercial Prime Properties in Grand Junction, says the commercial real estate market continues to strengthen. There’s potential for additional growth, he says. “One word may totally transform our commercial market in the near future: technology. Expect to see the tech industry grow significantly in the near future.”

Rhyne says the business owners with which he talked in the first half of 2019 were “cautiously optimistic.” He expects that description to remain applicable during the second half of the year.

While they’re generally confident about the local economy, they’re also concerned about the effects of state legislation enacted during the session earlier this year on natural gas and oil development, Rhyne says. The new regulations could prompt some energy companies to move operations to other states, in turn affecting the Colorado economy, he says.

The Grand Valley economy has become more diversified in recent years. Still, the energy sector remains an important component of that economy, he says.

Transporting goods to and from the Grand Valley remains another concern, but one recent efforts have addressed, he says.

Rocky Mountain Rail & Storage opened a transloading facility in Grand Junction. The facility can transfer shipping containers and other freight between rail cars and trucks.

Meanwhile, work continues on establishing a foreign trade zone, Rhyne says. A federal program allows for the establishment of secure areas that are considered outside of U.S. Customs territory for tariff purposes. Businesses are allowed to import goods without paying a duty until those goods leave the zone and enter U.S. commerce. When imported materials and components are used to make finished products, duties are assessed at what’s often a lower rate.

Work force development remains another concern for local businesses — and another ongoing effort for the chamber and other organizations — Rhyne says. Given a shortage of skilled employees, it becomes important for the Grand Valley to produce its own.

The monthly unemployment rate fell to 2.9 percent in Mesa County in May, matching the lowest level in more than a decade. The overall labor force has grown nearly 2.6 percent over the past year. Initial claims for unemployment insurance have dropped almost 3.8 percent since a year ago.

“Those are three really good signs,” Englehart says.

The jobless rate typically spikes in Mesa County in June in part because of high school and college graduates entering the local work force and looking for jobs. Otherwise, Englehart said he expects labor conditions to continue to improve in the second half of 2019.

Western Colorado has become an increasingly popular destination for people looking to escape the traffic congestion and higher housing prices along the Front Range, he says.

At GJEP, Brown points to progress in the fact Mesa County has the strongest gross domestic product of any area in Colorado outside the Denver area and 10th strongest GDP overall in the state.

Existing businesses are growing, and new businesses are coming to the Grand Valley, Brown says. The outdoor recreation and Colorado lifestyle available in the area attracts professionals as well as entrepreneurs who bring along their ventures.

The technology sector is particularly promising, and Brown says GJEP has allocated additional resources to helping business and individuals in that sector. The Grand Valley also offers a good location for manufacturing, Brown says.

The Colorado Rural Jump-Start Program offering tax incentives to businesses that create new jobs has promoted economic development, Brown says. The creation of so-called opportunity zones offering tax breaks also has spurred growing interest in Mesa County among developers and investors, she says.

Brown says she’s optimistic about 2019 and the likelihood of recruiting additional businesses to the Grand Valley. “Hopefully, we’ll have some pretty exciting announcements.”

Meanwhile, real estate transactions slowed in the first half of 2019 compared to the same span in 2018 as low housing inventories limited selection. It’s a trend Thompson expects to continue in the second half of 2019.

New construction has failed to keep pace, a shortfall made worse by cold and wet weather that hampered building early in the year, he says.

While year-end numbers for 2019 likely won’t match those for 2018 — the highest for Mesa County since 2007 — Thompson believes the market remains healthy overall. “I’m not scared with what’s happening.”

Moreover, investors remain confident in purchasing property in the area, he says. “People with money are feeling good about what’s happening in Grand Junction.”

Beede says the commercial real estate market continues to strengthen in the Grand Valley, although activity in the energy sector has slowed.

Professional office leases remain a “hot spot,” Beede says, and coworking spaces offering shared office facilities have become more prevalent. Growth has occurred in what were formerly weaker areas of the commercial market on Orchard Mesa and along North Avenue, he says.

Beede says there’s potential for the technology sector to grow significantly and, as a result, significantly change the commercial market.

So what will happen in the second half of 2019? Nobody can tell for sure, but Rhyne continues to track how the economy performs by what he hears from business owners. It’s as good a metric as any others, he says.