Whether it’s slowing growth or the end of the apartment building boom, one thing is clear: Colorado is bleeding construction jobs.
Colorado lost 4,300 construction jobs in April compared to the same period last year, putting it third from the bottom in the state rankings when it comes to construction employment, according to the Bureau’s latest update. This marks the eighth consecutive month that Colorado has recorded a decline in construction jobs from the previous year, including everything from roads and shopping centers to single-family homes and apartment buildings.
The epicenter of the decline is Denver, bureau data show. In April, the Denver metropolitan area, which stretches from Broomfield to Douglas and Clear Creek to Arapahoe counties, lost 5,700 construction jobs compared to last year, the largest drop among the 358 metropolitan areas that the federal government tracks throughout the United States.
Employment data is not perfect. It can be erratic from month to month and initial estimates are revised frequently. But the steady string of losses in Colorado implies a real trend.
“I think we at least believe construction jobs are down,” said Brian Lewandowski, an economist at CU Boulder’s Leeds School of Business. “We’re not sure the magnitude of that decline.”
What’s behind the decline?
There are likely multiple factors behind the decline, according to Ken Simonson, an economist with the General Contractors Association, a construction industry trade group.
One of the simplest explanations is that Denver simply isn’t growing like it was several years ago. Fewer people moving into the city – or more people leaving – will eventually translate into less demand for new buildings.
“Colorado, of course, was a high-growth state for most of the previous decade, but things have really slowed down,” Simonson said. “Denver was also a very trendy city for a while… but you got to the point where I think Denver stopped being a relatively low-cost city. Certainly, congestion got a lot worse, and I think when the pandemic hit, that really slowed growth for a while.”
The number of people moving to Colorado stagnated in 2019, according to data from the U.S. Census Bureau. And Denver’s population has been more or less stagnant since the pandemic. (Available government data does not include new immigrants.)
The construction sector tends to be more volatile than other industries, according to Monicque Aragon, senior economist at the Colorado Department of Labor and Employment. Something like a snowstorm can mess with the numbers for a month, he said. Fluctuations in the oil and gas business also affect construction, he said.
The housing construction boom is coming to an end
However, whatever the root cause, there is a clear downward trend from September onwards, he said.
“Given the recent declines in this sector this year, we will continue to closely monitor and analyze labor trends,” Aragón said in an email.
One thing developers built a lot in Denver during the boom years were apartments. That activity appears to be declining, according to CU’s Lewandowski. The number of permits for housing construction has decreased this year by more than 50 percent compared to last year. That doesn’t mean those construction jobs will disappear overnight, as developers are still finishing projects they started several years ago, but it does show which way the pendulum is swinging.
Kevin J. Beaty/DenveriteA large apartment building under construction at Colfax Avenue and Downing Street in Captiol Hill. March 6, 2024.
“I suspect what we saw is a huge balloon in multifamily activity that is now coming to an end,” Lewandowski said.
Some point out that recent political decisions could slow construction. New rules went into effect in July 2022 requiring any apartment or condo project of 10 or more units in Denver to include affordable options or incur a fee. That could push developers to avoid building in Denver, according to Michael Gifford of the Denver chapter of the General Contractors Association.
“That could be a great policy in theory… but developers have the option to go elsewhere,” Gifford said.
The worker shortage could also be a drag on construction employment, Gifford said.
Jefferson Lopez finishes some drywall on the future Montbello Freshlo Hub, which is under construction near the intersection of Peoria Street and Albrook Drive. February 25, 2024.
Alliance Construction Solutions project manager Arnulfo Serrano gives a tour of the future Montbello Freshlo Hub, which his teams are building near the intersection of Peoria Street and Albrook Drive. February 25, 2024.
“It’s not about people lining up to get a job and we don’t have them. It’s just that we can’t find enough (workers) to replace those who leave,” he said.
But labor shortages are a constant problem across the United States. It doesn’t explain why Colorado would be losing construction jobs while most states are adding them.
counting cranes
A very visible sign of a booming city is tower cranes. By that measure, construction in downtown Denver is contracting, according to real estate consultant Rider Levett Bucknall. The number of cranes in the city center is down 40 percent since the third quarter of 2023, according to the RLB Crane Index, an indicator of construction activity in North America.
The decline is largely because a group of large apartment projects in the River North Art District, known as RiNo, are on the verge of closing, according to Jordan Miller, an associate in RLB’s Denver office.
Kevin J. Beaty/DenveriteA construction crane on top of a development in Sun Valley. May 8, 2024.
“All of that was happening at the same time. “Everyone is finishing at the same time,” Miller said. “We’re seeing the cranes migrate…I think (construction) is moving out of that main downtown area.”
According to Miller, there is still a lot of construction going on in places that are not captured by the index. For example, work at the Western National Convention Center is outside the bounds of the index.
Still, if construction has simply moved to other parts of the Denver area, it stands to reason that jobs would move with it. That’s not what the data suggests.
There are many things that can hinder construction, such as higher interest rates and the rising cost of labor and construction materials. But those dynamics aren’t specific to Colorado and don’t explain why the state is at the bottom of the pack when it comes to growth in the construction sector.
“It’s kind of a puzzle,” CU’s Lewandowski said. “It’s not cut and dry.”
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