What Colorado City Will Grow Fastest By 2050?
The answer may surprise you
The state of Colorado Demography office came out with their latest long-range forecasts through 2050. One city will unseat Denver as the largest in the state and other areas will see surprising growth rates; there are also some that will see declining populations.
The long-range predictions are critical, not just to governments planning for growth (schools, roads, etc.) but also private enterprise. Long-term growth projections can drive everything from where a business locates, whether a new hospital opens, where houses are built, etc. Furthermore, declining populations have declining economic conditions. Detroit serves as an example: As population declined, real estate prices dropped precipitously. This negative cycle was self-fulfilling. As prices dropped government revenue dropped which equated to less services (police, fire, roads, schools, etc.) which led to further population declines. A vicious downward spiral emerged. Are there areas that could end up like this in Colorado?
As I read through the study on predictions for Colorado’s population changes, I was in disbelief. Were certain areas really going to grow as fast as predicted? If so, what will drive the growth?
- The Western Slope will grow by 67.2 percent
- The central mountain resorts will lose population along with Eastern plains and San Luis Valley
- The Northern Front range will grow by 107 percent
- El Paso County (Colorado Springs) will beat Denver for the most populated city
To see if the above predictions are plausible, it is important to differentiate the types of growth throughout the state. There is natural growth (births outweigh deaths) and net migration from other areas. Colorado’s primary driver of growth is net migration. Why is Colorado such an attractive place for net migration?
The answer is simple: JOBS.
The No. 1 reason people move to Colorado is for employment opportunities. Don’t get me wrong, quality of life and other factors can influence the decisions, but at the end of the day career opportunities are the primary concern.
WHAT IS DRIVING JOBS?
In the past, jobs were driven by manufacturing and extractive industries (coal, oil, etc.) Today’s job picture is vastly different. The Denver metro area is now driven by technical industries (software, financial, health care, etc.) The new industries pay well and require a highly educated workforce.
WHY IS THIS ECONOMIC SHIFT SIGNIFICANT?
Knowledge industries feed on themselves and concentrate in certain areas, like Colorado’s Front Range. It is a self-fulfilling prophecy; new companies will form near existing knowledge companies to access resources, industry expertise and specific talent.
The premier example is Seattle, Wash. Seattle was a crime-ridden, industrial town until Microsoft relocated there. Hundreds of other companies were created as a result which further attracted other companies, including Amazon. The same is happening throughout the Front Range, where knowledge companies spawn further innovation in the area. This trend appears to be gaining steam. For example, the Denver-Boulder corridor is not filled with employers like Google, Oracle, Webroot, Homeadvisor and more.
WHY IS COLORADO ATTRACTING THESE NEW COMPANIES?
Here is a picture of the U.S. based on percentage of residents with Bachelor’s degrees or higher; the darker the green the higher percentage of workers have attained higher education, according to census.gov. Notice Colorado is one of the most educated states , thus attracting companies seeking highly educated workers; this in turn attracts more educated workers seeking high-tech employment.
We’ve now established that Colorado will see net gains in tech jobs due to the large supply of knowledge workers. Unfortunately, the distribution of these jobs will not be evenly disbursed throughout the state. Many regions will gain, while others will lose substantially. As we all know employment is local. Each local submarket is radically different throughout the state, think of two metro areas Pueblo versus. Boulder.
Why has Boulder prospered while Pueblo has seen declining populations?
As we drill down to the state level, it becomes apparent that successful areas are drastically different than others. For example, when you look at Boulder, it has one of the highest percentages of educated knowledge workers, while on the flip side Pueblo has less than half as many highly educated workers. If a knowledge company were looking to hire workers, they are much more likely to look in areas that meet their employment profiles.
It is apparent that the top 100 tech companies in the state are clustering along the Front Range (source Built in Colorado). They are “voting” with their relocation/expansion choices for certain areas that will meet their business needs.
Why is this important?
This clustering is driving population growth and in turn sky rocketing real estate. If you overlay the graph below with the one above, the areas in dark green are the fastest growing “knowledge centers” in the state.
The pictures tell a simple story: Colorado is attracting knowledge workers and particular counties, due to education levels, are attracting more workers than others.
What does this mean for long-range planning? Workers will continue to congregate in the dark green areas throughout the state and those will continue to see above average net gain in employment into the foreseeable future. The lighter shaded areas will see either population decline or stagnation.
Walmart is an excellent example of what is occurring in Colorado. Walmart recently passed Apple as the largest mobile payment processer according to Bloomberg. How is it possible a retailer in Bentonville, Arkansas is beating a Silicon Valley darling? It turns out Walmart Pay was developed in Walmart labs; Walmart was unable to attract talent to Bentonville and therefore planted Walmart Pay in southern California near other tech incubators. The same is true in Colorado with key companies migrating to knowledge locations and leaving behind other geographies.
ARE THE ECONOMISTS’ PREDICTIONS CORRECT? Some of their predictions are spot-on based on education trends highlighted above, while others miss the mark completely. I’m a big believer that markets best predict economic outcomes. Businesses “vote” with their bottom lines in mind. Based on where companies are relocating and expanding, we can predict the economic success of a city.
- The front range from Denver North will continue to grow at above average rates
- The I-70 corridor will see continued growth from Denver to Glenwood Springs and then south to Aspen
- The southwest corner has good growth prospects including the Durango area
- The Eastern plains (in white) will continue population declines
- Pueblo, Delta and the northwest corner of Colorado along with other lightly shaded areas will experience population stagnation/declines
WHAT SHOULD YOU DO?
Are you going to follow the predictions of fancy economists predicting growth in areas that are not green? Fortunately, fancy economists are not needed to solve this puzzle. Businesses have already “voted”; the dark green on the maps tell the story. Focus on the areas with the “darkest green”; they will no doubt provide the most “greenbacks” to their local economies and put the most in your pocket. Will you follow the green in 2018?