Pre-Pandemic Economic Drivers Support Mountain Region Recovery; Lower Density Compared With Coastal Markets Offers Favorable Option

Underlying lifestyle drivers maintain positive regional outlook during uncertain times. Prior to the economic shutdown, the Mountain region’s largest markets were recording strong rates of employment growth and net migration that fueled tenant and buyer demand for commercial properties and residential units. While impacted by COVID-19, the number of recorded cases and jobs lost in the eight-state territory trailed other U.S. regions, prompting widespread reopenings in May. Moving forward, these factors and the Mountain’s low population density position regional epicenters and operators to potentially face fewer post-pandemic hurdles than other areas of the country. However, uncertainty still looms as the region has recorded a recent acceleration in new cases, highlighted by an increased virus spread in Arizona. Should this trend persist, another wave of safe-at-home orders could be enacted, hindering the recovery in the Phoenix metro.

Population growth trends recorded at the onset of this year may resurface. With job creation potentially rebounding during the second half, barring a second wave of closures, households seeking locations of reduced density may relocate to suburban communities within major Mountain metros. Tertiary markets like Boise and Colorado Springs that were recording strong population and tech-related growth leading up to the pandemic could also gain in appeal. A potential uptick in regional net migration would aid the pace of economic recovery, with operators in these markets benefiting from increased housing demand, consumer spending, and volumes of essential and nonessential goods.

Higher-paying sectors’ spending accelerates the return of other jobs. Financial, professional services and government organizations with a presence in the region were mostly able to avoid large-scale staff reductions during the shutdown. In Denver, Phoenix and Salt Lake City, these firms accounted for more than one-third of each metro’s employment base prior to the downturn, curtailing the overall number of jobs lost in the second quarter. Dependent on the length of recovery, companies within these sectors could expand payrolls during the summer, tapping the large pools of well-educated residents in the metros. Competition for these professionals may heighten if outside employers seeking lower operating costs in areas less impacted by the pandemic establish regional offices.