Colorado Leads The U.S. In YOY Construction Job Losses

Colorado’s construction industry is struggling to maintain employment levels despite booming activity across multiple commercial real estate sectors, according to new data from the Associated General Contractors of America.

Overall, Colorado has lost about 1,800 construction jobs over the last year, which ranks the state as the worst for construction employment growth, AGC data shows. That decline accounts for just 1% of the state’s more than 180,000 construction workers, which led AGC of Colorado CEO Mike Gifford to say there are still plenty of opportunities for the industry to expand. 

But Gifford said that expansion may be rockier for commercial real estate developers than on the residential side and could hinge on the support the industry receives from public officials for construction education programs. 

“Overall, it doesn’t look like the sky is falling, but the commercial side seems to have the biggest question mark,” Gifford told Bisnow. 

Colorado’s labor market has been one of the most resilient in the country since the beginning of the coronavirus pandemic. As of May 2023, the state’s unemployment rate stood at 2.8%, which is almost a full percentage point below the national average. 

Meanwhile, several commercial real estate sectors continue to see strong project delivery and construction activity figures. CBRE found that development activity in Denver’s industrial market increased by about 15% between Q4 2022 and Q1 2023. There was more than 2.5M SF of office space under construction in Denver in Q1, according to CBRE. 

Gifford said this activity suggests that construction firms are struggling with an extremely tight labor market rather than a shortage of projects to work on. He said the industry lost more than 1,800 workers last year due to retirement alone, a figure that wasn't captured in the employment data. 

AGC Chief Economist Ken Simonson told Bisnow in an email that almost all of the construction jobs Colorado lost were in the specialty trades, which “may reflect a slowdown in home renovations and additions, rather than in multifamily or nonresidential work,” he said. 

But Gifford said Colorado’s multifamily market may face significant challenges during the rest of the year. One reason is that state lawmakers have introduced several pieces of legislation that directly affect multifamily development, such as a “right of first refusal” bill that would require owners to give their tenants the first opportunity to purchase their building if the owner decides to sell. The bill didn't pass during the 2023 legislative session, but Gifford said it is still on the minds of many people in the industry. 

“These ideas aren’t going away,” Gifford said. “And that will obviously impact the margins that businesses receive on construction projects.”

To mitigate future issues stemming from a lack of employment, Gifford suggested that Colorado policymakers look at providing additional funding for construction education programs in high schools and creating grant programs that can send more students to trade schools. Colorado created a state apprenticeship program in 2021, and Gifford said 49 high schools offer construction classes as part of their curricula. But funding for the apprenticeship program has paled in comparison to other education programs that target early childhood and university-level program enrollment.

Another aspect that Gifford said he hopes public policymakers address is the increase of legislation that makes it harder for landlords to operate their businesses. Gifford said he worries that bills seeking to establish rent control or similar policies may depress landlord appetite for multifamily properties. 

“Some of these policies may look good in a vacuum, but when you add them up, they could push investment money out of Colorado and into states that don’t have these sort of policies lined up,” Gifford said.