As you walk through downtown Aspen, you see signs of economic recovery everywhere. The streets are busy, the shops and restaurants look full and there is little or no vacant retail space. Also, for the first time in several years, this past June’s Food & Wine Classic was sold out. In addition, downtown Aspen seems busy with new construction projects. A common question from visitors and locals alike is whether Aspen is booming again, or is it just an illusion?
Perceptions and first reactions can sometimes be misleading, so let’s look at the statistics to see what’s really happening. One of the key drivers of the Aspen economy is the current number of visitors that are coming to Aspen. Since 1987, the average annual occupancy levels for Aspen lodging, as reported by the Aspen Chamber Resort Association, has ranged between a low of 43 percent experienced in 2009 to a high of 62 percent reached in 1996, 1997 and 1998. In the past 10 years, the total occupancy rate has ranged from 43 percent to 58 percent. During the winter months in the past decade, the occupancy levels have ranged from a low of 60 percent recorded in 2009 to a high of 79 percent reached in 2007 and 2008. But in 2011, the overall occupancy rate was 50 percent up from the low point of 43 percent in 2009; and 64 percent during the winter, up from a low of 60 percent in 2009. All this would indicate that although visitors are returning to Aspen, the occupancy levels are still only about half way back to the high occupancy years of 2007 and 2008.
Another telltale sign of the economy’s health is retail activity as best reflected in the sales tax receipts collected by the city of Aspen. In 2007 and 2008, sales tax revenues peaked at $11 and $11.5 million respectively. Sales tax revenues declined roughly 15 percent in 2009 and 2010 to about $9.7 million and $9.8 million, respectively. But in 2011, sales tax revenue receipts rose 7.1 percent to $10.5 million.
By May of this year, sales tax revenue was up roughly 8 percent from the same time period in 2011, continuing to signal an improving retail environment for Aspen. In comparison to previous years, the 2012 year-to-date sales tax receipts, if the trend continues through the remainder the year, would put Aspen on track to equal the level of retail activity seen in 2006 and 2007, two of the three best years in this past decade.
Another major indicator of Aspen’s economic health is activity in the real estate market. At the mid-year point, the Aspen real estate market is running slightly behind where it was mid-year in 2011 in terms of total volume, but with roughly the same number of transactions recorded. What’s missing this year is the high volume of sales of homes valued over $10 million. In 2011, there were 20 Aspen homes that sold for $10 million or more. So far in 2012, there have been only five home sales over $10 million, roughly half the volume of 2011. A primary reason for this difference could be that lack of homes in the $10 million-plus price range due to the slowdown in new home construction in the past four to five years.
Although it may seem at first blush that Aspen is booming again, the statistics tell a slightly different story. It’s clear that Aspen is continuing to recover from the worst of the Great Recession, and for the most part has regained its economic footing. It’s also possible that the pace of Aspen’s economy and real estate market today is more typical of what to expect in the future rather than what Aspen temporarily experienced in the boom years of 2005 through 2007. The economic exuberance of those few years may have been an aberration due to an overheated national economy driven by excesses in the financial world. In comparison to the norm over the past 25 years, Aspen’s economy and real estate market are healthy and improving, but currently falls short of a renewed boom.
William Small, JD, CCIM is managing director of Frias Luxury Estates, a division of Frias Properties of Aspen. Email him at firstname.lastname@example.org .