Page 18
— Office Properties Quarterly — September 2016
Market Drivers
due to the strong employee base, he
said.
Another thriving sector is tech, as
Denver continues to be recognized
nationally as a tech hub. Many tech
companies that have headquarters in
SiliconValley, California, or NewYork
are looking to expand to communities
that have the necessary talent pool
and business networks to allow for
successful expansion, said Sam Bailey,
senior manager of Global Business
Development with Colorado Office of
Economic Development & Interna-
tional Trade. Coyote Logistics, out of
Chicago, and OnDeck Capital, from
NewYork, exemplify this trend.
Right now, the CBRE office is working
with about a dozen tech companies
headquartered on theWest Coast that
are planning for a significant presence
in downtown Denver.
“They’re drawn by the labor base, the
commercial real estate costs and the
cost of living,” said Alex Hammerstein,
a senior vice president with CBRE.
“And then when they get here, they’re
sold on Denver. They are impressed
not only by those three things, but also
they’re impressed by the Rocky Moun-
tains; they’re impressed by Union
Station; and they’re impressed by the
energy that LoDo has created. So it
becomes a really simple decision for
them.”
A common theme among all relo-
cating and expanding companies
is the pull of a strong workforce.
Colorado has the second-highest
level of degree attainment, said Laura
Blomquist Rodriguez, senior manager
of strategy and analytics for the Colo-
rado Office of Economic Development
& International Trade. And the Denver
area alone has about 79,000 high-tech
jobs, according to the CBRE Colorado
Tech Book.
“Additionally, something that may
not be known outside the state is the
depth of our networks and the col-
laboration,” Blomquist Rodriguez said.
With hundreds of networking events
and a willingness to collaborate, many
are finding the business culture desir-
able.
“We are finding more and more
that companies are choosing to relo-
cate and expand here because of the
business network,” said Bailey. “The
ecosystem that’s been built here and
the talented workforce – those are the
primary drivers for the majority of our
prospects.”
In the past, every conversation Metro
Denver EDC held with a prospect com-
pany started with a description of the
region, the workforce, the transporta-
tion system, education systems, etc.
“Now, the company starts the con-
versation by telling us why they want
to be here,” said Brandt. “The reasons
they’re giving us are the same ones
we’ve always told them. The word is
out.”
Much of the information companies
request today focuses on relationships.
For example, a company will request
a conversation with other companies
that do business here or conversations
with the universities or industry asso-
ciations, Brandt said.
Questions surrounding the politi-
cal environment are common, with
businesses wanting to ensure that the
state offers fiscal responsibility and
stability. A receptive legislature or city
council that is progressive in develop-
ing business-friendly legislation and
examples of bipartisan bills that relate
to business operations and economic
development are important to many
prospects, said Bailey.
Once a business successfully relo-
cates to Colorado, the state stands to
gain momentum by taking advantage
of the collaborative ecosystems that
may exist outside Colorado.
For example, after the state recruited
Gusto to Denver, the company’s CEO,
Joshua Reeves, spoke about his recruit-
ment to other businesses in his net-
work, which ultimately led to several
conversations with perspective clients,
Bailey said.
Other popular and enticing factors
include the state’s transportation sys-
tems – from the centrality of highway
accessibility to Denver International
Airport to Union Station and public
transit – and quality of life factors,
including the weather and recreational
and cultural opportunities.
Site tours are no longer limited to
the potential commercial spaces. Now
they include driving the neighbor-
hoods where employees are going to
live, exploring the cultural amenities
and getting a feel for the community
that the company is looking to grow
into, said Bailey.
One of Colorado’s most attractive
aspects to companies coming from
coastal markets also is one of Colo-
rado’s biggest threats to continued
relocation prosperity: cost.
With an average office lease rate of
about $25 per square foot, some people
are starting to watch the affordability
of office space. But while the rate is
high historically for Denver, it still is
one-third of what San Francisco real
estate costs are at $73 per sf, said Ham-
merstein. “Our cost of living is signifi-
cantly less as well,” he said. “I think a
one-bedroom unit in Denver rents at
$1,300 versus $3,200 there.”
At this lease rate, we’re still in a com-
petitive space with the communities
that we tend to compete with – places
like Salt Lake City, Dallas, Phoenix, Aus-
tin,Texas, and Portland, Oregon, said
Silverstein.
As the cost of land continues to rise,
there is less build-to-suit activity from
these new and expanding companies.
“We are becoming a bit more expen-
Comcast
Comcast’s new call center, located at 3404 E. Harmony Road in Fort Collins, allowed the
company to expand within Colorado while keeping costs reasonable by locating in an
unused building on the HP campus.
