September 2016 — Office Properties Quarterly —
Page 19
Market Drivers
sive market, due to the density of com-
panies here,” said Bailey. “So oftentimes
we will hear from companies that they
knew that our market was affordable,
but they thought we’d be potentially
more affordable.”
By negotiating a deal to locate on
HP’s campus, Comcast’s call center
became a lot less expensive than build-
ing its own, Roebken said.The property
now has access to the campus’ ameni-
ties and credits the ease of working
with HP as another positive of the deci-
sion.
While renting existing space, theo-
retically, can keep costs down, the chal-
lenge is finding it. “Some of them get
quite impatient when you tell them
that, ‘We are sorry but the industrial
vacancy rate is three-point-whatever,’
and depending on the neighborhood
they are looking for office space in, it’s
probably available, but it’s probably a
lot more expensive than they were
expecting it to be,” said Brandt.
In addition to office space property
costs, the cost of housing is an impor-
tant consideration. “Those housing
costs are getting mighty pricey,” said
Silverstein. “So that’s a challenge to
our area to go along with all of our
strengths. If we are to maintain attrac-
tiveness for the workers out there, we
also need to maintain an affordable
cost of living.”
In Boulder, we’ve seen this play out
to Denver’s benefit. It became expen-
sive for millennials to live in Boulder,
so they chose to live in Denver, said
Hammerstein. Over time it became
harder for companies to recruit
employees to Boulder, so businesses
started relocating or opening satellite
offices in Denver, which also offers the
added benefit of the ability to scale.
Right now, most of the tech companies
located in Boulder are considering
relocating or expanding with a Denver
presence, he said. For similar reasons,
Whole Foods moved its regional office
to Denver after locating in Boulder for
10 years.
Overall, the office market in Denver
is healthy. Although there are some
concerns about the little more than 1
million sf of sublease space available,
vacancy rates continue to decline as
other industries gobble up the space
that’s coming back on line from the oil
and gas segment.
“It’s been a bit of a yin-and-yang,
because while we’ve seen this down-
turn of the energy industry, oil and
gas primarily, that’s been a really great
opportunity for these companies,” said
Hammerstein.Without growth in tech
and other industries, Denver would be
a very different real estate market. But,
as of now, companies are able to take
advantage of the opportunity backfill-
ing those vacancies.
s
Sovrn
Sovrn, a tech company, is relocating and expanding to a space in Flatiron Park in Boulder.
The new space, which will be occupied in the first quarter of 2017, is being designed by
Oz Architecture.
CBRE
