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Page 26 — Office Properties Quarterly — March 2017
Force Space and Command, head-
quartered in Colorado Springs, is the
cyber executive agent for the Air Force.
There also are many locally affiliated
support companies within the defense
industry in town, Merritt said.
• Workforce. As with all jobs, access
to a vibrant workforce is king. For this
young industry, it’s even more chal-
lenging because there is a significant
national shortage, Merritt said.
“A lot of the focus going forward is
going to be around workforce develop-
ment, because the community that
can get workforce right in this arena is
going to have a major leg up compet-
ing nationally.”
In order to foster workforce growth,
the city will need to leverage the local
transitioning military – the some 500
to 600 people getting out of the mili-
tary every month in the city. Many of
these folks could be ideal for these
positions due to their military training.
Another focus to shore up the work-
force is to leverage the local academic
institutes. Four local institutions are
National Security Agency certified
Centers of Academic Excellence for
Information Assurance – the University
of Colorado Colorado Springs, the Air
Force Academy, Regis University and
Colorado Technical University.
“We’ve got the universities develop-
ing that future workforce, which has
made us attractive,” said Merritt.
The strength of the region – defined
by its higher education in cybersecu-
rity programming, strong local govern-
ment support, military and more than
100 private-sector cybersecurity and IT
companies – were all factors contribut-
ing to the National Cybersecurity Cen-
ter’s selection of Colorado Springs, said
Eric Hopfenbeck, NCC’s chief of staff.
Office Real Estate Needs
Typically, cybersecurity companies
like to be fly-below-the-radar users, so
getting a firm handle on exactly what
is going on can be difficult, said Andy
Oyler, a Quantum Commercial Group
office and investment broker.
“I’ve done leases with a number of
the larger defense contractors in town,
but we so rarely know exactly what
they’re doing at that particular loca-
tion,” Oyler said. “Sometimes they’ll
allude to what they do but, most of the
time, they don’t tell us a whole lot.”
According to the Colorado Springs
Chamber & EDC, there are more than
80 cybersecurity companies and 140 IT
companies in the city along with five
workforce training organizations in
cybersecurity. The city is ranked fifth
for cybersecurity jobs, according to
The size of the companies run the
gamut, from small startups to major
international companies, such as Lock-
heed Martin.With the smaller ones,
there is a need for flexibility of expan-
sion, as they’re growing quickly, said
Merritt. The bulk of the interest from
relocation prospects are small to mid-
size companies, in the 50 to 200 person
range, he said.
The Colorado Springs office market
has been slow to recover, especially
near the airport, due to a lack of new
jobs, said Oyler. So the growth of the
cybersecurity industry will have a posi-
tive impact on the office market. Many
of these companies tend to be larger
users and, in addition to taking larger
spaces, they’ll bring other economic
opportunities.
“Cybersecurity companies are leas-
ing up space and often will require a
modification of their space, which will
lead to opportunities for construction
companies to do the build out,” Oyler
said. “Plus, your average cybersecurity
employee is paid well – all of that is
very positive.”
The most important real estate
must-have is communications capa-
bility. “They need real estate that
has real high-speed internet capabil-
ity and can handle significant traf-
fic because that’s the fundamental
need,” said Merritt.
The second important real estate
criteria is location. “The workforce
is the biggest item that’s going to
slow the growth of the industry,” said
Merritt. “The demand for cyber capa-
bilities and services is going to keep
growing exponentially. But it’s the
workforce that is the obstacle.”
For this reason, locating near areas
of talent – such as military bases and
academics – helps foster employ-
ment growth, especially for com-
panies working with defense and
military organizations. Many of the
commercial-focused cybersecurity
companies are pinpointing where
their desired workforce – mainly
millennials – want to live and work,
often in pockets downtown, Merritt
said.
Most of the cybersecurity compa-
nies are moving into existing office
product and retrofitting these spaces,
rather than building new facilities.
This is due to a large amount of avail-
able office space plus the cost of new
construction is significant, said Oyler.
The National Cybersecurity Cen-
ter selected its specific area within
the city to spark economic develop-
ment and because the organization
could locate in an existing building,
said Hopfenbeck. While currently in
temporary offices, the future home
of the NCC is a 135,000-square-foot
facility operating as an expo center.
The building was formerly a satel-
lite manufacturing facility for TRW,
though it has had many uses since.
The facility was identified through a
partnership with UCCS – the school
owns the building, and NCC will rent
its space, Hopfenbeck said.
One of the biggest variables is the
tenant-improvement costs because
many companies require some type
of sensitive compartmented infor-
mation facility build out. Even if the
property has SCIF in place, most will
have to recertify the area to the level
they need.
“When building out SCIF space, the
cost typically is very high,” said Oyler.
Within the lease, most landlords
may take on some of the costs with a
tenant-improvement package, and the
tenant is responsible for the remain-
der of the build-out cost.
“Not all cybersecurity companies
require SCIF, but I would assume most
of them need some level,” Oyler said.
“It all depends on what they’re doing
at that location and how secure it has
to be.”
For these cost reasons, cybersecurity
companies are likely to have longer-
termed leases in order to amortize the
build-out costs.
While cybersecurity, at its most
basic meaning – protecting data – is
defined, the industry still is changing
rapidly as every other industry begins
to grapple with the ramifications of
cyber threats. Cyber threats touch all
industries, making the market oppor-
tunities for cybersecurity broad and
the potential for growth explosive.
It’s logical to assume that all the pri-
vate and public defense operations, as
well as most of the IT companies, are
involved in cybersecurity in one form
or another and will only grow in these
areas – making the potential impact
on the office market extraordinary. s
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