CREJ - Office Properties Quarterly - March 2016
The many cranes scattered across Denver’s skyline give visual evidence to the growth in the downtown real estate market. Denver is an attractive city for businesses to locate (and relocate), and developers are building space to accommodate the demand. Certainly, the revitalization of Union Station is a hub for much of the new buildings and renovation of older buildings. And the downtown areas of River North, Lower Highlands and Lower Downtown are the focus areas for much of this growth. Technology companies, a growing sector of Colorado’s economy, have large numbers of young, knowledgeable workers. The millennial generation (also known as Generation Y), with birth years ranging from the early 1980s to the early 2000s, are the lifeblood of these tech companies. This workforce trend will only increase; it is estimated that by 2020, 86 million millennials will be in the national workforce, representing 40 percent of the total workforce population. The explosion of the millennial workforce has fueled the boom in companies looking for urban business locations. Millennials want to work where they live, and with so many in this group choosing to live in downtown housing, it follows that they want to work downtown as well. The type of spaces that appeal to this young workforce has significant impact on real estate professionals and developers, as well as on the professionals who design the space. The trend of revitalizing old loft spaces started years ago and shows no sign of slowing down. Millennials want funky. “Brick and timber” spaces are commanding premium lease rates, but in the race to attract and retain the best talent entering the workforce, many companies are biting the premium rate bullet. When weighing the higher rent in areas of LoDo, some companies are looking for alternatives, while other are looking to take newer building spaces and give them a rawer, “funkified” look and feel. Design professionals are challenged to find different approaches to create spaces that embrace this feel. Open ceilings, stained concrete floors, coffee bars and bike racks are replacing more traditional interior looks. Amenities for millennials do not necessarily mean what they did only a few years ago. Amenities in the past were focused largely on niceties contained in the building itself. While these amenities are still valuable, the urban millennial workforce considers surrounding amenities as much as those inside their own building. Gyms, coffee houses, restaurants and other gathering places that are close to where Gen Y’ers work often are more important than those inside their building. “Location, location, location” certainly is a key mantra for companies looking to attract the best young talent. Interior spaces for companies that value collaborative work look different from the older, traditional private offices, cubicles and conference room model. Individual space is shrinking in favor of communal workspaces that foster casual interaction. Progressive companies are looking for spaces to be utilitarian and versatile in function. Formal conference rooms are giving way to spaces that encourage smaller, informal, serendipitous meetings where ideas can be shared without dedicating a room to a meeting. Often employers are finding that fewer walls and more open space is what millennials want, because the environment supports a collaborative way of working. The emphasis is less on “I” and more on “we,” and spaces must reflect this paradigm shift. Where and how tenant improvement dollars are spent to support a millennial-friendly workspace has shifted. The younger workforce puts less value on a beautiful space and more on an urban space reflective of what they value and what interests them. Millennials represent the new generation of workers who will have profound impact on the futures of companies; where and how they want to work will continue to shape the landscape of Denver’s downtown market. All this buzz about the millennials begs the question of what happens once this generation matures and ages into their 30s and 40s? Generation Z is right behind them!