By Ken Amundson – November 21, 2019
BOULDER — It may be more difficult for real estate professionals and other business people to do business in Boulder than other places, but a cadre of Realtors and business leaders still are bullish on what lies ahead for Boulder.
“I’m optimistic about Boulder. We’ve bought six buildings so far this year and are under contract for five more. We’re insulated, but not isolated here. Boulder will hold its own regardless of the economy,” landlord and property developer Stephen Tebo concluded at the end of a session about what lies ahead for Boulder.
Tebo of Tebo Properties, Becky Callan Gamble of Dean Callan & Co. Inc., John Koval of Coburn Partners, Clif Harald of the Boulder Economic Council and moderator Geoffrey Keys of Keys Commercial Real Estate anchored the final discussion of the day at the Boulder Valley Real Estate Summit at the Embassy Suites in Boulder on Thursday. Their charge was to look at whether the headwinds facing business in Boulder, economic prospects, and recent developments will have a positive or negative impact on doing business in the community. Their robust assessment: 2020 is going to be fine and maybe an improvement from 2019. Here’s why.
Turnout in the recently completed municipal election was larger than normal for an off-year election, said Harald, and the results “moved the center of gravity more toward the center, a more balanced perspective,” he said.
“The council is trending younger. It’s more diverse than previously. The council is still 5-4 with … slower growth interests in the majority, but that’s better than 6-3,” he said.
Gamble noted a “definite shift in projects” with more big players coming into the community and bringing with them big investment dollars.
“Once you start to see some institutions that have invested in the community — for so long it was hard for institutions to invest here — now there are several here and it’s become a very safe place for them to put capital,” Gamble said, in reference to the Google and Apple ventures in Boulder. “It does start to push out the middle-size investors; it’s hard for them to compete against the large institutional investor,” she said.
Shifting office properties
At one time, said Keys, the sweet spot in Boulder was office and retail properties of about 2,500 or 3,000 square feet. That is no longer the case. To a certain degree, changing patterns among companies needing office space have reduced reliance on properties of that size.
Instead, co-working spaces are popping up, permitting companies to expand or contract without having the obligation of long-term leases, Gamble said.
Also, smaller spaces in smaller buildings tend to be older and not as fresh and new as high tech companies want them to be. Mergers of small law firms and accounting firms now require larger spaces, leaving the smaller spaces ripe for redevelopment.
New industries such as the hemp/CBD industry are gobbling up space at one time occupied by marijuana businesses. Tebo said many interested in CBD are coming from out of state. The downside of that industry is that the small business that needs a loading dock gets priced out, because CBD companies are willing to pay more, he said. Tebo expects that many CBD companies will fail within three years, but Gamble said CBD has “a long runway” because of its numerous applications ranging from health care to textiles. “It’s going to be around for awhile,” she said.
While acknowledging the rewards of doing business in Boulder, all complained that local governance takes its toll.
Koval said his project at 27 Pine, which is now a 13-unit condominium with 3,800 square feet of commercial on the first floor, got caught in the city’s moratorium during which the council was trying to figure out new development standards for the community. Ultimately Koval determined that the commercial space, on a largely residential street, would be difficult to lease, so he moved his own company into the space.
Tebo said a redevelopment of a former Radio Shack resulted in him spending significantly more than anticipated because of new development standards.
“We expect smaller businesses will opt out of Boulder,” Harald said, “because costs are prohibitive for them. The larger companies are willing to pay that but not the smaller businesses.” He noted that 78 percent of businesses in Boulder have 10 or fewer employees.
“There’s a disproportionate impact of regulation on small businesses, and it is at our peril that we treat them this way,” he said.