B
oulder's commercial real estate market is facing significant challenges due to high costs and changing consumer habits. A panel of agents at the Boulder County Real Estate Conference highlighted several key issues affecting the sector.
The high cost of living in Boulder is driving employees out of the city, but it's also attracting investment in multifamily development. The office leasing market continues to struggle due to remote-work policies, although some see a slight uptick in demand. High rents are forcing even top commercial and industrial players to leave the area.
Boulder's green building codes, while well-intentioned, may price out some investors due to increased rebuild costs. However, consumers are willing to pay for upgrades, making it a viable option for developers. The impending decision on the Sundance Film Festival's relocation could bring a surge in demand for space, with 85,000 attendees expected.
A cautionary tale of high investment not yielding returns was shared by Angela Topel, vice president at Gibbons-White Inc., regarding BioMed Realty LLC's purchase of Flatiron Park. The tech campus saw its vacancy rate nearly double to 20% due to doubling rents and tenants leaving for more affordable options.
Multifamily development has been a strong market, with many investors putting their money into it. As housing becomes increasingly unaffordable, people are forced to rent, driving demand for multifamily properties. Andrew Freeman, a broker at WK Real Estate, noted that the office market is struggling due to remote work and small businesses finding it difficult to justify leasing space.
However, Topel sees a slight shift in the pendulum, with big companies starting to require employees to return to the office three to five days a week. This could lead to a rebound in demand for office space. The challenge will be figuring out what to do with vacant space until then.
Interest rates are expected to decrease further, coaxing players off the sidelines. However, Boulder's green building codes and government planning time pose additional challenges. Agents hope that the city will become more accessible and allow developers to complete projects in a timely manner.
The potential relocation of the Sundance Film Festival could bring significant opportunities for short-term leases and temporary spaces. Karla Brown, senior broker at The Colorado Group Inc., suggested that agents start thinking about how to capitalize on this event, which could bring lucrative deals and exposure for brands.
