CEOs cite Boulder’s commuting, housing challenges in strong economy

BOULDER – Yes, the commute in and out of Boulder along U.S. Highway 36 should improve over the coming year as a gargantuan makeover of the corridor is completed. But for Boulder employers trying to compete with Denver and other parts of the metro area for talented employees, that relief can’t come soon enough.

Participating in BizWest’s CEO Roundtable on the economy at the accounting firm of EKS&H on Wednesday morning, 36 Commuting Solutions executive director Audrey DeBarros said the improved 11-mile stretch of U.S. 36 from Westminster to eastern Boulder County is on pace to open this year. The last leg into Boulder should open early next year. Included in the new construction is a tolled express lane in each direction that also will be open for carpoolers and bus rapid transit.

In the meantime, though, Boulder companies are feeling the burden of the rough commute through U.S. 36 construction.

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Lisa Calkins, chief executive of Amadeus Consulting, most of whose 80 employees commute into Boulder, said she hears from employees taking jobs in Denver or other suburbs so they no longer need to commute to Boulder. Calkins said her company does what it can to accommodate its commuters, such as allowing employees to work from home one day per week or shift their office hours to avoid heavy traffic. But that’s not always a battle she can win.

“The commute is really challenging for them,” Calkins said.

The issue of a tough commute is likely to remain even after the U.S. 36 construction is complete, in part because of the strength of Boulder’s economy. Businesses are attracted to Boulder for the quality of life and cachet of the city’s brand as a hub of technology and innovation. But that also has led to a shortage of housing and soaring housing costs that send much of the workforce looking to live elsewhere, Wednesday’s participants noted.

The dynamics of Boulder’s strong economy are complex to say the least, said Boulder Economic Council executive director Clif Harald. He said 2014 was one of the strongest he can remember for Boulder, certainly since the late 1990s. The year was highlighted by events such as Zayo Group’s initial public offering, SolidFire’s $82 million venture capital round, and Google’s announced plans to expand its local presence with a large new campus. Commercial real estate vacancy, meanwhile, is approaching record lows.

“Conventional wisdom would say that that’s great,” Harald said. “If you’re an employer in town, and a growing employer, this is a big challenge.”

Harald said the commitment of companies such as Google to remain in town is remarkable, although he admitted he’s surprised Boulder hasn’t lost any big companies of late that were looking to expand.

The question of where growing companies expand in a town with such low vacancy rates isn’t likely to go away any time soon, particularly with a large debate raging among city officials and community members about how to handle density and building height as redevelopment projects increase.

Scott Reichenberg, president of commercial real estate brokerage The Colorado Group, said the type of product Boulder needs to quench the demand for commercial space simply can’t be built because of certain height and growth restrictions in town.

“We’re known as an incubator community because of some of these constraints we’ve been talking about,” Reichenberg said.

Other highlights from Wednesday’s roundtable included:

— Noted University of Colorado economist Richard Wobbekind said that while the state’s economy as a whole seems to be on “cruise control,” the extreme drop in oil prices is concerning if the lull lasts. While low gas prices at the pump would be good for the country as a whole, Colorado’s economy likely would be a net loser in a prolonged price slump because of the amount of oil production in the state and the ripple effects the industry has on others. That said, Colorado’s energy industry has yet to see many layoffs, and Wobbekind said he doesn’t see the drop in oil prices having a large positive effect on the shortage of workers in the construction industry or the cost of new construction.

— On the retail front, Macerich senior property manager Kim Campbell said Twenty Ninth Street in Boulder and FlatIron Crossing Mall in Broomfield both had strong years even as the company has had to get creative to fill spaces. As retailers such as Gap and J. Crew have looked to downsize local stores, Macerich has been able to fill the voids with other smaller niche stores. At Twenty Ninth Street, the company also has filled vacant space with commercial office users such as Zayo Group, which she said is expanding again to take over Macerich’s local management office space there.

— At the University of Colorado, vice chancellor for strategic relations Frances Draper said the school is looking at ways to “maintain the enterprise” without raising tuition. The school, which receives less than 10 percent of its operating budget from the state, is faced with concerns that refunds from Colorado’s Taxpayer Bill of Rights, or TABOR, could kick in again in coming years, cutting into funding for things such as higher education. One major push of the university is to increase its six-year graduation rate from just under 70 percent to up near 80 percent to help lessen the economic impact of students leaving school with mounds of student debt and no degrees.

— In banking, First National Denver commercial banking manager Gretchen Wahl said the landscape has gotten extremely competitive, with banks sacrificing on price to win deals. She said she expects to see more consolidation and mergers, but only “for the right price.”

— In health care, Boulder Valley Individual Practice Association executive director Cathy Higgins said Boulder Community Health is becoming increasingly unique as one of the few remaining independent and locally owned health systems in Colorado, especially after Longmont United Hospital’s recent acquisition by Centura Health. While BCH has maintained a desire to remain independent, she said she wouldn’t completely rule out another health system trying to enter Boulder to compete, although she believes it’s unlikely for the foreseeable future.

The monthly BizWest CEO roundtables are sponsored by EKS&H and Boulder law firm Berg Hill Greenleaf and Ruscitti. Wednesday’s participants included: Lisa Calkins, CEO, Amadeus Consulting; Kim Campbell, senior property manager, Macerich; Audrey DeBarros, executive director, 36 Commuting Solutions; Frances Draper, vice chancellor for strategic relations, University of Colorado Boulder; Clif Harald, executive director, Boulder Economic Council; Cathy Higgins, executive director, Boulder Valley IPA; Scott Reichenberg, president, The Colorado Group Inc.; Gretchen Wahl, commercial banking manager, First National Denver; and Richard Wobbekind, director, Business Research Division at CU’s Leeds School of Business.