BOULDER — The Boulder Valley’s high quality of life and desirability, rising housing costs and low unemployment are creating a unique economy in the region — something that has impacts on every industry in the region.
Leaders from businesses and economic development groups along the Front Range came to BizWest’s Boulder Valley CEO Economic Roundtable to discuss the economy and what it means for their respective industries.
The broad economy – Rich Wobbekind, senior associate dean for the Leeds School of Business at University of Colorado Boulder
Wobbekind said he expects to see continued economic growth, although sectors are seeing that growth at a slower pace. A commonality across the board is that employers are having difficulty finding new employees, given the area’s low unemployment rate. Wobbekind said he expects to see better wage appreciation, which will be important given the increasing housing prices the area continues to see. However, he added that he also expects more housing to come online in the market.
It’s likely that the national economy could see a recession sometime around the end of 2019 or in 2020, but Wobbekind said the recent stock market slide is more likely related to a momentary correction of valuations than the fundamentals of the economy.
Another national issue could be employment and a dearth of people who want to come to the U.S. to work.
“There are outside people who are nervous about the U.S.,” Wobbekind said. “They’re less prone to migrate. We’ll see where all that shakes off.”
Banking – Gretchen Wahl, senior vice president of MidFirst Bank
MidFirst Bank is new to the region and Wahl said the market has been a competitive one.
She said competition is high among banks to provide loans around the size of $1.6 million, while the very large banks are competing to give huge loans.
“There’s a pocket where it’s harder to get a loan between $10 million to $25 million,” Wahl said. “As a new bank in the market, for us to give a $25 million loan right out is harder for us. The bank is excited to be here, but there’s still some education around teaching ‘yes, these lease rates and values are real.’”
Much like the overall economy, Wahl said that employment can also be difficult in the banking sector.
“What we pay people can be substantial, even for junior lenders,” she said. “It’s when you get to tellers or customer service reps where it’s harder. They have to balance likely commuting to work, paying for parking, all of that with their salary. And they have to judge if they’re making enough to cover the overhead of working.”
Real Estate – Geoffrey Keys, president of Keys Commercial Real Estate
There’s a lot of retail and office space downtown, Keys said, as retail rates on Pearl Street Mall have come down slightly and office rates are starting to plateau. It’s led to a resurgence of local retailer on the mall, he said. Retail rates are softening and the vacancy is around 10 percent.
The area is also seeing an influx of companies following Google.
“There are companies from Palo Alto who are wanting to co-locate with Google,” Keys said. “It’s like the Google-ization of Boulder.
Retail – Kim Campbell, senior manager of property management for FlatIron Crossing and Twenty Ninth Street
Macerich, the company that manages Flatiron Crossing and Twenty Ninth Street, saw fourth-quarter sales go up 5 percent for 2017, Campbell said, which shows that people are still shopping at malls despite the prevalence of online retail.
While some retailers are consolidating, Campbell said she felt positive for 2018 and beyond.
“In 2019 we’re looking to bring in some new market concepts, like entertainment, augmented offices and maybe residential,” she said. “Things are looking good overall in the economy.”
She added that while Twenty Ninth Street in Boulder and FlatIron Crossing in Broomfield are close to each other, they don’t steal business from one another.
“Both coexist very well,” she said. “They’re not stealing the market, but actually have grown the market total together.”
Broomfield – Mike Van Den Bosch, senior economic development specialist for the City and County of Broomfield
Broomfield is booming.
Interlocken continues to be in high demand and is even seeing more density come into the residential sector. New construction projects, like what McWhinney is working on, will come online soon. And Arista is attracting the eye of newcomers for its walkability and urban feel.
But growing Broomfield is a balancing act, Van Den Bosch said: Some residents are concerned over the addition of Ikea to the area, which will likely bring increased traffic congestion.
“We can’t get complacent,” he said. “That will get us in a situation where we’re getting pushback from unhappy residents.”
Health Care – Robert Vissers, CEO of Boulder Community Health
Over the last decade health care has seen tremendous change, but this year, that’s compounded with uncertainty.
“There’s been a failure by the federal government to repeal the Affordable Care Act, but they are slowly dismantling it by little pieces,” Vissers said.
Hospitals are being impacted significantly: By 2022 the average hospital will have a negative operating margin.
Despite the difficulties facing the health-care industry, Vissers said the Front Range and Colorado are doing well. Still, Boulder has challenges ahead, as the demographic changes to have a rapidly aging population with more complex medical needs and a shift in payer from employers to the government.
Boulder – Clif Harald, executive director of the Boulder Economic Council
Harald said he sees the growth of Boulder, Broomfield, Denver and the Front Range as “a rising tide with lots of boats.”
With a lot to offer throughout the region, companies and people may be relocating from one city to another, whether it be for more affordable rent, the chance to be closer to talent pools or just a desire to be closer to the mountains. But Harald doesn’t see that migration as a net zero for Boulder.
“These aren’t just Boulder attributes,” he said. “The quality of life isn’t in a vacuum. It’s Colorado. We would be a shadow of ourselves if we weren’t part of this region… Companies are making decisions made on multiple factors. It isn’t a zero-sum game (when it comes to attracting companies.) There is so much churn and creative energy.”
He said he credits the Metro Denver EDC for the ability to create an “all in this together” mentality for the region.
“When any of us are successful, it raises everyone’s value proposition,” he said.
Natural Products – Arron Mansika, managing director of Naturally Boulder
Of all the members of Naturally Boulder, about eight of them are top-level, enterprise companies. Four of them were acquired in the last year.
That can bring a lot of opportunity for startups, Mansika said. There are now companies with a lot of knowledge about the food industry in town: Pinnacle, Hormel, Danone.
It brings more funding and more talent into the region. Mansika said he’s seeing 2- and 3-year-old companies bringing in CEOs with years and years of experiencing, because those industry veterans see a chance to build up another company to success.
The question companies are asking now, Mansika said, is where they can produce their product. Places like the CTC, Skyway and East Boulder are continuing to grow for production.
“It’s an unwieldy industry, but we’re fortunate in Boulder to have a vibrant community,” he said. “We have the next generation in the driver’s seat — Justin from Justin’s, TJ from Bobo’s — and another generation being groomed. We’re bringing brands in from out-of-state because there is a cache in Boulder they want to be part of. We have a privileged position in the industry and expect continued growth.”
Boulder Valley CEO Economic Roundtable participants:
Geoffrey Keys, president of Keys Commercial; Arron Mansika, managing director of Naturally Boulder; Rich Wobbekind, senior associate dean of the Leeds School of Business at University of Colorado Boulder; Clif Harald, executive director of the Boulder Economic Council; Gretchen Wahl, senior vice president of MidFirst Bank, Mike Van Den Bosch, senior economic development specialist for City and County of Broomfield; Kim Campbell, senior manager of property management for FlatIron Crossing and Twenty Ninth Street; Robert Vissers, CEO of Boulder Community Health. The roundtable was moderated by Chris Wood, editor and publisher of BizWest Media and sponsored by EKS&H and Berg Hill Greenleaf Ruscitti.