CEO Roundtable: Bioscience labs, residential real estate red hot in Boulder Valley

BOULDER — Unlike the Great Recession in 2008, real estate brokers, investors and lenders have come through the COVID-19 pandemic relatively unscathed and, in many instances, are now thriving. 

The residential real estate market, along with bioscience labs and pharmaceutical manufacturing facilities, are particularly strong in the Boulder Valley region, industry leaders remarked Tuesday during BizWest’s Real Estate CEO Roundtable. 

A million-dollar floor?

On the residential side, historically low inventory has kept home prices sky high for months on end.

Re/Max of Boulder managing broker Todd Gullette said he doubts Boulder’s median home price will dip back below $1 million in the foreseeable future.

“Inventory is becoming a permanent issue,” he said. “… We can’t build out of this.”

Housing Helpers managing broker Stephanie Ianonne agreed that local prices are likely to remain astronomical.

Due to rising construction costs, “builders can’t build [new homes] for much lower.”

Certain parts of the Boulder Valley — Longmont, for example — remain much more affordable than Boulder, but “we’ll see how long that lasts,” Burden Inc. president Keith Burden said. 

Cautious optimism about the future of offices

When the pandemic was raging and most workers were at home, some speculated that the traditional corporate office might be dead. That prediction now appears a bit premature, at least locally.

“In our office there’s a lot of cautious optimism,” Element Properties co-founder Chris Jacobs said.

“There’s a lot of re-education occurring within the marketplace for office space,” but the sector remains quite strong, according to Vista Commercial Advisors Inc. president Chris Jensen.

Users who previously needed 6,000 square feet are trying to figure out if they can make do with 3,000, he said. 

Tenants are also looking for something different from the traditional, boxy spaces with closed-doors and private offices, The Colorado Group co-owner Karla Brown said. New users prize collaboration space and flexibility.

Bioscience facilities are “all the rage”

Flex-industrial spaces, particularly those that can support bioscience users, are “all the rage right now,” W.W. Reynolds Cos. president Jeff Wingert said. “I hope it’s not just a fad.”

Landlords may be tempted to start converting more traditional industrial spaces into bioscience-friendly facilities, but Jacobs warned that “there’s an incredible amount of due diligence and planning and an incredible amount of capital needed” for such a play.

While the retail and restaurant sectors suffered mightily across the country, business failures were limited locally, Tebo Properties founder Stephen Tebo said.

“Thank goodness for the government programs, otherwise we would have certainly lost a few more restaurants,” he said.

Attention from institutional investors on the coasts

Historically the Boulder Valley real estate market has been dominated by local players. That’s starting to shift as more and more institutional investors show up in town with full coffers.

“It’s really hard for them,”  Dean Callan & Co. Inc. broker Beau Gamble said of mom and pop landlords trying to compete with deep-pocketed private equity funds and real estate investment trusts that look at the Boulder area as a “safe market to be in.”

Family offices and private buyers venturing into more expensive investments and owner-users are more apt to conduct off-market deals due to the increased presence of institutional players, Brown said. 

Tuesday’s roundtable was attended by sponsor representatives Aaron Spear of the Bank of Colorado, George Berg of Berg, Hill, Greenleaf and Ruscitti LP, and Jeremy Wilson and Justin Dodge of Plante Moran.

© 2021 BizWest Media LLC

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