Boulder Valley economy appears poised to weather recovery headwinds in 2022

BOULDER — As the Boulder Valley region claws its way back from the 2020 COVID-19 doldrums, economic challenges such as inflation and labor-market constraints persist. 

Still, the region appears to be on solid footing based on strong fundamentals as 2022 gets underway, according to participants in BizWest’s virtual CEO Roundtable on the Economy on Tuesday.

Rich Wobbekind, associate dean for business and government relations at the University of Colorado Boulder’s Leeds School of Business, said he expects Colorado and the local area to regain pre-pandemic job totals in 2022, a year that’s expected to feature about 4% growth. 

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BSW Wealth Partners CEO David Wolf said he expects certain aspects of the current economic reality — such as lingering inflation — to be “sticky” rather than “transitory.”

Still, he said, “we still think there is room for companies to grow profits and the economy could be stronger than people think.”

The economic comeback has been unequal based on both region and industry sector and is expected to remain so in 2022.

The Boulder metropolitan area, which encompasses the entirety of Boulder County, trails the Denver and Colorado Springs regions in growth while the hospitality industry is expected to lag behind pre-pandemic levels for at least the next year, Wobbekind said. 

Longmont Economic Development Partnership CEO Jessica Erickson said business leaders in her city are feeling “generally optimistic but cautiously optimistic,” and Broomfield director of development finance Jeff Romine said “there’s a tale of two economies going on right now” depending on industry sector. 

Labor

Like many parts of the country, businesses in the Boulder area are struggling to fill open positions. 

“In the 12 years I’ve been leading Creative Alignments, I have not seen this tight of a market,” Creative Alignments LLC CEO Peggy Shell said. “This is insane.”

The tight labor market is forcing employers to pay more, be more flexible with remote working and focus additional resources on retention, she said. 

Hospitality

No industry sector was hit harder by the COVID-19 pandemic than the hospitality industry, which has seen a stubborn comeback in 2021 and early 2022.

“We’ve seen a lot of resiliency” from restaurants, but that resolve is being tested even more by virus outbreaks during the already slower winter months, Boulder Downtown Partnership CEO Chip said. 

On a positive note, hotel business in the region has bounced back nearly to pre-pandemic levels. 

“There’s a huge amount of pent-up demand” for travel and tourism opportunities, Boulder Convention and Visitor Bureau CEO Charlene Hoffman said. 

Health care

Obviously a pandemic that’s going into its third year is going to have a major impact on the health care industry.

Combine that reality with the tight labor market and you get compounded staffing issues for Boulder Community Health, hospital system CEO Robert Vissers said.

With about 10% of jobs unfilled and another big chunk of employees regularly out of work with COVID-19, providers must create more workflow efficiencies, he said.

There’s reason for optimism, however, as virus hospitalizations are down in recent days.

Banking

Unlike the Great Recession of 2008 and its subsequent long and drawn-out recovery, the most recent economic downturn was not led by the banks and the sector has weathered the storm mostly in one piece. 

Bank of Colorado branch president Aaron Spear said he expects at least a couple of interest rate hikes in the coming months, but “global instability” could hamper the Federal Reserve’s appetite for increases. 

In the short term rising rates are good for bankers with many new loans, but not for those whose balance sheet is weighted toward older loans, he said. 

Retail

With forced closures and the ongoing trend toward online shopping, the past few years have been tough on retailers.

Still, “there’s always an appropriate response to opportunity” for savvy retailers, Pedestrian Shops president Richard Polk said.

In his case, Polk said he increased focus on e-commerce.

“We’re feeling very strong,” he said, but it remains a challenge to keep inventory on shelves and workers on payrolls.

Housing

One area where interest rate changes typically have a major impact is in the residential real estate space, which has remained hot in the Boulder area for several years. 

But a rate hike may not have as much impact as in the past because many buyers already expect to pay so much for a home that interest is but a drop in the bucket, Re/Max of Boulder managing director Todd Gullette said. 

Areas outside of Boulder’s core, such as Longmont, have long been seen as an affordable alternative for homebuyers, but “we’re not necessarily that anymore,” Erickson said. 

If not checked, out of control home prices will continue to impact employers’ ability to attract the workforce they say they desperately need. 

Commercial real estate

While retail spaces were hit hard during the recession, other product types have thrived. 

“The innovation and tech space is where we’re seeing the greatest demand” for commercial real estate, particularly for flex-industrial spaces, Romine said. 

This demand is led by technology firms and bioscience companies. 

Innovation economy 

The Boulder area has for decades been a hub of entrepreneurial and innovation strength, and the past several years have seen a major increase in the presence of big tech companies.

These firms “mostly tie into the innovation economy,” which is driven by federally funded research and development projects, according to Boulder Economic Council executive director Scott Sternberg.

There is a “multiplying effect” of work done by organizations such as the National Institute of Standards and Technology and CU that’s led to an increase in attention from venture capitalists being paid to local startups, he said. 

Sponsor attendees of the CEO Roundtable included Spear; Ashley Cawthorn, Berg Hill Greenleaf Ruscitti LLP; and Jeremy Wilson and Jim Cowgill of Plante Moran.

This article was first published by BizWest, an independent news organization, and is published under a license agreement. © 2022 BizWest Media LLC.