CEO Roundtable: How healthy is Boulder Valley’s real estate market? It depends

BOULDER — While headwinds and challenges persist across the Boulder Valley commercial real estate market, certain building-type and geographical submarkets are healthier than others.

At BizWest’s Boulder Valley Real Estate CEO Roundtable held Tuesday at the Boulder Chamber, attendees were mostly bullish on centrally located retail stores and flex-industrial spaces that cater to advanced manufacturing businesses, but remained skeptical about the short-term prospects for traditional office buildings. 

For a host of reasons — high interest rates, macroeconomic uncertainty, skittish capital markets, to name a few — the pace of deal activity is slower across the board than in years past, Vista Commercial Advisors Inc. president Chris Jensen said. 

“There are deals getting done but they’re not getting done the way the used to get done,” said

Jason Kruse, principal and managing broker at The Colorado Group.

In today’s real estate environment, “slow seems to be the new reality,” CBRE senior vice president Jeremy Kroner said. 

The office market — which continues to experience nagging high vacancy rates, particularly in downtown Boulder — remains especially sluggish,

“The office market is pretty much destroyed,” Keys Commercial Real Estate principal and broker Geoffrey Keys said. 

Office vacancy increases are due in large part to changes in work-from-home dynamics that emerged during the COVID-19 pandemic. 

“The culture has just changed a bit,” TenantWisdom LLC chief operating officer Isaac Guanajuato said. 

As a result of these changes, which now appear to be at least semi-permanent, “I don’t think office is ever going to come back to what it was,” Gibbons-White Inc. CEO Lynda Gibbons said.

Because there are fewer tenants in need of office space, the tenants that remain wield more negotiating power.

“You have to throw the house at them to get them to come to your place,” Tebo Properties leasing director Shane Tebo said. 

Additionally, “anxiety from tenants” about the overall economy and their future office needs is making the renewal process more-challenging for landlords, Chernoff Boulder Properties and CB Property Management CEO Seth Chernoff said.

Getting deals done requires “a lot of patience” and a lot of tenant improvements, Tebo Properties founder and owner Stephen Tebo said. 

But while the “office market is still a struggle, other asset classes seem to be doing alright,” Market Real Estate managing broker Todd Walsh said.

Companies in the defense and aerospace sectors have been active in absorbing flex and industrial square footage, Sentinel Management Inc. general manager Kory Cash said.

Over the past half-decade or so, experts have been predicting a biotechnology boom in the Boulder Valley. But while the sector has seen its share of successes — and setbacks — an significant increase in commercial real estate activity from life-sciences companies has thus far failed to materialize.

“There are certainly not as many (life-sciences deals) as were anticipated,”  Dean Callan & Co. president Beau Gamble said. 

Still, ongoing interest from major national players — for example, BioMed Realty LLC entered the Boulder market several years ago with the purchase of about 1 million square feet of space in the Flatiron Park business campus — indicates that the region is “very well positioned long-term” to attract more life-sciences companies, Kroner said. 

Other high-tech industries such as quantum computing could be poised for major growth in the coming years. 

Elevate Quantum, a nonprofit consortium of about 70 stakeholders in the quantum space who represent industry, academia, capital and laboratories in Colorado and New Mexico that was recently awarded millions in state and federal funding, “is going to change the game” for commercial real estate as quantum companies begin to commercial and take office and lab space, Boulder Chamber Economic Council executive director Joseph Hovancak said. 

Despite the years-long narrative that brick-and-mortar shops are doomed, “retail is kind of on fire, at least in Boulder,” Keys said.

On the development front, projects are still being planned and breaking ground, but strong support from local governments is increasingly crucial to getting projects to the finish line, McWhinney Real Estate Services Inc. senior vice Kyle Harris said. 

Sponsor attendees at Tuesday’s CEO Roundtable included Ashley Cawthorn, Berg Hill Greenleaf Ruscitti LLP; Plante Moran’s Jeremy Wilson and Jim Cowgill; and Bank of Colorado’s Aaron Spear and Jon Svoboda. 

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