THE FLOOD TIDE: COMING FOR BOULDER?
Article by Scott Crabtree
Last month, CBRE published a report which listed Denver-Boulder among the top Life Science markets in the US. According to the report, demand has increased more than 87% this past year. It seems that every week, a different biotech company announces an expansion or move to the Boulder area, even with only 5% vacancy on lab space. Simply put, demand is outpacing supply.
Meanwhile, while the return to office remains slow due to covid, the swell of tech companies which took root in Boulder prior to the pandemic has not gone away. If anything, the pandemic has forced coastal tech companies to look inward towards lifestyle-rich, affordable middle markets (by comparison to—say—Palo Alto and New York). As we emerge from covid and some form of demand for office returns, we can expect significant competition in the market.
Others have taken note. Following a trend that started a few years back, a wave of coastal investors have been buying up and re-trading assets in the Boulder area. Boston-based Beacon Capital Partners purchased Pearl East Business Park in July for a whopping $190 million, or $392 per square foot. Etkin Johnson Real Estate Partners sold 16 properties in the Colorado Tech Center to Miami’s Starwood Capital Group for nearly $393 million. These price tags do not reflect current rents in Boulder, which can only mean one thing: investors are forecasting a sharp increase in rents over the next 3 to 5 years with significant investment.
It all leads to one likely conclusion. Between the limited supply of lab space, the forthcoming return of tech to office, and investors’ expectation of returns on historically high acquisitions, Boulder will see rents sharply increasing over the next 2-5 years.