Companies are looking toward the U.S. Highway 36 corridor to attract and retain employees in the technology sector, and as density increases, so too will investor interest.
“I think one of the things that investors are predicting, and its time has really come, is that the 36 corridor is going to be the recipient of a good deal of new requirements because companies have to locate near the employee,” John Jugl, vice chairman of Western Regional Capital Markets for Newmark Grubb Knight Frank, said at NAIOP Colorado’s March 15 breakfast meeting. “Your employment base really does open up on that 36 corridor. You touch more people, and it’s easier to recruit.”
“Attracting tech people is really important to us,” said Michael Slubowski, president and CEO of SCL Health, which began moving to Interlocken Advanced Technology Environment several years ago and today has 1,100 employees under a single roof. “Back in 2008, when we originally located on the Oracle campus, there was a fair amount of vacant space. It’s just the opposite now.”
Swisslog Healthcare Solutions plans to move from Denver to Broomfield to attract tech employees and said its retention has improved since employees learned of its plans. “Our turnover was in the high teens, and it’s almost nonexistent with the anticipation of going that way,” said Roger Horton, the company’s vice president of technology.
Impetus for companies locating on the corridor, midway between Denver and Boulder, include easy access to Denver International Airport and, as has been the case for many years, a lack of large, flexible spaces in Boulder.
“We think of it as the catcher’s mitt mentality,” said Derek Conn, executive vice president and partner at Etkin Johnson Real Estate Partners, which has nearly 2 million square feet of product on the Highway 36 corridor, much of it industrial/flex product in the Colorado Tech Center in Louisville. “As tenants grow out of Boulder, they are oftentimes in two to three different locations in Boulder, and we are able to offer efficiencies in Class A buildings that Boulder just doesn’t have,” Conn said, adding the CTC location enables lifestyle brands and others to retain their Boulder County identity.
“The city of Boulder has gone through the biggest construction cycle in its history and it hasn’t delivered any buildings,” noted Jugl, who added that most new construction in Boulder has been redevelopment of existing buildings, which adds little inventory.
“It’s interesting because a lot of these R&D buildings are companies that are making things. They’re not just social networking companies … When you look at a company that’s making something in Boulder and needs 18-, 22-foot clear (ceiling height), racking and dock-high (loading), those companies are going either to Longmont or they’re going down the corridor. I actually think that a lot of the opportunity is going to be in the R&D space because I think there’s a great value proposition on a cash-on-cash basis, and there’s a whole group of companies that are really doing very well that are just being forced out,” he said.
One of the issues communities along the corridor face is, “We’re seeing greater pressure for greater diversity of housing choices,” said Westminster Economic Development Director John Hall, who moderated the NAIOP Colorado discussion.
Condominium construction, stifled by Colorado’s construction defects laws, would help, agreed Slubowski. Although “relatively” more affordable than Boulder or “some places in Douglas County,” he said, housing affordability “definitely is an area where we see some challenges in attracting talent.” Boulder’s traffic and growth issues, high housing prices, along with a tapping out of tech talent, notably by Google, all are making U.S. 36, which is easier for employees to get to, more of an “infill” location, said Jugl.
“Generally speaking, investors are looking for the 36 corridor to pick up, but it’s going to be the densification of the 36 corridor that’s going to attract more and more capital, because that’s what they’re looking for elsewhere,” he said.
Arista, Downtown Westminster (the redevelopment of the old Westminster Mall) and Superior Town Center all are bringing dense, urban development to the corridor.
The 36 corridor also has a wealth of newer office buildings – 82 percent of them were built after 1990, according to Jugl.
“One of the things that investors like about the 36 corridor is the newness of the product. It has some of the best buildings within Colorado and the Front Range,” he said.