Why Denver's Growth has a Friend in Tech
For every three office jobs created in Denver, one is in technology
It's no secret that things have been very good in Denver commercial real estate over the last few years – cranes scattered across the skyline, new restaurant concepts opening in every neighborhood and empty parking lots filled in by apartment complexes. A large number of people are moving to Denver and fortunately for them, there are jobs for them to fill. What industries have created the most opportunity in Colorado in the last couple of years? Look no further than the technology sector.
This local industry added more than 7,000 jobs in 2016 and 2017, a growth rate of 12.5 percent – according to CBRE's 2018 Tech 30 report. For every three office jobs created in Denver, tech is one of them. With lower wages compare to the Bay Area (average tech wage of $125,438 in the Bay Area vs. $100,751 in Denver, according to CBRE's 2018 Tech Talent report), Denver is now the recipient of fast-growing tech companies shifting their expansion to our region. Companies such as Slack, Guild Education and Gusto have committed significant growth to the city while other homegrown heroes like Ibotta, Craftsy and GoSpotCheck have done their part in job creation.
One of the main beneficiaries of the tech sector's rapid growth is the Denver office market. Tech companies absorbed more than 425,000 square feet in downtown Denver according to CBRE research and increases their share of the overall market by almost 2 percent in just one year between Q3 2017 and Q2 2018. In looking at the first three quarters of 2018, the tech sector represents more than 25 percent of all downtown Denver’s office leasing activity. Denver’s office rent growth is ranked 9th in the nation and the 3.2 million square feet of office space currently under construction in metro Denver is showing no signs of slowing down.
Coworking has taken note of the explosive opportunity around tech companies and has grown to 2 million square feet over the last few years and has another half a million square feet coming online in the near future. Companies such as Industrious and Serendipity Labs give new-to-market tech companies the ability to open shop quickly in prosperous areas downtown. Coworking’s speed to market allows these companies to hire sooner and grow faster in Denver. Coworking also allows companies in other markets to easily open satellite offices in Denver and test the waters before fully committing to growth.
Whether it’s the less expensive labor market, highly educated workforce, the entrepreneur-spirited community or just the fresh mountain air, tech companies are choosing Denver for growth, and the office market will continue to be a leading beneficiary as long as that continues.
Matt Harbert is with the advisory and transaction services team at CBRE.