DENVER – Colorado’s tech industry footprint is continuing to grow according to CBRE Research’s 2017 Colorado Tech Book. At least 40 tech companies expanded their presence in Colorado in the past year, with 400,000 square feet of positive net absorption from Q2 2016 to Q2 2017. At least 14 companies, including three from abroad, opened offices or moved their headquarters to Colorado.
In metro Denver, tech companies leased 7.9 million square feet of office space—an all-time high—maintaining technology’s position as the largest industry represented in Denver office leasing activity. Northern Colorado, whose tech industry continues to be dominated by hardware design firms located primarily in industrial/flex space, saw a 50,000-square- foot net increase year-over-year.
A traditional hub for hardware and high-tech manufacturing, Colorado Springs saw its tech industry diversify over the past year, driven in part by a 25.5 percent increase in the square footage occupied by software companies. In total Colorado Springs’ tech footprint grew by 2.3 percent, or 56,500 square feet, year-over- year.
“Colorado’s profile within the tech industry seems to only be rising. From startups just beginning their business to Fortune 500 global companies, we are consistently seeing organizations interested in opening or expanding their presence in Colorado, citing our strong population growth, relatively low cost of living, sustained economic growth and unmatched entrepreneurial spirit,” said Katie Murtaugh, research analyst, CBRE.
When it comes to the cost of doing business, CBRE Research found that Denver aligns in the middle of the pack compared to other western tech hubs, although the market remains significantly affordable in comparison to San Francisco. For example, the average office asking rent in Denver is $27.59, less than half of San Francisco’s rate at $70.29. The average Denver tech salary is only 83 percent of San Francisco’s average. The lower cost of doing business combined with an educated, highly skilled labor pipeline and other economic factors is attracting companies from across the nation as well as around the world to target Colorado for relocations and expansions.
In just the past year, at least 14 companies opened new offices along the Front Range, including Vertafore (moved HQ to Denver from metro Seattle), Xero (moved U.S. HQ to Denver from San Francisco), Propertybase (based in Germany, opened U.S. HQ in Boulder) and Esker (based in France, opened new office in Lakewood).
Overall, CBRE Research found that high-tech companies occupy 16.0 million square feet along the Front Range. The Denver Metro is home to the largest high-tech industry footprint at 10.1 million square feet. Northern Colorado, including Fort Collins, Greeley and Loveland, has 3.5 million square feet dedicated to high-tech companies as of the end of Q2 2017, and Colorado Springs’s tech footprint registers at 2.5 million square feet.
Key Findings Include:
- At least 40 tech companies expanded their presence in Colorado in the past year, with 400,000 sq. ft. of positive net absorption.
- Downtown Denver was the epicenter of technology growth with over 200,000 sq. ft. of positive net absorption. Southeast Denver, Colorado Springs and Fort Collins also had about 50,000 sq. ft. each of positive net absorption by tech companies.
- At least 14 companies, including three from abroad, opened offices or moved their HQ to Colorado, noting its strong population growth, a relatively low cost of living, sustained economic growth and an unmatched entrepreneurial spirit.
- In 2016 technology remained the largest industry represented in Denver office leasing activity with more deals and more sq. ft. leased than previous years.
- New and start-up companies often lease co-working space, which occupies at least 1.3 million sq. ft. in metro Denver. Contrarily, companies that are rapidly expanding look for well-located offices with attractive amenities and cost-effectiveness.
- Venture Capital (VC) funding for Colorado tech companies took a hit last year, dropping from $789 million in 2015 to $339 million in 2016, but following the national trend. In 2017, VC funding for Colorado companies is back up and by mid-year, year-to-date funding rivaled total 2016 funding.