Repurposing Tech Real Estate In Colorado
By Barry DiRaimondo, SteelWave LLC cofounder, CEO & chairman, and Peter Llorente, Steelwave senior managing director of acquisitions and development
According to the Computing Technology Industry Association, tech employment in Colorado increased by over 10,000 net new jobs in 2022 and is expected to grow by nearly 9,000 net new tech jobs in 2023 – the highest total nationally. The 2022 growth rate of 4.3 percent ranks Colorado seventh among all states and is well above the national average of 3.2 percent. And, as of 2020, sixty of the largest Silicon Valley tech companies, also had a presence in Colorado.
Across Colorado, there are nearly a quarter of a million people working in tech jobs — the fifth highest national concentration of tech workers relative to the overall labor force — and 14th largest by total numbers. The 8.3 percent of Coloradans working in tech further earn a median wage approaching $104,000 – 118 percent higher than median wages for all occupations in Colorado.
In concert with this growth in personnel, there is also increasing demand for worker-friendly office environments, which is a major reason our company, SteelWave, is ebullient about its future in Colorado. For over 40 years, SteelWave — a privately held full-service creative real estate management firm — has specialized in creating workspaces for traditional tech, media tech, biotech, defense tech, and design tech offices that foster collaboration and productivity in a high-growth environment.
The economic and cultural shocks of the past few years, from the COVID-19 pandemic to the present date, have brought seismic shifts in urban commercial real estate markets that have reached Colorado. The 40 percent drops in commercial real estate values that have hit some cities may not peak that high in Denver, yet Colorado cities are hardly immune from the challenges faced by the capital market ecosystem and the specific issues surrounding the remote workforce debate and ongoing supply-demand imbalances across all sectors.
Let’s Face Facts
The retail and office segments have experienced significant declines in asset values, and companies are grappling with how to more effectively utilize office space so as to meet financial requirements and attract quality personnel out of their home cubby holes, a scenario that has led to major increases in office vacancies. Moreover, interest rates have risen sharply, creating another set of uncertainties for corporate tenants that impact their own growth plans.
From a different angle, though, these disruptions are also providing tremendous opportunities for continued growth. Drawing from our track record of capitalizing on bearish commercial real estate (CRE) markets, SteelWave envisions the most favorable CRE buying window since the Resolution Trust Corporation (RTC) days of the 1990s.
The SteelWave approach to CRE revolves around transforming the workspace experience and inspiring the tech workforce to embrace collaborative, creative, and joyful environments. By integrating elements of hospitality and residential design into properties, SteelWave seeks to create work environments that energetically inspire. In Colorado, these include The Link in downtown Denver, the Element Research Center in Boulder, and Infinite Labs in Louisville.
To accommodate industry giants like Google, Microsoft, Meta, or Apple (all of which have sizable teams in Central Colorado), SteelWave repurposes existing office spaces to meet the needs of fully integrated teams with engineers and marketing experts collaborating side by side. Our redesigns include next-generation amenities such as fitness centers, curated food and beverage options, outdoor spaces, and wellness programs all within the corporate campus.
The tech creative climate is enhanced with high-end spaces with high ceilings, ample natural lighting, and seamless connections between indoor and outdoor areas, all nurturing professional growth and personal well-being. These amenities foster collaboration and enable the showcasing of products and hosting of events that attract both customers and prospective high-quality employees to leave behind ‘work-from-home’ to join highly productive teams.
All of this aside, the key to SteelWave’s success is focusing on tailoring workplace designs to reflect the unique characteristics of each building, neighborhood, and region. Colorado cities have very different cultures, climates, and thus localized needs, compared to cities in California or Texas.
It is vital to SteelWave’s success to gain a deep understanding of each local CRE market and to design workspaces that create the best fit between the corporate campus and the surrounding community. This means building strong relationships with owners, users, and brokers based on transparency and honesty about emerging trends in the workforce and the corporate climate.
SteelWave has been in Colorado since the early 80s through its two predecessor companies, but with the rapid growth of the Colorado tech industry, we hope to grow with that industry and continue providing high-quality solutions and opportunities for our clientele.
About the Author
Hosting over four decades of experience in the industry, Barry DiRaimondo oversees strategic investments and operations across all Steelwave LLC commercial real estate (CRE) and company-related matters, including ownership and disposition strategies on enterprise-owned assets and development and acquisition approaches applicable to each SteelWave market. Barry is a member and Council Chairman of the Urban Land Institute (ULI), a member of the Policy Advisory Board at the Fisher School of Real Estate at the Haas School of Business and concurrently serves as the Chairman of the Board at e-Cobalt Investing.
About the Co-Author
As Senior Managing Director of Acquisitions and Development in SteelWave’s Denver, Seattle, Portland and Texas regions, Peter Llorente oversees acquisition, financing, asset management, marketing, leasing and property management activities for SteelWave. Llorente has over 36 years of real estate experience and has been with SteelWave for 21 years. Since joining SteelWave, Peter has acquired and developed over 78 properties at a cost of $4.0 billion.