Booming Biotech as Office Space Flags – BizWest

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BOULDER – The COVID-19 pandemic and its aftermath has told the story of two trajectories for a pair of commercial real estate asset classes – traditional office spaces and biotech-centric flexible spaces with office, laboratory and light fabrication – in the Boulder market.

As office users who have remained largely in work-from-home or hybrid mode, leaving their workplaces underutilized, life science companies are chomping at the bit for additional square footage in Boulder, a market that is rapidly becoming one of the industry’s leading regions.

“The sky isn’t falling,” said Becky Gamble, CEO of brokerage Dean Callan & Co. “But that doesn’t mean there aren’t obstacles we anticipate. The most glaring, certainly , remains the office and important vacations. Companies just haven’t really identified what returning to work looks like and what their hybrid model is. It’s not just Boulder; you see this all over the country.

Dean Callan has just released his Boulder Market Report for Q3 2022, which provides insight into the strengths and challenges facing the commercial real estate industry during uncertain times.

“Construction costs are definitely a hiccup, as are interest rates. When you combine that with a little geopolitical headwind, you’re in a position where everyone is cautiously optimistic,” Gamble said. “At Boulder, we have always operated in silos, but we still feel some of the “challenges faced by communities everywhere.

Downtown Boulder, despite its prominence and cachet, has felt the work-from-home sting more intensely than many of its neighbors.

The district had an office vacancy rate of 27.94% in the third quarter of 2022, compared to 26.46% in the second quarter of the year, according to Dean Callan’s report. This figure of almost 28% is up from less than 17% in the first quarter of 2021.

“Downtown is so heavily concentrated with tech users, and tech users are the ones, for obvious reasons, who have figured out how they can still be successful and productive working from home,” Gamble said. “…The flip side is that it’s still downtown Boulder, one of the most desirable locations for companies looking to provide a lifestyle for their employees. …I think the market will come back, but there’s a lot of subletting and a lot of direct space. It will take a little time. »

Central Boulder weathered the storm a bit better. The office vacancy rate was 12% in the third quarter, which has been fairly stable for about a year.

“Amenities keep popping up,” and the center of Boulder is “greatly located, convenient in terms of parking,” Gamble said.

East Boulder has become the epicenter of the city’s biotech scene, as its sprawling business parks and corporate campus are prime candidates for redevelopment into flexible lab spaces.

The office vacancy rate in this district was 19% in the third quarter of this year, compared to 23% in the second quarter and 21% in the first quarter of 2021, according to the report by Dean Callan.

“While office leasing has slowed considerably, the development of life sciences is moving forward at full speed. Approximately 2.5 million to 3 million square feet of construction is either underway or under construction along the Boulder/Denver corridor,” the report said. “This production… will be a big boost in attracting more companies to our market and creating even more demand for the R&D product provided by Boulder.”

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