LOVELAND — Northern Colorado must work hard to preserve and grow key, high-paying industries in the coming decades, even as real estate developers and investors adapt to demographic and lifestyle changes that will alter their industry.
Those were among the messages at the “Demand Drivers” panel discussion at BizWest’s inaugural Northern Colorado Real Estate Summit, an all-day conference at the Embassy Suites Hotel and Conference Center in Loveland. The event attracted about 450 people.
Panelists included Andy Montgomery, CEO of the Northern Colorado Economic Alliance; Ashley Stiles, vice president of commercial development for McWhinney; Joshua Guernsey, managing partner, Waypoint Real Estate; and Mark Bradley, managing broker and owner of Realtec Commercial Real Estate Services Inc.’s Greeley office.
“We’re out there trying to look at what the jobs of tomorrow are going to be so that we can attract them to Northern Colorado, so we’ve got an economy that sustains our region for the next 30 years,” Montgomery said.
Montgomery said that Northern Colorado includes 10 dominant clusters, such as brewing and agricultural food processing, but closer examination reveals two clusters with a dominant presence but that aren’t growing: IT and biosciences, “high-paying industries that we need to be concerned about in Northern Colorado and actively we need to be recruiting.”
“It’s critical because those are two industries that produce higher-paying jobs,” he added.
As we start to see these industries slip to the negative, and we’ve got less of a concentration and location quotient … you start to get a little concerned.”
Montgomery said that Northern Colorado continues to benefit from a great quality of life but will never lead by incentives.
Montgomery noted that Northern Colorado’s educated workforce is underutilized compared with the national average. He noted that 45 percent of Larimer County’s workforce has a bachelor’s degree or higher, but only 24 percent of the jobs require a bachelor’s degree.
“If we just got our labor utilization to the national average, it means a $200 million wage lift for our region annually,” he said.
He said key for Northern Colorado’s future is growing high-paying jobs by predicting future trends and telling Northern Colorado’s entrepreneurial success stories to companies in key industries that might look to expand in the region.
“These are two industries (IT and biosciences) that we cannot afford to fall behind in the creation of jobs,” Montgomery said.
“We have to do a much better job of telling what Northern Colorado is,” he added. “We need to be able to explain with a united voice, what we have in Northern Colorado and how we can meet the needs of these companies.”
Stiles said McWhinney, which has developed 6 million square feet of office, industrial, retail and hospitality space, along with 1,700 multifamily units, has identified several key metrics that affect what types of property it develops.
Among the demand drivers for the company, which has more than $2 billion in assets under management, is growth around urban cores, Stiles said, with Millennials and Baby Boomers driving growth in suburban markets.
That affects development along the Front Range, as the company seeks to meet the needs of those two groups.
Key sectors that have driven McWhinney developments include tech and agriculture. She noted that Colorado has 50 companies on the Inc. 5000, with seven on the list from Northern Colorado.
Stiles noted that half of Colorado’s 66 million acres “are dedicated to growing things.” That agricultural presence brings many ag-related companies to the region, including Agrium — now Nutrien — which occupies more than 200,000 square feet at McWhinney’s Centerra project.
McWhinney works with economic-development groups to identify key industries and then target companies within relevant supply chains.
McWhinney’s retail developments have taken a different turn away from stand-alone bricks and mortar due to the growth of e-commerce sales compared with traditional stores.
She said retail “is a blood sport. It’s like a marathon, not a sprint, so endurance really matters when you’re talking about retail.”
Retail must be experiential, rich and diverse, she said, and will be more successful if part of another project, such as retail components of the company’s Union Station project in Denver or The Elizabeth hotel in Fort Collins.
“It used to be, location, location, location,” she said. “I currently believe that it’s experiential, experiential, experiential when it comes to retail.”
She said the company is actively exploring how disruptive technologies will affect office developments, including autonomous cars, virtual workspace and global commuting. That could involve redevelopment of of “vast seas of parking,” she said.
She noted that higher prices for office space have prompted some companies to flee to more-affordable industrial projects.
Josh Guernsey, managing partner with Waypoint Real Estate, and Mark Bradley, managing broker and owner, Realtec Greeley office, compared and contrasted Larimer County with Weld County.
Both counties are performing well in terms of growth and economic development, with a projected doubling of the population in the coming years.
The counties share many of the same challenges, however, including high construction costs, escalation of housing prices, an aging population and transportation congestion.
Real estate industry professionals see an industrial market with a vacancy rate of 2 percent to 3 percent. “Vacancy rates are lower than I’ve seen in my career,” Bradley said.
Office space is becoming more efficient, with workers able to live one place and work another, and retail has seen store closings far exceed store openings, Guernsey said.
Among the demand drivers for Larimer and Weld counties are quality of life, an experience economy, capital interest, and technology as it affects industrial space, Bradley and Guernsey said, with Weld County also enjoying ample land availability.
Constraints include land availability in Larimer County, along with transportation, affordability and how technology is affecting retail in both counties.