Chamber View: Our office Space Dilemma
As the realities of the pandemic set in, many of us in the economic development community pondered what economic recovery would look like. The rapid adoption of virtual collaboration tools and online educational platforms saved both our economy and our education system. By some reports, this digital transition accelerated online technology adoption 10 years into the future, with movement from an office to a home environment occurring literally overnight. But while this remote work conversion provided continuity to many businesses throughout the pandemic, we are seeing the long-term impact in our current office space vacancy dilemma.
By many measures, our economy can be considered fully recovered from the pandemic. Unemployment rates are either at or approaching pre-pandemic levels, and tourists have returned to town. Our primary industries, as well as our entrepreneurial sectors, have been opportunistic and made strategic investments that catapulted their businesses out of the pandemic. However, amidst these positive economic trends, building owners and commercial real-estate brokers are now struggling with an increased inventory of available office space with a decrease in demand. Most visible in our downtown district, the lack of office worker traffic continues to have negative impacts on our retail and hospitality businesses.
According to a recent study conducted by Dean Callan & Company, downtown Boulder commercial real estate vacancy rates are approaching 30%. In part, this is due to the intentional decisions corporations are making to limit their office expenditures given the current economic uncertainties. Compounding this circumstance is the continued adoption of a hybrid working model and a large movement toward 100% remote work. As a result, office utilization, as measured by the number of people working in an office compared to its capacity, is way down.
This condition is not unique to Boulder, as many cities and downtown districts around the country are experiencing the same phenomenon. Add to this condition factors that are unique to Boulder, such as an increased homeless population in the downtown district and an overly protracted building permitting process, you can understand why we are seeing such an aggravated office vacancy level across our community.
The Boulder Chamber and the Boulder Economic Council (BEC) have been active in addressing these challenges, knowing how critical they are to so many sectors of our economy. First, we must address the factors that are unique to Boulder. The Boulder Chamber, with the support of our partners at the Downtown Boulder Partnership and Visit Boulder, are working to develop a comprehensive set of recommendations on how to address the homelessness situation most appropriately and humanely. Moreover, we’ve been calling for urgent improvements in the development permitting process.
On a broader scale, the BEC continues to market the benefits of Boulder. Our messaging continues to be centered around our quality of life and the opportunities to network in a highly educated and entrepreneurial community. Additionally, downtown Boulder is becoming comparatively more affordable. We are cheaper than the coasts and, due to recent large building acquisitions that are increasing valuations in the surrounding region, downtown Boulder is now a reasonable option for either a down-scaling or expanding business.
After a long career in an office environment, I appreciate the importance of in-person, informal interactions with co-workers and staff. I also understand that the convenience and efficiency of remote work opportunities is here to stay as a business option. However, to bring back the value of spontaneous creation, indirect mentoring and the cross-pollination of ideas that can only occur in an in-person environment, let alone what it means for the vibrancy of our local economy, we must endeavor to create an environment that will increase office utilization rates and bring our business ecosystem back into balance.
Scott Sternberg is the executive director of the Boulder Economic Council and associate vice president for economic vitality at the Boulder Chamber.