Boulder’s Entrepreneurial Weakness – Space

I’ve talked a lot on this blog about the great things about the Boulder entrepreneurial ecosystem. Over the past five years it’s been awesome to see things really blossom. But there are always problems of some sort. And we have a few here in Boulder which – in the spirit of helping understand how entrepreneur ecosystems work over time – are worth pointing out and talking about.

The most visible problem her is that Boulder’s booming businesses are running out of room. Downtown Boulder is not large – maybe 10 blocks by 5 blocks – and very few of the buildings are more than three stories tall. Once you get outside the downtown Boulder core, you get some larger buildings and some office parks, but you are no longer in the core of downtown. If you get in your car and drive to the next towns over, such as Broomfield and Westminster, there is plenty of office space and some larger buildings.

But many companies that start in downtown Boulder want to stay in downtown Boulder. The companies build their culture around being downtown, benefit from the extremely high entrepreneurial density of Boulder, and the dynamics of being in a downtown core rather than in a suburban office park.

Ironically, the Boulder politicians have always seemed to have a bias against “business in Boulder.” I’ve heard about it for the 16 years I’ve been here and experience it periodically. The zoning here is extremely restrictive and the decisions around zoning seem arbitrary. The division between retail, tourism, business, and residential seems in continual conflict. A few real estate developers own and control much of the existing office buildings in town and as a result end up having a zero sum approach to leasing space – specifically they jack rents up as high as possible when the market is tight, only to have them collapse when the market loosens up.

As I’ve watched local Boulder companies grow to be in the 100 to 300 employee range, I’ve watched them struggle with office space. If the trajectory of several of the local companies continues, this struggle will get more severe over the next 24 months. Inevitably, several of the larger companies will have to move outside of Boulder, even though they don’t want to. When this happens, our real estate owner friends will once again have a lot of empty space on their hands which will fill up more slowly with smaller firms as they grow into what’s available.

I’m not sure if this is a solvable problem given all of the different constituents involved. The contraints on Boulder’s growth have many advantages and are part of what makes Boulder as great as it is. But it’s also a weakness – one that is front and center right now as a number of companies who look like they could be long term, self-sustaining anchors of the Boulder entrepreneurial community have to figure out where to house 300 people going on 1,000.

  • John Best (@redrookdigital)

    I know there is a focus on the interaction between politics and economics (and thereby business) at present, with the various “Occupy” protests both in the US and the wider Western world. I have to wonder whether therefore the solution to the overcrowding and expansion problems is political.
    Why would Boulder deny itself the employment, growth and (let’s face it) tax opportunities a relaxing of the zoning rules would mean?
    Perhaps someone should alert them to the good press and mileage that could be made on a “pro job creation” platform.

  • Build another ‘hub’ in the fringes/suburbs?

  • I said the same thing in an email moments ago – there are office buildings a-plenty for lease in the ‘burbs.  I saw a few large ones myself less than 30 days ago.

    Brad points out (correctly) above that part of what makes Boulder, well ‘Boulder’, is that downtown vibe that [probably] cannot be replaced elsewhere. 

  • Doug Gibbs

    Drive down to 55th, between Pearl and Arapaho. There is space, but we need more lunch places. 
    Companies can also go North to Longmont, there is an actual town up there with super markets and everything. The commute is easy, and most of your employees probably live there anyhow.

    • Derek Scruggs

      Funny, just the other day I was thinking it would be a great idea to open a restaurant down there. Somebody tell the Kitchen Next Door to open a lunch spot.

  • Jeff

    We need more offices like Cambridge Incubators.

  • Downtown Sean

    The politicians are starting to get it –  which is why they changed the downtown zoning a few months ago to allow more office space downtown. Thanks Brad for helping to lobby them on that!  As a result, there is now a proposal to add a 3rd floor (20,000′) to the Borders building at 1600 Pearl and the Camera redevelopment could add another  100,000′ or more of office. Eventually the parking lots at Wells Fargo and the Colorado Building will be built out. None of this will be enough to meet all the demand, but with a 55′ height limit, it’s the best we’re gonna do downtown.

  • Lee Drake

    Feel free to send some of your extra entrepreneurs to Rochester, NY where they can enjoy inexpensive real estate, rentals in anything from 21st century clean rooms to revitalized historical buildings, for a fraction of what it costs in a big city, access to over 5 resident world class colleges cranking out some of the best minds in the world, the highest per capita number of engineers in the world, the shortest commutes in the world, and a plethora of both NGO and governmental programs to sponsor and encourage the entrepreneur.  It is though NYS where you’ll also enjoy some of the best services, at the highest cost in taxes.  Great schools, good roads, fantastic opportunities without all the hassles of a big city.  We’re used to runnning lean – everyone here is entrepreneurial these days. 

  • We’re not likely to see the high-tech space issue solved in downtown Boulder, despite its desirability to tech employees. I’d like to see Boulder — or even some of the office park owners such as new owner in Flatiron Park — work to create some better pockets of restaurants, shops, etc. in outlying areas. There is something to be said about NOT being in downtown — much better lease prices, better parking at office parks and usually easier traffic access both on your bike and car. Flatiron Park is example of area nearly devoid of any places to eat, with just a few exceptions. A few places like Ozo’s Coffee saw this opportunity years ago and have profited from their location out there. That said … if redevelopment of places like former Boulder Camera site is devoted to more office space and fewer condos, we’ll be able to hang onto a few of these great tech startups as they continue to grow. 

  • Derek Scruggs

    I was just in San Francisco and was struck by how worker-unfriendly the South of Market area is. Lot of cool loft spaces, but not any places to eat and it feels very industrial to walk around the neighborhood. Surprisingly few coffee shops too.

  • Matthew Matey

    Excellent post Brad.

    It’s suprising how many cities “just don’t get it” when it comes to planning. You have companies asking to strengthen the core of the city with more jobs, which is rare these days, and they are unwilling or not wanting to help companies grow. 

  • Mikeh

    Tourism + retail (+ Chief Niwot’s curse) attracts the business in Boulder. Or, stated the usual way, “how can I move to Boulder and make a living?”. Are the politicians biased against business or trying to protect tourism/retail? Probably a bit of both. Do developers raise rents in good times? Of course, just market forces with inelastic supply. 

    Boulder has a surprisingly permanent bubble going for it – I’d say 10k people want to move there each year (just a number for example). This is balanced by the roughly same amount that move out surrounding cities. It gets pretty easy to rationalize that the surroundings are just as close to the mountains against the reality of costs. This cycle of new cash flow has helped Boulder ride out the economy of the last 30 years a lot smoother. Continuous demand. This is been going on a lot longer than the current tech startup wave, but the other waves didn’t whine as much and moved on (biotechs, data storage, organics etc…). It might be a sign of better long term prospects when a company moves out of Boulder.

    • I don’t get your comment about “whining as much.” I don’t think this is whining – it’s a practical reality of Boulder as it stands today. I’m also not sure why you think the long term prospects for a company are better when they move out of town. For example, I think the long term prospects for Rally are spectacular and they badly want to stay in the Boulder core.

      • Anonymous

        This blog post was most definitely whining.  “Someone else created this great environment and now we want it all to ourselves.”

        Funny, Microsoft, Google, Disney have all seemed to acquire local organizations and managed to stay and grow in the Central Boulder area (or just east of it.)  There is a long abandoned “Borders” storefront on Pearl Street just east of the Mall, yet no mention of that.

        The idea of more than a couple 300 to 1000 employee organizations in downtown Boulder is completely impractical anyway.  Part of success and growth is making the difficult choices.

        • The comment “now we want it all to ourselves” is ludicrous and demonstrates that you don’t really understand the local Boulder entrepreneurial community. The last thing we want is to have it all to ourselves. Our goal is to continually make Boulder a better place for everyone.

  • As you note, this seems like a rather serious problem. How can you grow a community if there is no  space for it. Then again, problems = opportunities. Can a real estate group be convinced to invest in Boulder? Can Tech Stars and UC form a partnership to create a new massive innovation space? Can you fit real estate into one of Foundry’s investment themes? Ample physical space seems very relevant to the long term success of Boulders entrepreneurial community. Best to try and solve this now, rather than later. Do you have any viable solutions?  

    Can the city council be convinced that some rezoning is vitally important to Boulder? Can they count the tax dollars they will lose as these companies are forced to leave the city? Can you run for city council?

  • pointsnfigures

    Interesting.  This is clearly a problem that cries for a Coaseian solution.  They ought to try it.  You have done a fantastic job growing that ecosystem.  Hope we can do the same in other places.  

  • I know this won’t happen, but I secretly wish the Boulder entreprenural community was transplanted to LoDo Denver. Specifically, the part of downtown North West of Market Street.

    LoDo is remarkably similar to downtown Boulder with many advantages. It has the same feel, 1800’s brick buildings mostly three stories and under, yet it doesn’t have any of the problems Boulder is plagued with. As a startup CEO who’s lived in both Denver and Boulder, and moved my company from Denver to Boulder back to Denver, let me explain why this pipe-dream would be great…1. Valid point that “space crunch” keeps entrepreneurs together. Just like SoMa SF, and the startup-dense parts of NYC, LoDo denver is small. Yet not a “bubble” and has lots of options if you outgrow it.

    2. Tons of great restaurants, coffee shops, etc. WAY more variety than Downtown Boulder

    3. The bigger startups that outgrow LoDo office space can move 2 blocks to the SE and choose from literally a million square feet of office space in the “high rise” part of downtown, and still interact with the smaller startups in LoDo.

    4. Better public transportation – FasTracks will connect all points of Denver and DIA to LoDo via the amazing redesigned Union Station. Already there’s wonderful light rail and bus service to the LoDo area from all over. Public transit in Boulder is terrible, especially for people living outside of Boulder proper. It’s a massive traffic jam getting into Boulder each day with no train, no HOV lanes, no nothing. And because of Boulder political views, I doubt they will increase the highway capacity. Boulder is a bubble, one road in one road out, not good for commuters.

    5. The hip, young, startup crowd has tons of neighborhoods to choose from, from trendy to family oriented, all within 15 minutes of downtown. Boulder has a massive “age gap” between college-age and 30+ with families. Lots of young people I know involved with the startup scene don’t like living in Boulder and choose to commute from Denver, or not locate in Boulder at all, because all the twenty-somethings live in Denver and it’s a lot more fun. Boulder is really boring for post-college twenty-somethings without a family. This is the primary reason I moved away from Boulder back to Denver.

    6. The cost of office space in LoDo is similar, or cheaper than downtown Boulder. And taxes are lower. And there’s true class A space, almost impossible to find in downtown Boulder.

    7. The cost of living in Denver is about 20% less than in Boulder, primarily because housing is a lot cheaper. This is a major factor and could position Colorado as a “low cost startup hub”.

    These are just some reasons I’ve observed first-hand having office space in LoDo and then moving to Boulder, and back. I know it’s a pipe dream but a larger city like Denver, if we could start over, would be a lot better in my opinion.

    Curious to hear what others think!

    • Here’s a Google Maps link for out-of-towners that don’t know where LoDo is

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