CREJ

Page 12 — Office Properties Quarterly — March 2020 www.crej.com Market Trends O ver the past few decades, technology has grown explo- sively, becoming ubiquitous in our professional and per- sonal lives. As an economic engine, the technology sector is potent – a fast-growing, high-wage, office-occupying sector – and it is quickly changing the face of com- mercial real estate, as evidenced by its impact on creative space design in Denver. Our research notes that tech employment reached an estimated 11.8 million workers in 2018, or 7.6% of the overall U.S. workforce. Looking ahead, the technical workforce is pro- jected to increase by 13.2% between 2016 and 2026. Additionally, tech workers are well compensated, with a national median salary of $81,907 as of 2018, nearly double the overall median salary of $42,700. Denver serves as a prime example of the technology industry’s economic impact on the real estate sector. With its excellent quality of life, well-edu- cated workforce, high concentra- tion of millennials and world-class research universi- ties, Denver was ranked fifth in Curbed.com’s 2020 list of “The 10 Best Cities in the U.S. to Move to Right Now,” reinforcing its position as a highly attractive desti- nation to millennials and highly edu- cated workers. Tech growth in Denver is being driven by organic expansion and by companies that are relocating to or opening second headquarters in the city. Our research pinpoints more than 20 Silicon Valley-based tech companies that recently have opened offices in Denver, and the Downtown Denver Partnership reported that 120 tech firms were formed in 2018 in downtown Denver alone. This amount of concentrated growth certainly impacts the office market, as represented by the fact that the technology sector accounted for 36% of office space absorption, or approximately 1.4 million square feet, over the past two years. Further, tech firms now occupy almost 11% of downtown Denver’s office space. Tech firms typically operate in high-growth mode, which dictates a need for flexible lease terms and scalability. Tech’s economic clout is pushing owners to shift from office space as a static product to a dynam- ic, space-as-a-service model that aims to facilitate creativity, produc- tivity and talent attraction/retention. Owners are securing a competitive advantage in attracting tech tenants by adopting this model in new con- struction as well as in existing build- ings. Denver owners and developers are working to adapt to this new work- place model by including collabora- tive, modern amenities like state- of-the-art fitness centers, training rooms and event spaces, open-space options for gathering, food choices, bike storage and outdoor areas in both new developments and existing renovated offices. The tech industry’s Technology sector influences creative office space Jamie Gard Executive managing director, Newmark Knight Frank Newmark Knight Frank Paradigm River North will be highly amenitized to appeal to tech tenants. Please see Gard, Page 22 Newmark Knight Frank One Platte will feature the largest floor plates of any building in downtown Denver.