The Boulder Chamber View: Innovative solutions to office vacancies — A multifaceted approach

Originally published by Daily Camera on March 25, 2024.

For the first 20 years of my life, I lived in a small, but bustling downtown area. My parents owned two retail shops in the central corridor, and I recall the importance of employees from local offices who filled the streets, patronizing our local restaurants and businesses. This experience set the stage for my initial appreciation for the importance of occupied office buildings.

Fast forward to today, in the third month of my new role leading economic vitality for the Boulder Chamber and Boulder Economic Council, I find myself in a vibrant community that similarly thrives on the local in-commuting workforce. Yet, like many urban centers, Boulder faces the challenge of office vacancies amidst a changing economic landscape. At the same time, this presents an opportunity for us to rally together as a community in pursuit of innovative strategies and creative solutions that will spur further economic vitality and vibrancy in Boulder.

After speaking with local commercial brokers, conducting research, and leveraging my economic development experiences, it has become apparent that reversing office vacancy trends will require a strategic and collaborative approach that leverages the expertise and resources of various stakeholders. From property owners to local businesses, from city officials to residents, everyone has an interest in overcoming the current challenges and a role to play in this essential economic vitality effort.

A foundational pillar for an effective strategy is market analysis. Understanding the local market dynamics, including demand-supply balance, rental rates, and vacancy rates, is essential for tailoring our approach to attract tenants effectively. By analyzing demographics, industries, and economic trends, we can identify target industries and tenants, and then customize our offerings to meet their needs. The Boulder Chamber has a good foundation for this information in its current data resources but will further partner with the city of Boulder’s economic vitality team, the commercial broker community and industry sector partners to fill any data gaps.

Furthermore, enhancing visibility through targeted marketing efforts is paramount. Investing in both online and offline channels to increase awareness of available office spaces is key to attracting potential tenants. While some investment in developing the precise messaging that strikes the perfect tone is important, sharing the Boulder experience and conveying an “open for business” spirit certainly will be an attractive foundation for our marketing outreach.

As we work toward permanent solutions, another concept that shows promise for filling office vacancies is pop-up spaces. By offering short-term leases for seasonal shops, art galleries, or temporary event spaces within vacant offices, property owners can generate rental income and drive business activity. Pop-up spaces not only attract foot traffic and buzz, but also create opportunities for long-term tenant engagement. To make it work, though, our Planning Department will need to demonstrate a high degree of flexibility in office use and layouts.

Establishing innovation hubs in empty office buildings — in partnership with regional businesses, academic institutions, and trade associations — is an additional option for filling empty office spaces. These collaborative ecosystems facilitate knowledge-sharing, networking, and entrepreneurial endeavors, making the spaces more appealing to startups and entrepreneurs. Again, this has the potential for spurring longer-term business development, as those entrepreneurial ventures are our future office tenants.

Finally, exploring further investment in affordable mixed-use developments — that combine office space with retail, residential, and/or cultural amenities — could serve as another source of new dynamism for our business centers. The truly dynamic urban centers of today demand a diverse mix of office tenants, residents and visitors. However, such redevelopment of character, with a blend of live, work, and play options, doesn’t happen by accident.

Aside from these potential solutions to our current office vacancy challenges, there are significant barriers to our success that demand the immediate attention of our elected leadership.

Homelessness can indirectly impact the ability to fill empty offices by contributing to a range of social and economic challenges that affect the overall business environment. We need to maintain our local and regional focus on comprehensive service and enforcement solutions to homelessness in our community. Further, the soaring cost of occupancy expenses, fueled by ever-rising property tax rates, also pose a significant deterrent for businesses interested in vacant offices, particularly startups and small enterprises. Mitigating tools to consider include rental subsidy programs, whereby property owners receive tax incentives or financial assistance to offer discounted lease rates.

Challenges linked to acquiring permits often lead to delays and may also discourage potential investment in commercial real estate ventures. Simplifying the permit procedure by integrating digital platforms, offering online application options, and fostering interdepartmental collaboration can accelerate project timelines and alleviate administrative complexities. Moreover, introducing a pre-approved permit system tailored to specific project types and delineating concise guidelines for expedited reviews can bolster transparency, efficiency, and regulatory adherence.

Finally, as we consider the possibility that the office market will continue to face challenges in a universe of remote work conditions, we need to further explore the opportunity to convert offices into residential units. Research indicates that certain office floor plans would make such conversions cost-prohibitive. However, in a community that invests heavily in other forms of housing subsidies, grants for office conversions to residential units could possibly offer a lower cost option than some new residential development options under consideration.

While this marks just the beginning of my dialogue on the issue of office vacancy, I’m hopeful that it sparks a broader conversation on a crucial matter concerning economic vitality and community resilience. Addressing the challenge of filling our vacant offices demands a multifaceted strategy that leverages our renowned entrepreneurial spirit and fosters innovative thinking —qualities that Boulder possesses in abundance. Additionally, it necessitates a collective determination from our business community, residents, civic leaders, and policymakers to pursue the solutions I’ve outlined above.

Let’s work together to reverse the current trend of office vacancies, transforming those empty spaces into vibrant centers of business activity. It’s a vision all of us can appreciate, even this son of small retail shop owners.

Joseph Hovancak is vice president of economic vitality for the Boulder Chamber.

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