Executives hail local economy that’s ‘hitting on all cylinders’

Susan Reilly, chief executive of Broomfield-based Renewable Energy Systems Americas Inc., said the extension of the wind-energy production tax credit, which is commonly used to finance wind-energy projects, gives wind-turbine manufacturers breathing room to plan projects and build turbines. At right is Lew Kingdom, managing broker of Wright Kingdom Real Estate. Doug Storum

Michael Davidson
BOULDER – The hope and hype about the area’s strengthening economy appears to be justified, as business leaders are optimistic heading into 2013 following strong performances in 2012, according to a panel Jan. 23 at the Boulder County Business Report’s CEO Roundtable.

Local companies are expanding and looking to invest, banks are lending again and several economic indicators show the area economy has made up the ground lost since the 2008 recession.

“The short version is, the state’s doing better than the nation is, Boulder’s doing better than the state is, and at this point, in terms of the economic cycle of job recovery, Boulder is back to where it was in terms of peak employment prior to the recession,” said economist Richard Wobbekind, executive director of the Business Research Division at the University of Colorado’s Leeds School of Business.

According to the Colorado Division of Labor and Employment, the 170,400 jobs in Boulder County businesses reported in October were the most since December 2008.

Wobbekind pointed to technology as the driving force of the recovery, but a number of industries are showing gains.

“The jobs are very broad-based in this recovery, in every sector except information,” Wobbekind said.

The state’s growth is highly concentrated along the Front Range. The one part of the state outperforming the Boulder area, he said, is the Fort Collins area, where in addition to a burgeoning tech scene, the region benefits from growth in agriculture and natural-gas production.

While statewide employment is about 2 percent below the pre-recession peak, wages, retail sales and government revenues are past previous peaks, while housing is recovering too.

“Obviously, we’d be even higher if we hadn’t gone into the recession,” Wobbekind said, “but a lot of the indicators are extremely positive.”

Wobbekind’s data is in line with the results of a large survey of area primary employers conducted by the Boulder Economic Council, the city and the Leeds School, BEC executive director Clif Harald said. Primary employers are those that produce goods and services typically sold to customers outside their home area.

In the survey, 550 primary employers were asked about future plans. What they said was very heartening for the city.

“We heard from them (that) two-thirds are planning expansions this year, or in the very near future,” Harald said.

Companies large and small, established and starting up are showing optimism.

“We have well-established, growing Fortune 200 companies here, but we also have this incredible pipeline of early-stage and start-up companies,” Harald said. “From the existing to the new to the relocating, we’re hitting on all cylinders.”

Boulder economic vitality coordinator Liz Hanson said the city had a successful year retaining businesses in 2012, and the number of businesses interested in the city’s flexible tax and fees rebate program has never been higher.

“We had a really big year in 2012, and we’re looking for a good 2013,” Hanson said.

Businesses are looking to expand at a point where banks are looking to lend, said Patrick O’Brien, Guaranty Bank and Trust Co.’s market president.

During the past year, banks started adjusting to new regulations, freed up money to lend and started working with a greater range of clients. The tough times when banks were tight-fisted seem over.

“That’s all behind us now,” O’Brien said. “I can say that fairly comfortably as we look back at 2012, which was an excellent year for community banks.”

Even home builders, one of the industries hardest hit by the recession, are getting loans for new projects, O’Brien said.

The year 2013 looks promising for all community banks, said Valorie Simpson, the Colorado Business Bank’s Boulder County president. Banks are able to make loans to a broad range of companies.

“We’re seeing everything — technology, manufacturing, investor real estate,” Simpson said. “We’ve done a lot of health care. It runs the gamut and is very diversified and very broad.”

Not all businesses can get the financing they need, especially those starting out that are not attractive to angel investors, said Ceyl Prinster, president and CEO of the Colorado Enterprise Fund. The fund exists to help those companies get started and bridge the so-called “valley of death” before they start generating revenue.

Retail sales in the area also have solidified, according to Kim Campbell, an executive with Macerich Co. (NYSE: MAC), the company that owns the Twenty Ninth Street and FlatIron Crossing retail centers. “On a sales-per-square-foot basis, our sales at both properties are at an all-time high,” Campbell said.

Trends in residential and commercial real estate also give hope.

Home prices are rising, and the biggest current problem is a lack of inventory, said Lew Kingdom, Wright Kingdom Real Estate’s managing broker.

In downtown Boulder, rents are high enough that new redevelopment projects are economically viable, said Bill Reynolds, president of W.W. Reynolds Cos. in Boulder.

Tenant interest is strong for Class A office space downtown despite increasing rents, said Angela Topel, senior broker for Gibbons-White Inc. The brokerage represents the owners of the 11th and Pearl redevelopment project, and the high rents it will command when it opens in late 2015 are not proving to be a deterrent.

“We are asking for high rates, and people are actively pursuing it,” Topel said.

The picture is different on the east side of Boulder, in business parks with a lot of flex space such as Flatiron Park and the Pearl East Business Park, the latter of which is owned by W.W. Reynolds.

“The rents in these tired buildings are what they were 15 years ago,” Reynolds said, and it isn’t clear prospective tenants are willing to pay more for upgraded buildings.

The owners of retail space have different challenges and might have to be creative, as fewer anchor tenants are looking to move in, developer Jim Loftus said. Loftus is one of 40 investors behind Hazel’s Beverage World, the 35,000-square-foot liquor store that opened in the space formerly occupied by Ultimate Electronics at 1955 28th St.

“If that hadn’t been done, it would probably still be vacant,” Loftus said.

Parts of the renewable-energy industry ended 2012 on a high note, but for a different reason. Congress voted to extend the wind-energy production tax credit, which is commonly used to finance wind-energy projects. The extension gives wind-turbine manufacturers breathing room to plan projects and build turbines, according to Susan Reilly, president and CEO of Renewable Energy Systems Americas Inc. RES-Americas is a Broomfield-based company that plans and builds renewable projects.

“A lot of the damage has been averted,” Reilly said. “It could have been pretty catastrophic for the industry” if the credit were not extended a year.