DENVER | Main Development Thread #7

[The Dirt]

I can back this up with anecdotal evidence. An independent developer friend of mine said that a lot of tech companies don't like to locate here sure to high taxes and will instead "offshore" their HQ to another state, while keeping some of the labor here.

[TakeFive]

Originally Posted by twister244

I wonder if the only thing that really holds Denver back from explosive HQ "imports" is our tax structure? Correct me if I am wrong, but any incentives offered by the state need to come from a pool already accounted for the in the budget. The state can't just go and offer company X billions in incentives without it going through the voters first?

According to the Tax Foundation, Colorado comes in 18th which isn't turrible. See Big Map Here.

According to a recent Forbes piece on THE BEST STATES FOR BUSINESS 2018, Colorado comes in 8th.

According to CNBC's America's Top States for Business 2018, Colorado is rated 5th but does have low rankings for Infrastructure (29th) and has fallen to 37th for COST OF DOING BUSINESS.

Colorado which does have a solid eco-devo recruitment plan probably has less flexibility than some states. Generally larger HQ's aside from their birth state are looking for other things than what Colorado can offer - although DIA does compensate for quite a lot.

[mhays]

With tech HQs and major engineering offices, international air connections (Asia especially) might matter more than national connections. DIA's ranking isn't so high on the international side.

[rds70]

Interesting new concept plan submitted to the City for the Bell Park site bounded by Speer, 14th, Market and Larimer:

Concept - Two buildings are proposed on a single zone lot at 1300 Walnut (Market) Street, in the LoDo neighborhood of Denver. The proposed buildings are as follows: 1) 5-story office building, over 3-levels of underground parking. The building includes ground floor retail space adjacent to a public park. 2) 36-story concrete residential tower, over 3-levels of underground parking. The building includes various resident amenity spaces, service areas for building operations and a leasing office.

Sounds very similar to the original proposal from 2007/8. Although the residential tower would include 169 apartment units instead of condos.

[PLANSIT]

Originally Posted by rds70

Interesting new concept plan submitted to the City for the Bell Park site bounded by Speer, 14th, Market and Larimer:



Sounds very similar to the original proposal from 2007/8. Although the residential tower would include 169 apartment units instead of condos.

Heard a rumor that this site had a new proposal. Looks to be over 400 feet.

[TakeFive]

Originally Posted by mhays

With tech HQs and major engineering offices, international air connections (Asia especially) might matter more than national connections. DIA's ranking isn't so high on the international side.

DIA has plenty of flights to Europe at this point. Now that they have regular direct flights to Panama City on Copa Air which is the largest So American airline serving 55 cities that box is checked. It's direct flights to Asia which is more limited.

Denver did have two prominent engineering companies that happen to work on the Panama Canal, one which oversaw construction on half the work while a Spanish company oversaw the other half. But last year CH2M was bought by Jacob Engineering out of Dallas while MWH Global with operations in 35 countries was bought by Stantec. That leaves only Fentress Architects as a national/global company that I'm aware of for engineering/architects.

Any tech company that's grown their success from Colorado has typically been bought out. Most prominent tech companies want to retain their California address but serve as a tech incubator for most of the country via expansion and/or acquisition.

[mhays]

DIA ranks much higher on the domestic list than the international list. You're showing one reason...it's not just how many cities are on the list, but how many flights to those cities. Let's say SF has five a day to Shanghai (wild guess) and you have one...a single flight per day is inconvenient and risky schedulewise for flyers, whether it's the company flying or just the worker's family going back and forth.

I don't mean engineering like CH2M. I mean software engineering...we're talking about tech companies.

[TakeFive]

Originally Posted by mhays

DIA ranks much higher on the domestic list than the international list. You're showing one reason...it's not just how many cities are on the list, but how many flights to those cities. Let's say SF has five a day to Shanghai (wild guess) and you have one...a single flight per day is inconvenient and risky schedulewise for flyers, whether it's the company flying or just the worker's family going back and forth.

I don't mean engineering like CH2M. I mean software engineering...we're talking about tech companies.

Point taken about DIA but if a 'traveling' company picked Denver it wouldn't be hard to add frequency once a route has been established. But true, what makes DIA the 5th busiest airport in the country is its hubbing ability and overall number of destinations and nonstop flights. Consequently it is undergoing a substantial expansion and renovation. seventwenty recently linked to their concourse expansion.

The OP went to HQ's and/or large regional decisions. Whether Amazon is considered more of a service/retail or tech company isn't important. Tech companies mentioned were just examples of companies who made recent major office choices and of course many tech companies often make such moves due to their growth.

Denver has never been a particularly prominent tech town but it has always had a solid tech presence and has been getting more tech attention in recent years. But Denver's strength is in it's diversity and it's not just tech companies that travel. For example, Arrow Electronics although it sells tech stuff "serves as a supply channel partner for more than 150,000 original equipment manufacturers, value-added resellers, contract manufacturers, and commercial customers through a global network. The company maintains over 300 sales facilities and 45 distribution and value-added centers, serving over 80 countries."

Denver is delighted that VF Corp which does business in 170 countries chose to relocate their HQ to downtown Denver. While Ardent Mills is a joint venture among larger agricultural companies it also chose Denver for its HQ; two good examples of Denver's diversity. While not as recent Lockheed Martin opened a new HQ in Denver in 2014.

Denver has forever been in flyover country but it's easy enough to get there from here whether nonstop from Denver or one stop on the way to New Zealand, it's not a problem.

[mojiferous]

I'm not sure if anyone is actually choosing a HQ location because of airport connections anymore...

It's an easy way for a company like Amazon to let mid-sized cities know that they're not in the running without saying that the execs don't want to move there, but in my experience fewer tech companies are prioritizing the need for direct connections to Asia or Europe because of video conferencing. Why send your team to Tokyo or Guangzhou or Munich for a $30,000+ 2 day meeting when you can just have them call in? Instead of sending them there twice a month, they'll end up going once every 6 months and save you a ton of money and headaches. And for that biannual trip they can connect through somewhere else. Obviously face-to-face meetings are important, but not necessary for day-to-day business any more.

And it's even less important for non-execs now... A few of the engineers and technical resources that my wife works with don't even have offices - they live in the wilds of Idaho and Montana and fly out to projects only when absolutely necessary - their company HQs are all in DC or Texas, but none of them want to live there. I have a couple of friends who travel international nearly every week, and their offices are in major cities with huge airports, but in both cases their company isn't HQ'd in the city they live in (Seattle and DC) - Instead, the company just has a satellite office in the city and the people who travel the most work in that office.

In all these cases the HQ team - the managers and HR people and executives - don't need to be in the same place as the engineering team, or the manufacturing, or whatever group actually makes the money or does the business. Instead companies seem to be deciding their HQ location based on:
A) where they can take advantage of tax rates or lack of regulation,
B) where they have the best access to investment money
C) where they can meet client C-level execs or government officials face-to-face.
or maybe D) where their execs want to live.

Places like Austin and anywhere that usually ranks in the top 5 on a "best places to do business" list are always deep in A country. B is why tech companies continue to go to SF and NYC despite cost. And C is why Amazon chose DC and NY for their second HQ.

Denver is a great place for option D, but unfortunately D is the least likely choice for someone to move their HQ. It's a real consideration when expanding offices and looking for potential hires, which is why downtown is still booming and why companies are locating offices here, but it means so little compared to the first three when locating your HQ. It does work well if you want to portray your company as youthful and healthy, like Davita did... Denver is a great place for a satellite office because of option D - people want to move here, much like Seattle or California (or Austin) but the execs aren't going to have great connections to VCs or to the federal government or be able to avoid paying taxes here in Denver, so it isn't a strong reason.
A few HQs we've attracted in the last few years have come because of a combination of option D and a little of option C - Ardent Mills and VF chose Denver because of connections to their clients or customers, but there aren't too many industries concentrated here to attract other HQs. Maybe aerospace?

Point is - because of changes in the way companies can manage their employees and operations remotely, and the fact that Denver is not a center of finance, regulation, or tax sheltering my guess would be that we probably won't be a huge HQ magnet in the decades to come...

[Cirrus]

Originally Posted by mojiferous

the fact that Denver is not a center of finance, regulation, or tax sheltering my guess would be that we probably won't be a huge HQ magnet in the decades to come...

I think this is largely correct. Denver will continue to get a lot of natural incremental growth as the economic center of a large region, but it'll be growth that's more bottom-up, growth that happens because Fort Collins and Pueblo need bigger banks and consultancies than they can provide on their own. It's hard to imagine too many scenarios where Denver wins a national competition against the coasts (best access) or Texas/Florida (best combo of access+cheap).

[TakeFive]

Few random thoughts

Originally Posted by mhays

DIA ranks much higher on the domestic list than the international list. You're showing one reason...it's not just how many cities are on the list, but how many flights to those cities.

If you're suggesting that Seattle benefits from its international Asian routes I wouldn't be surprised. The whole west coast is decidedly more 'Asian' and Seattle is just up the coast from the Bay Area. Seattle has grown much of its tech and business chops from two companies: 1st Microsoft and more recently Amazon. The synergies created by both companies has to be massive. I'd assume the international air service evolved from their presence.

Why did Austin become a tech darling?

Primarily because it's in Texas and because of SXSW - although that's more of a good excuse than fundamental, it does speak to Austin being the more creative spot in Texas. Neither Colorado/Denver nor Arizona/Phoenix etc can offer the kind of incentives that Texas has passed out over the last two decades. Texas decided to try to match California's success and has been on an evangelical crusade to do so. Dallas is the center of influence and over the last two decades has easily outgrown Denver including international air service. But having to travel first to Dallas to catch an international flight has not been a deterrent for Austin. Dallas is more of a 2nd or even 3rd tier tech city.

Texas benefits from it strategic location to the Cotton Belt and the re-industrialization of our domestic economy including oil & gas, chemicals, auto and Boeing Aircraft as well as defense manufacturing. There's many, many components to our domestic GDP. Any yes it's highly driven by software engineering as everything is now techy.

What's impressive is how well Denver is doing without having an Amazon or Microsoft. I can only assume it must be a combination of the mountains and legal weed.

[mhays]

I wasn't talking about Seattle, but yes it does benefit from a mid-tier level of Asian airline connections...maybe 10 per day off the top of my head. We're a distant #4 on the West Coast vs. LA, SF, and Vancouver despite some additions...hoping to be a closer #4 soon.

The company's own travel is just one factor. It's also employees from around the world wanting easy trips home and easy trips for their families. Recruitment of thousands of people from China for example is much cheaper and easier when flying is a single flight, or two instead of three.

Do companies make location decisions based on the quality of airline connections? Not as #1 consideration in my experience, but it's frequently mentioned as a factor.

[twister244]

I feel like the DIA situation is a bit of a chicken/egg situation. If suddenly a bunch of companies were pressuring local officials for more international flights to accommodate their local growth, it would happen.

DIA seems like the kind of airport that could easily expand international flights if necessary. They certainly have the room if money starts to talk.

I think previous points are spot on about our lack of proximity to capital markets like NYC, or Silicon Valley, coupled with our local tax policy (for better or worse), has put Denver in the position its in. That's not necessarily a bad thing depending on your preferences. It just is what it is.

[TakeFive]

Originally Posted by mojiferous

In all these cases the HQ team - the managers and HR people and executives - don't need to be in the same place as the engineering team, or the manufacturing, or whatever group actually makes the money or does the business. Instead companies seem to be deciding their HQ location based on:
A) where they can take advantage of tax rates or lack of regulation,
B) where they have the best access to investment money
C) where they can meet client C-level execs or government officials face-to-face.
or maybe D) where their execs want to live.

Point is - because of changes in the way companies can manage their employees and operations remotely, and the fact that Denver is not a center of finance, regulation, or tax sheltering my guess would be that we probably won't be a huge HQ magnet in the decades to come...

Excellent post. I think you nailed it overall although I'd argue that DIA is still a key cog but your point is well taken.

Considering recent moves by Arrow Electronics, DaVita and VF Corp their HQ has a small percentage of their overall employee and cost basis so if they like Denver for whatever reason then it's not a problem to locate in Denver.

Funny side story

I fall asleep listening to a talk radio rebroadcast by an East Coast Talker. Todd Schnitt spent most of his air time in Tampa Bay before moving to the NYC market to syndicate his program. Hardly a week goes by when he doesn't talk about his love for Colorado. He bought some land in Avon with intentions to 'retire' and broadcast out of the Vail Valley. His show is carried by stations from Vail to Aspen and he loves talking to callers from there about skiing etc. He is in Vail this week and has pictures on his twitter account.

Colorado's mountain ski areas really are much more of a draw than many appreciate.

[Cirrus]

Originally Posted by TakeFive

Colorado's mountain ski areas really are much more of a draw than many appreciate.

But awfully far from Denver. Are any of the ski areas capable of becoming significant cities on their own?

I'm doubtful. Seems like it would have happened already. But maybe. Anybody have thoughts on the possibilities? Vail and Aspen have topography problems, but why aren't there more people in, say, Fraser?

[TakeFive]

Originally Posted by Cirrus

But awfully far from Denver. Are any of the ski areas capable of becoming significant cities on their own?

Nah, that isn't what I was thinking of; didn't mean to give that impression but I did kind of leave it hanging.

You'd be surprised how many people have ended up in Denver because they vacationed in Colorado, typically to go skiing. It goes to Denver being an outdoors-activity kind of place as well. That can include CEO's and even if they've moved beyond skiing they likely have kids who would love living close enough to 'go to the mountains.'

[Cirrus]

Still an interesting question, regardless of intent.

[PhilipDDG]

Originally Posted by Cirrus

But awfully far from Denver. Are any of the ski areas capable of becoming significant cities on their own?

I'm doubtful. Seems like it would have happened already. But maybe. Anybody have thoughts on the possibilities? Vail and Aspen have topography problems, but why aren't there more people in, say, Fraser?

This is an interesting thought. Barring some unforeseen event of shattering significance, though, I can't imagine a major city rising in Colorado's mountains for at least several generations, and then only through a more mundane, organic growth process that is accompanied (and more than matched) by the same growth in Denver and the Front Range.

Right now Summit County (Dillon/Silverthorne) seems to be the most likely candidate. It's already a hub for at least four, perhaps five, ski areas, and it's bisected by a major interstate. It also has room for sprawl to the north towards Kremmling.

While it doesn't have an airport capable of passenger flights, proposals have popped up from time to time for developing an airport in Park County to serve Summit's skiing interests. Hoosier Pass is already a remarkably easy pass to traverse, and it's easy to imagine some strategic improvements to the more curvy north side of the pass to accommodate increased vehicular traffic.

Fraser, which you mentioned as a possibility, seems less likely, and that's mainly because I think its surrounding geography is a detriment to convenient access.

[CastleScott]

But awfully far from Denver. Are any of the ski areas capable of becoming significant cities on their own?

I'm doubtful. Seems like it would have happened already. But maybe. Anybody have thoughts on the possibilities? Vail and Aspen have topography problems, but why aren't there more people in, say, Fraser?

Just maybe a tidbit-my parents had a cabin near Lake Dillion for several yrs (factory built job on a half acre) but it seemed cold up there a lot even in summer as cool air would sink down into the valley from the high peaks. It just seemed as if you ran out of things to do pretty fast up there plus listening to some teenage sisters nag about the cold and being away from their friends a lot too..

[Sam Hill]

Now, how fun is this rendering to look at? It's just so much damn fun! Ain't it?


https://denverinfill.com/blog/2018/1...esidences.html