Boulder Economy Faces Headwinds – And High Hopes

Originally published by BizWest, October 23.

Boulder Chamber president and CEO John Tayer set the tone for the Boulder Chamber Economic Summit Wednesday with a wry response to the event’s theme,  “Navigating What’s Next: Business in a Changing World.”

“The hell do I know?” Tayer quipped, opening the event at the University of Colorado Boulder’s Glenn Miller Ballroom.

Tayer acknowledged “a state of confusion” facing business leaders, with federal cuts, layoffs and lingering office vacancies creating headwinds. But he pointed to reasons for optimism, including Boulder’s emerging quantum sector and the upcoming relocation of the Sundance Film Festival in 2027.

The Economic Summit, which attracted about 375 attendees, was designed to bring some clarity to what’s happening, with presentations on higher education, city government’s role in economic vitality, key industries, the overall economy and the impact of the Sundance Film Festival.

Higher-ed funding squeeze

Justin Schwartz, chancellor of CU-Boulder, said the university, approaching its 150th anniversary, faces “numerous external factors, most of which are beyond our control” — from federal and state budget cuts to the loss of millions of dollars in research grants.

He said higher ed must acknowledge valid criticism while adapting to a changing landscape.

“We at CU Boulder and across all of higher education would be foolish to avoid criticism. There are fundamentally many things that we can and should do better, no matter who’s steering the ship. And I don’t want to diminish or dismiss the challenges that we face as a university, a community, a nation and a world. But what I do want to do today is offer perspective, facts and a reminder the University of Colorado, the Boulder community may be facing these headwinds, but fundamentally to our core, we are strong, and we are growing from the challenges that we face. The current environment actually gives us an opportunity to evaluate our strengths, invest in our priorities and surge ahead of our peers who are struggling much more than we are in this time, while also remaining true to our identity and to our core missions at CU Boulder.”

City leaders confront budget woes, crime

Boulder city manager Nuria Rivera-Vandermyde and Stephen Redfearn, chief of police, tackled city financial constraints and crime in a session titled, “City of Boulder: Your City’s Partnership in Our Collective Economic Vitality,”

Rivera-Vandermyde noted the budgetary challenges that the city faces, including a 7.8% decline in the general fund this year.

“I think this my fifth budget in the city of Boulder, and except for the first year where we were talking about rebuilding our workforce coming out of the pandemic, I don’t believe I’ve had a budget where we have not used the word constrained, and that seems to be the word that we are remaining we remain constrained in our budget,” she said.

“We are seeing the impacts of federal tariffs, and what that looks like for the price of our goods and services. We’re seeing sales tax declining, and that means that consumers, our residents, have less consumer confidence, so they’re buying less. They’re going out less. They’re eating out less. They’re buying less”

Redfearn said that while the city has done a good job of reducing crime — in part due to better staffing and technology —  issues with homelessness, mental illness and drug addiction are more difficult to solve.

Public perception might not reflect improvements in crime statistics, Redfearn said.

“We deal with crime, and then we deal with the perception of crime,” he said. “And those are not always aligned. And I know that I can sit up here and spout data all day long, but if you’re a business owner, community member that continually sees disorder and is frustrated with crime, the data is not important to you, and we understand that. And so part of what we’re also working on is just having a better response, better presence in the community, to make people just feel safer here.”

Economists ‘certainly uncertain’

Brian Lewandowski, executive director of the Business Research Division at CU’s Leeds School of Business, interviewed Rich Wobbekind, senior economist at the Business Research Division in a session titled, “The Economists: Economic Straight Talk.”

Wobbekind said that while forecasted gross domestic product growth of almost 4% in the third quarter is strong, GDP has not yet reflected the impact of the current federal government shutdown.

Although very few jobs are being created — 22,000 in August, the most-recent data available — unemployment remains low nationwide, Wobbekind noted. Immigration policies — affecting both legal and illegal immigration — could be one factor keeping unemployment low.

“It’s one of those things that certainly makes a constraining factor,” Wobbekind said, “and it helps to explain why you have an unemployment rate nationally of 4.3%.”

The question, Wobbekind said, is whether that’s sustainable in the long run, noting that immigrants have filled jobs in labor-intensive industries such as health care, services and technology.

“I don’t know that we have the right population workforce structure to handle some of the growth and jobs that are going to happen over time,” he said.

Lewandowski said budget cuts and layoffs at federal laboratories could have a long-term impact on the Boulder economy.

“I think our long term worry … is the impact on innovation. Boulder has had a very strong innovation economy that we’ve documented. It has a strong entrepreneurial economy, strong startup community. It’s attracted venture funds from around the world, and we worry a little bit or a lot about the long-term impact, or the long term disruption on R&D, basic research and ultimately, innovation,” he said.

Wobbekind noted that consumer confidence has been “fairly dismal,” but consumer spending and the stock market remain strong. Investors might feel more certain in the direction of the economy, which can spur business investment, he said.

“So you’re ‘certainly uncertain,’ is what you’re saying, Lewandowski said.

“We’re getting more certain than we were, but we’re still uncertain,” Wobbekind responded.

Impact of Sundance

Leaders of the Sundance Institute discussed the relocation of the Sundance Film Festival to Boulder in 2027, outlining the economic, cultural and community impacts of the move.

The panel, moderated by Tayer, included Amanda Kelso, acting CEO of the Sundance Institute; Jeff Levine, head of audience development and experience for the Sundance Film Festival; Paula DuPre Pesmen, managing director for the Sundance Film Festival Relocation; and Ebs Burnough, board chair of the Sundance Institute.

Burnough described the organization as “an amazing ecosystem” founded by Robert Redford to support independent filmmakers through labs, programs and the festival itself — “our most glamorous forward-facing marketing tool.” He said Sundance’s heart lies in its development labs for directors, writers and producers.

Dupre Pesmen, a Boulder-based filmmaker, said bringing Sundance to Boulder is “not literally moving buildings” but “bringing the mission here — to connect audiences to stories and independent film.” She said the move will enhance Colorado’s arts culture and attract visitors to the state.

Kelso said the decision to move Sundance to Boulder followed a “robust process” that considered venues, lodging, financing and community culture. Boulder’s natural setting and creative energy reflect Redford’s belief that “art needs to be connected to nature,” she said. The enthusiasm from the Boulder community, she added, has been “a tsunami of love.”

Levine said Sundance is eager to collaborate with local businesses ahead of its 2027 Boulder debut. “We don’t want to descend from the skies in January (2027),” he said, encouraging partnerships in hospitality, retail and transportation to welcome “tens of thousands of visitors.”

Sundance’s economic impact will be substantial, with Kelso noting that the festival generates an average of $122 million in out-of-state visitor spending, $80 million in wages, and $16 million to $18 million in state and local taxes annually.

Burnough stressed that the Boulder version of Sundance will not follow a fixed blueprint but will evolve collaboratively. “We’re coming to you with an open model,” he said. “This is a partnership and a collaboration.”

He said Boulder stood out for its “openness, inclusivity and spirit of generosity,” calling the move “an exciting risk” and a “leap we’re taking together” that could define the next 40 to 50 years of Sundance’s evolution.

Industry voices

Leaders from several key industries provided brief updates about their sectors, in a session titled, “Industry Sector Review: Diverse Industries — Diverse Circumstances.”

• Aerospace: Calvin Pennamon, Director, Operational Exploitation Systems, Northrop Grumman, Northrop Grumman, on the company’s role in the region’s aerospace sector. “We’re embedded into the local region to where we are a part of the roots of Colorado. We have over 2,500 employees within the Colorado area, 500 here in Boulder itself, across five buildings. We are so invested in Colorado that we are here for one thing, and one thing only, that is to grow and to expand.”
• Commercial Real Estate: Erik Abrahamson, senior vice president, CBRE, on the struggling office market “The consensus is, things are getting better. I’m really happy to say that it really does feel like things are getting better. We feel busier. It’s all happened in the recent weeks. We’re cautiously optimistic, but I think we’re starting to improve. I’m going to call it, I think we hit bottom.”

Abrahamson said it’s a good time for tenants to sign long-term leases, as some landlords are offering concessions, such as free rent and lower lease rates. Brokers are reporting increased tour activity — especially with professional services, attorneys, financial services, aerospace and defense — but some deals likely won’t close until 2026.

• Biotechnology: Julie Stiff, senior vice president and site head, KBI Biopharma Inc., on challenges faced by the U.S. biotech sector, including pricing pressures from federal government programs, as well as from governmental changes, layoffs and the federal government shutdown, with no new drug applications being accepted during the shutdown:

That creates an “unpredictable business environment,” she said. “It creates hesitancy with capital investment. It delays decision-making, and it makes future demand very hard to predict, which is particularly a problem with a CDMO (Contract Development and Manufacturing Organization) like mine, not knowing what we need to build capacity for or create openings for our schedule from one year to the next.”

• Agriculture: Mackenzie Sehlke, executive director, Boulder County Farmers Market: Sehlke, on Boulder’s robust farming and natural-foods scene: “Our local food system is strong. It is powerful, and it employs a tremendous number of folks in the Front Range and across Colorado. So that’s the good news about the state of agriculture. We’re an agricultural community. We’ve grown up around food, and we eat really well in this community.”

But, she added, “Between 2017 and 2022 Colorado lost 142,000 acres of local farmland, and Boulder County lost one in every 10 of our farm community here.” Higher costs for labor, housing, transportation inputs and land “push our small farmers out of this community, which means that local food is not only less accessible,” she added. “It’s more expensive for you all.”

• Restaurant Industry: Adam Reed, senior director of people development at Big Red F Restaurant Group, on challenges in the restaurant industry: “Times are tight right now. They’ve always been tight, and they’re even tighter than they have ever been. The barrier to entry to open a restaurant right now is somewhere in the neighborhood of probably $1.2 to $1.4 million if you’re trying to open a brand new spot. We opened Jax Fish House and Zolo Grill in 1994 for about $125,000 each. And so the ability to roll into a new space that isn’t a recycled space isn’t real. … Many of the restaurants that have turned over, becoming second-, third-generation restaurants, that’s the way it’s capable of being done because every other piece of the restaurant is really difficult to fund: property tax and triple nets, tariff impacts on wine and other imports, price of beef is at an all time high for a variety of factors, and then we’ve also seen unprecedented wage increases in the last six years.”
• Newcomer: Shawn Martini, domestic government affairs manager, Rainmaker Technology Corp., on why the company cloud-seeding company, based in El Segundo, California, recently opened an office in Boulder: “We want to locate in Boulder for one word, and that is talent. There is a significant number of folks who come out of the national labs, NOAA and NCAR and are really good, experienced professionals in environmental sciences, climatology, meteorology, and the kinds of things that we need to do and work on on a daily basis in order to help improve our operations and build our models and ultimately make more water. We’re sitting here at the University of Colorado. Of course, that is a really fantastic generation point for some additional new talent coming out of the university. We want to pick up those people and be able to put them to work solving some of our most difficult problems in terms of our company.”

Tayer summarized Boulder’s current economic situation by heralding its long history of entrepreneurship and bouncing back from adversity.

“We’ve been through difficult and confusing times before and not knowing what’s next, but it’s amidst the confusion, that period of instability, where Boulder shines,” he said. “We work with what we know, and we forge a path forward, and we evolve along the way to build an even stronger, more resilient economy and community.”