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Growth in Colorado aerospace industry spurs need for more real estate on the ground

The growth of Colorado companies operating in space is driving an increasing need for space on the ground to support operations that take place hundreds of miles above Earth.

Colorado is second only to California in the size of its aerospace industry and real estate agents are working with companies looking for new buildings to make room as they continue to expand.

“There’s a lot going on in aviation and it’s not going to stop,” said Matt Harbert, vice president at Raise Commercial Real Estate.

About 23% of Herbert’s current work involves the aerospace industry, according to an analysis by Raise. Colorado has been home to some of the larger, well-known aerospace companies for a while, but Harbert said “the startup ecosystem” is driving the industry’s expansion in the state.

“We’re seeing an incredible amount of start-ups that we didn’t see five, seven years ago. They either start here or move from California,” Herbert said.

At least three aerospace companies have recently moved into new spaces of 100,000 square feet and larger, Harbert said.

A report by the Metro Denver Economic Development Corporation and the Colorado Space Coalition said there are 290 aerospace companies in Colorado and more than 500 companies that provide space-related products and services. The analysis said employment in the sector grew 11.2% from 2019 to 2020 in the nine-county Denver area and northern Colorado and grew 30.1% from 2015 to 2020.

Colorado has the nation’s highest concentration of private aviation employees, according to the report. In 2020, 33,460 people were directly employed by the aviation industry. The Metro Denver EDC analysis said 62,270 private and military workers in aviation support an additional 170,340 workers in industries throughout the state, bringing direct and indirect employment to 232,610 workers.

The industry’s “hyper growth” over the past few years began around the start of the coronavirus pandemic, said Frederic de Loizaga, first vice president of commercial real estate services and investment firm CBRE in Denver.

“Aerospace has been one of the bright spots in the entire Denver metro area and all the way to Colorado Springs,” de Loizaga said. “Looking at it from a real estate perspective, it’s great to have the industry here. We as a state are very fortunate to have the concentration of aerospace companies that we do.”

Colorado’s aerospace sector is anchored by several large companies, such as Ball Aerospace. Lockheed Martin Space, Northrop Grumman, Raytheon, Sierra Space and United Launch Alliance.

“When you have all these big players, you also attract the smaller aviation users who want to be close to the bigger players,” says de Loizaga, who specializes in working with the industry.

Herbert said Colorado benefits from a strong private and defense aviation presence. “These companies want to be around each other for the collaborative piece. They want to be around the startups and the bigger names that we have.

Colorado’s strong space economy has been a boon for York Space Systems, which started in Denver in 2012. Dirk Wallinger, CEO and president, said the company can take advantage of the “tremendous amount of talent and ability” present in the state.

“We’ve also brought a lot of people to the state because it’s just a great place to be,” Wallinger said.

York Space, which manufactures small satellites for government and private customers, recently moved into a 140,000-square-foot building in the Denver Tech Center. The company has three other facilities in downtown Denver that total about 50,000 square feet. One is a research and development site in the Aeronautical and Engineering Sciences Building at Metropolitan State University of Denver.

Wallinger declined to give specifics, but said York’s workforce has grown 300% year-on-year over the past three years and revenue is up 250% year-over-year. The company’s goal is to be able to produce 750 satellites per year by the end of 2023 or earlier.

The types of buildings that aerospace companies need run the gamut, Herbert said. “What’s unique about aerospace is that they usually require both manufacturing, industrial-type buildings and offices,” he said.

This usually requires a building with high ceilings. One option is to add a mezzanine level for the office space.

De Loizaga said some companies need “clean rooms” or a controlled environment to keep dust and other particles out of a manufacturing area. Safe areas are often required to protect work on defense and national security projects.

The real estate industry is seeing aerospace companies moving into new parts of the Denver area and Colorado.

“Most of the activity was between Colorado Springs and Denver. It was really the corridor for aviation,” said Herbert. “Now, what we’re starting to see is that corridor going further up into Boulder. We’ve seen a lot more activity along the US 36 corridor.”

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