Colorado has gone from red to purple, to now ultra blue. The headline in the Wall Street Journal says it all. Not only did a socialist win for Congress, but the governor’s race also went much farther left than predicted. Will changes in Colorado laws eliminate all remote workers throughout the state? What does the changing electorate mean for businesses, property taxes, and the health of Colorado’s economy?Should the changes in Colorado be a surprise?
Colorado’s hard shift left should not be a surprise
Look at the last presidential election. Colorado was trending almost lockstep with Oregon and Denver actually exceeded Portland Oregon in the shift left. That shift especially along the front range is showing up in elections throughout the state from local leaders to the governor to congress. This shift to the left is not just a blip it is a trend that the Front Range, and especially Denver are becoming much more like Portland, Seattle, NY with the surge to the left.
Perception over reality rules even for businesses
Before getting into the impacts of the recent election on Colorado, it is important to note that perceptions trump reality. Regardless of your political stance, getting a headline in the WSJ about Colorado Socialism is the death knell for many business relocations.
Just the mention of a socialist in Colorado will put the overwhelming majority of businesses on edge. Why would they take the risk of investing resources in Colorado with huge uncertainty regarding how welcome the state is for businesses. Unfortunately, they will not. Businesses will look to states like Utah with comparable quality of life and business certainty for relocations and totally skip over Colorado.
I’m sure some of the readers will say it is just Denver that is surging to the left, at the end of the day the word Colorado and Socialists are grouped and businesses don’t care and don’t want to take the risk to understand the nuances when they can easily select another city without the drama.
What does Colorado’s huge surge to the left mean for the economy
It is not a mystery of what will occur in Colorado over the next four years. We have clear roadmaps in California, New York, and Oregon to follow. In each of these states spending has risen and in turn taxes have risen along with increased regulations. Here are three big changes to prepare for in Colorado
- Higher taxes: I can tell you with 100% certain taxes on everything are going to increase as the tax and spend policies are supercharged with the surge left.
- More restrictive laws on real estate: We have seen this over the last several years, every social woe including affordability are somehow because of real estate owners. Look for eviction laws to get even worse, increased habitability bills, and overall every expense for rental property owners to rise.
- Huge changes to labor laws: The labor law changes will be the biggest impact, the governor has already pledged to be more labor friendly which means union laws will continue to favor workers and it will be much harder to ever fire workers in Colorado. The wild card is will Colorado eliminate the “at will employment” laws and make it next to impossible to fire workers.
What does Colorado’s socialist movement mean for Real Estate?
Unfortunately Denver’s office market just received the curse of death and a huge kick in the gut. I see zero chance of recovery in the Denver core markets (other than submarkets like Cherry Creek that are already performing well). This will have a ripple effect on downtown as it hollows out. Look for a continued flight to the suburbs as well. Overall the Denver metro will substantially underperform other markets as the socialist policies scare businesses away taking jobs with them.
The wild card Colorado law that will make real estate fall hard
The labor unions have already pushed bills to eliminate at will employment and this push will be turbocharged with the new electors:
In response to prior vetoes of labor laws by moderate Democrats, labor unions in Colorado are vowing to push a ballot initiative that, if enacted, would fundamentally reshape employer/employee relations in the state. Ballot Initiative 43 is proposed to be on the ballot in 2026 and is supported by AFL-CIO of Colorado, SEIU Local 105 and United Food & Commercial Workers Local 7.2 If passed, Initiative 43 would eliminate at-will employment in Colorado, making it only the second state in the Union—the other being Montana—to require “just cause” to discharge an employee.
As employers have seen in other “just cause” jurisdictions, like much of Europe, laws like those proposed in Initiative 43 place a high burden on employers doing business in the state and pose a number of questions only the courts will be able to answer. For example, when determining if there was “just cause” to discharge an employee for performance issues, how much notice does an employer need to provide to an employee, and how long should that employee get to cure before they are discharged? Long and short employers are not going to wait around to see how the courts rule they are going to jump ship for greener pastures.
The “just cause” eliminates remote worker in Colorado
The reason I mention “at will” employment is because Colorado is one of the top states in the country for remote workers having almost 38% of all workers remote. It is important to remember that the business owners with remote workers are bound by the state labor laws and can disallow workers to work from certain states. We already see this in Montana that has a just cause policy on firing workers:
Companies often avoid hiring remote workers in Montana due to its unique labor laws and the administrative costs of state tax and insurance compliance. Montana is the only state in the U.S. that is not strictly “at-will”; after a probationary period (often 12 months), employers must demonstrate “good cause” to terminate an employee.
This has led Montana to have the lowest remote work rate in the entire country as companies don’t want the liability and need the flexibility to terminate remote workers.
The hard shift to the left in Colorado will have huge impacts on real estate
Do not underestimate the impact of the hard shift to the left. Regardless of whether you liked Polis or not, he was a moderate Democrat that acted as a gatekeeper for far left policies that would have had huge impacts on Businesses.
Unfortunately, the recent election eliminates moderation in Colorado and pushes the state even further left than California. Businesses will take note and relocate to greener pastures that have less political risk which will have huge impacts on the Denver metro area.
The Denver metro will not be the only one impacted by the changing political structure in Colorado. Recent labor proposals to eliminate at will employment could essentially also eliminate any remote work in Colorado. I’d put the probability at 60% or greater that the legislature eliminates at will employment as labor groups have attempted over the last 5 years or so.
Stay tuned for an upcoming Rocky Mountain ride in Colorado with higher taxes, more regulation, the death knell for the Denver office market, and the possibility of the elimination of remote work in Colorado.
Additional Reading/Resources
- https://www.wsj.com/politics/elections/hickenlooper-wins-colorado-democratic-senate-primary-fighting-off-left-wing-challenge-ea713cbc
- https://coloradohardmoney.com/colorado-snubbed-in-best-places-to-live-report/
- https://coloradohardmoney.com/colorado-doubles-income-tax-rate/
- https://coloradohardmoney.com/13k-jobs-lost-colorado-population-declines-business-leaders-ring-alarm-bells/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. He is the owner of Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Glen resides in Colorado, lends in Colorado, owns property in Colorado, and services loans in Colorado which provides a unique real estate prospective of what is actually happening on the ground both in Denver and throughout Colorado. My goal of this real estate blog is to provide an honest assessment of what I see happening in Colorado real estate and how it will impact real estate owners, buyers, realtors, mortgage professionals, etc…
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