AI is the hottest term on Wall street with stocks tanking or zooming based on their AI longevity. Can the same be said about real estate? Are some real estate markets better positioned for AI than others? How exposed are Boulder and Denver to the coming AI revolution and what does this mean for real estate prices? Will one of these markets greatly outperform the other? Why?
Why will AI impact Denver and Boulder more than other cities?
The more a city’s economy is oriented around white-collar knowledge work, the more exposed it is to AI. Boulder and Denver clearly fit this definition with a huge number of white collar “knowledge jobs”. Over the last 20 years the highly paid knowledge jobs have propelled Denver and Boulder into the “superstar” city classification. But, the tides are now changing.
How will AI impact Boulder and Denver real estate values and workforces
AI will also test our theories of what superstar cities really do economically. Are they just collections of individuals with skills that happen to be highly compensated? Or are these cities special engines of innovation and flexibility? If it’s the former, the labor markets in San Francisco and San Jose could be in trouble. If it’s the latter, they could be the cities that not only invent modern AI but figure out how to use it.
Even though AI will impact both the Denver and Boulder areas, the impacts will not be uniform.
Denver: Denver is much more reliant on white collar workers that are performing jobs in finance, insurance, banking, etc… These are the prime targets in the AI revolution we are watching unfold. We are already seeing this play out with in the office sector with vacancy rates and rental rates.
- Higher Vacancy: Downtown Denver has a significantly higher vacancy rate (over 38%) than downtown Boulder (around 29%).
- Market Context: Boulder’s market is often considered more of a “bubble” compared to the larger, more volatile Denver downtown market.
- Rent Stability: Despite high vacancy, downtown Boulder has seen rents remain stable ($25–$30/sq ft) for the past three years.
Boulder: Although Boulder has a high percentage of knowledge workers, these workers are many times the creators of the knowledge as opposed to the users like a bank employee. This should help Boulder outperform Denver even during the AI revolution we are now seeing.
What does the AI revolution mean for property values in Denver versus Boulder
Boulder will substantially outperform Denver in regards to real estate appreciation over the long term. We are already seeing this play out in the office market with rents in Boulder staying the same for the past 3 years while rents in Denver are in a free fall. Furthermore, Boulder is more of a suburban type of market with a high desirability of employers from google to Microsoft to countless others. This will continue even with the AI apocalypse for white collar jobs as employees in Boulder are typically more the creators of the information as opposed to the users of the information.
On the flip side, Denver will have some heartburn from the AI revolution with many big companies from insurance, banking, etc… downsizing substantially due to the efficiency gained from AI.
Summary: AI impact on Boulder and Denver real estate prices
Although Boulder will fare considerably better with the AI transition, I don’t think either city will have an AI apocalypse. There will still be a need for some human interactions and many of the tools will increase efficiency of worker which will lead to smaller workforces not elimination of all employees. With that said, there is going to be a transition period, especially in Denver, that will be painful with larger job losses in the short term so it would be wise to be careful in your real estate investments. My recommendation would be to buy for the long term 5-10 years to ensure you can ride through the shorter term market gyrations due to the AI revolution that will impact major cities throughout Colorado.
Additional Reading/Resources
https://coloradohardmoney.com/colorado-joins-tax-increase-line/
https://coloradohardmoney.com/colorado-snubbed-in-best-places-to-live-report/
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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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