Tuesday, July 08, 2008

The ConocoPhillips Impact

by Osman Parvez
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A few weeks ago, on the east side of town, the curious and the entrepreneurial gathered to hear the latest on ConocoPhillips. Excitement was palpable in the crowd. Just how big of an impact were we talking about?

Before the property was purchased, rumors swirled through our community. Who was mystery buyer? Whispers were that it was Google. The possibilities were tantalizing. Finally, the buyer was revealed: ConocoPhillips, the 5th largest company on the Fortune 500, had acquired the former StorageTek campus.

An energy company? A few were left scratching their heads. What do you mean it's not Google?

Well, it may have taken our community a little time to get our heads around it, but now we're starting to get the picture. For those of us at this meeting, it was crystal clear. The potential turns out to be enormous, much bigger than if Google or Microsoft were coming to town.

When it's said and done, the company expects $400 to $500 million in salaries to be spread across up to 7,000 employees. They believe our region is set to become the alternative energy capital of the United States and they want to be part of that picture. When fully hired, which will take a number of years, the company could become the state's 4th largest employer.

According to Mary Manning, company spokesperson, ConocoPhillips has 10,000 U.S. based employees today. They want to make the new facility a destination point for the company. A place that puts the research thinkers in closer proximity to leadership training.

The campus will have two business function. It will serve as a research and leadership development center. The company also expects the facility to help make it a serious player in the changing energy picture, part of a new U.S. energy policy.

Things are only just beginning to get underway, and keep in mind that this is the start of a long process. ConocoPhillips will master plan the new campus and it will take time to deconstruct the existing structures in an environmentally friendly manner. They are aiming to be open by 2011 (but likely mid 2012). At this time, they are trying to learn from best in class, expecting to use leading edge green standards in the process. The site will have overnight accommodations, a full fitness center, food services, and much much more.

The company considered building more space in Houston, but after careful consideration chose to be here in Colorado. According to a representative at the meeting, the quality of our community was a major factor in the decision. Our region also has the greatest concentration of human capital for alternative energy in the nation. Many other alternative energy companies are looking at stuff here, and not just in Boulder County. We've reached the tipping point.

ConocoPhillips coming to Boulder County is analogous to IBM choosing Boulder back in the day. Just consider the long term economic impacts of that for a moment. I feel a bit like a sports announcer at the big game when I write this, but mark my words, ConocoPhilips coming to town is going to be huge.

From a real estate perspective, any residential area within bike commuting distance of the campus has received an economic stimulus, courtesy of ConocoPhillips. The new jobs are likely well paying, so the primary impact will probably be to the middle of the market. Louisville, in particular, will benefit but so will the housing markets in Boulder, Broomfield, Lafayette, and Longmont.

p.s. For those of you still hung on on Google.. they are already here. They acquired Sketchup a few years ago and already have a small office downtown.

image: johnnyalive


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3 comments:

  1. Glad you finally wrote about this....it is huge.

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  2. Not so sure about the benefits being felt by Longmont,maybe a little-Erie maybe, Superior for sure. At any rate-just how long do you think it will take to start seeing positive things? 2013? 2015? Those of us with houses in the immediate area-Do we hold out for 5 years? 10 years?

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  3. Nobody has a crystal ball for this type of stuff, and the impacts could be 5+ years before it starts to become obvious (of course, waiting until it's obvious is too late).

    If you already own, my suggestion would be to not sell. However, you should consider how you have your ownership structured from a tax perspective. If you're thinking about moving and can keep the property, maybe its time to look into moving it into an LLC at the current basis. Be sure to consult with your tax adviser on how to treat it as an investment property and get the most benefit from depreciation, etc.

    ReplyDelete