Colorado’s Biotech Rise Comes With Growing Pains As National Headwinds Mount

Colorado’s life sciences sector is trying to regain its footing and hold onto momentum gained at the back end of 2024 — progress threatened by federal policies and international disillusionment with doing business with American companies. 

That’s according to real estate and innovation leaders who spoke at Bisnow’s May 1 Denver-Boulder Life Sciences Summit held at the Four Seasons Denver.

“Two weeks ago, we were ready to receive a $12M check from a Canadian venture firm,” said Afshin Safavi, CEO of Colorado Health & Tech Centers. “They called us and they said the government of Canada has told the investor not to invest in the U.S.” 

Safavi pointed to delayed federal grants, political dysfunction in Washington and Food and Drug Administration gridlock as compounding factors. 

“We are not, as of today, No. 1 in biotech in the world anymore,” he said. “We're No. 2.”

Kelly Brough, CEO of Fitzsimons Innovation Community, echoed the urgency, if in a more measured tone.

Most of the 80-plus companies on her 184-acre campus rely on National Institutes of Health or National Science Foundation dollars to survive, she said. 

“It's a big deal,” Brough said, adding that Fitzsimons works closely with its tenants to land private seed money, launch initial public offerings “and move into long-term opportunities that sustain them.”

But federal funding “is critically important,” Brough emphasized. 

The “good news,” she said, is that the entire country is facing the same obstacles.

“And when the going gets tough, I think the scrappy get going, and I think in Colorado we're a little scrappier than everybody else,” Brough said.

Bisnow recently reported that about 800 NIH research projects have been axed by the Trump administration, while proposed federal budget documents show a 19% decrease in FDA funding.

At the state level, demographic and cost-of-living trends are beginning to undercut Colorado’s long-standing talent advantage. 

“Fifteen years ago, everybody was coming here in droves, and today it’s much tougher,” Brough said, citing projections that Colorado will see more people leaving than arriving by 2038. “Why should you care about this? That is how we build our workforce ... and we are about to transition ... we have to be way more efficient, way higher performing, more people have to work if we're going to grow the economy.”

Emma Martin, chief of staff at ovarian cancer startup AOA Dx, said the state has served her company well by offering affordable lab space, collaborative partners and strong biotech talent. But with venture capital harder to come by, growth must be carefully timed. 

“We are itching to expand and to grow the team and to keep working on our tests, which means potentially more office space. But obviously we have to have the cash to be able to do that. So it's a little bit of ‘We’re going to do our best,’” Martin said.

The current environment means developers and designers are under pressure to do more with less. Companies are increasingly focused on creating environments people want to work in — not just functional labs, according to HOK Project Manager Jessica Ginther.

“We're working 40, 60, 80 hours. People expect daylight. People expect amenities. People are looking for a great coffee station ... So how we curate the other areas to really enhance the collaboration [is critical].”

Adam Diffendal of Swinerton said adaptive reuse has become a lifeline. 

“When people talk about life science right now, it feels like we’ve really become specialists at finding buildings that were never meant to be labs and we turn them into labs,” Diffendal said, adding that his team is able to do that in Colorado at prices 30% lower than similar projects in California.

Despite the challenges, the panelists agreed that Colorado’s biotech fundamentals remain strong.

Venture capital funding surged 28% year-over-year in 2024 to $881M, Bisnow previously reported. Only two years, 2021 and 2022, saw higher investment totals in the region’s life sciences industry, with $1.5B and $1.3B, respectively.

But vacancy rates remained stubbornly high at around 11%, according to CBRE data.