The Colorado Springs industrial market has trended positively over the past 10 years. Though it is a very gradual trend, we are now at a point where we anticipate the market to slow or level off. The market will not see a lot of change throughout 2020, though we expect the market to stay positive due to the lack of new construction, high costs, possible hesitancy related to elections and lack of available quality industrial product. The overall vacancy rate for the Colorado Springs industrial market started the year below 7 percent. That rate has dipped lower each quarter, nearing 5 percent at the end of 2019. We foresee room for the rate to continue dropping through 2020, but believe we may see a slight rise in the vacancy rate due to some new construction and existing occupants becoming more efficient with their spaces. This industrial market has not seen the amount of new construction needed over the past two years to keep pace with the high demand the market has experienced. This will impact growth and trends throughout 2020. There was roughly 72,000 square feet of new industrial product under construction during 2019. When it comes to new construction …
BROOMFIELD, COLO. — The Denver office of United Properties and Brue Baukol Capital Partners have completed the disposition of Interpark Industrial Center, a two-building industrial property located at 11325 Main St. and 11380 Reed Way in Broomfield. San Francisco-based Stockbridge Real Estate purchased the asset for $47.8 million. Completed in 2018 and situated on 16.1 acres, the property offers a total of 239,816 square feet of industrial space. The asset features ESFR sprinklers, 24-foot clear heights, modern column spacing, dock-high and drive-in loading, and ample parking. Additionally, Interpark Industrial Center includes a 220-foot shared truck court and 60-foot concrete loading pads. The property is currently 89.7 percent leased to three tenants: Swisslog Healthcare, MKS Instruments and GC Imports. Tyler Carner, Jeremy Ballenger, Jim Bolt, Jessica Osternick and Frank Kelley of CBRE’s Denver offices, along with Jeremy Kroner of CBRE’s Boulder office, represented the seller in the transaction.
The past 10 years has brought population growth to Colorado, which many associate with Amendment 64, or the legalization of marijuana, along with an overall flat interest rate. The new issue is whether Colorado can sustain this growth, despite the heavy focus on affordability. So far, however, the state has experienced continued growth in population, income and multifamily sales volume, according to CoStar. Tapestry Segmentation also reports a median household income in the Greater Denver area of $76,094, which is 28 percent higher than the national figure reported by the U.S. Census. The Denver multifamily market is enticing to tenants as many view the option to lease as an easier path than purchasing a home. This, in turn, has enticed investors and developers to build due to demand. Investors also see opportunity in converting apartments to condos when the market shifts. At the same time, there are concerns that the Federal Reserve’s Interest on Excess Reserves (IOER) policy could present uncertainty to the overarching environment. The intention of the IOER policy is to allow banks to have a lower reserve, which is intended to remove the volatility of interest rates. However, many experts are questioning if …
DENVER — A joint venture between Shorenstein Properties and Nichols Partnership has unveiled plans for One Platte, a five-story office and retail development located at 1701 Platte St. in downtown Denver. Situated on 1.5 acres in the Central Platte Valley neighborhood, One Platte will feature a 250,000-square-foot building offering 240,000 square feet of office space and 10,000 square feet of ground-floor retail space. The Beck Group is providing design-build services for the development. The building will feature floor-to-ceiling windows with views of the Rocky Mountains and Denver skyline. Amenities include a lounge, rooftop terrace, event spaces, fitness center, bicycle lockers and a secure underground parking facility. Construction started Feb. 11 on the project, with completion slated for early 2022.
DENVER — 9th Avenue (Denver) Land, a joint venture between Continuum Partners and CIM Group, has opened Milo, a market-rate multifamily building at 9+CO, a mixed-use property in Denver. Designed by Shears Adkins Rockmore Architects, Milo features 319 micro, studio, one-, two- and three-bedroom apartments across two buildings. The units range from 370-square-foot micro units with built-in wardrobes and murphy beds to 1,590-square-foot three-bedroom flats. Ground-floor units include walk-up private entrances and two-story townhomes. Additional unit finishes include stainless steel appliances, walk-in closets, in-unit washers/dryers and balconies in select units. Community amenities include co-working office space; roof deck with grills, fire pits and seating; a hot tub; heated lap pool; resident lounge with entertaining kitchen; shuffleboard table; 24-hour fitness center; secured parking garage; bicycle and ski repair center; pet and bicycle wash; and storage units on every floor. Milo is the second market-rate residential building at 9+CO, joining the 275-unit Theo development that opened in May 2018. The 26-acre urban infill project is located at the site of the former University of Colorado Health Sciences Center in Denver. The project will ultimately comprise approximately 2 million square feet of mixed-use space. Currently signed retailers include Fluff Salon, Sweet Combforts, Elevation …
DENVER — H.I.G. Realty Partners, an affiliate of H.I.G. Capital, has funded a $33.1 million loan for the acquisition of an industrial/flex office portfolio located in Denver. The borrower is CW Capital Partners. The three-building portfolio features 264,000 square feet of industrial and flex office space. At the time of acquisition, the portfolio was 80 percent occupied by a diverse group of tenants. The floating-rate, five-year loan allows for future advances for the lease-up of the portfolio over time.
The Denver office market remains strong. Vacancy continued to compress in 2019 as rental rates and sale prices forged ahead to the highest levels in history, allowing landlords and sellers to remain in control of the market. Class A office transactions accounted for $1.7 billion in office sales in Denver Metro over the past year, versus $1.2 billion of Class B office sales, with average market cap rates of 6.6 percent and 7 percent, respectively. Interestingly enough, vacancy rates are higher in Class A product at 11.7 percent versus 10.1 percent in Class B. Sale prices and rental rates continued to grow in both classes. However, there was a significant difference in rental rate and sale price numbers as Class B lagged by about 20 percent to 25 percent in both categories. With a potential downturn looming, it begs the question, is Class A or Class B office a better long-term value? Considering rental rates and income are a direct derivative of what investors will pay for office buildings, investors must ask themselves whether rental rates are sustainable. It is apparent that the “chase” for the cool, hip, new Class A office is real, but the question is whether Class …
DENVER — Woodspear Properties (Ascendant Capital Partners DNA) has purchased an industrial property located at 9950 E. 40th Ave. in Denver. H-B Tempe LLC , a Minneapolis-based private investor, sold the asset for $21.1 million, or $196.69 per square foot. Built in 2014 with concrete tilt-up construction, the 107,303-square-foot, institutional-grade facility features 7,037 square feet of office space, three dock doors and 16 drive-in doors. Situated on seven acres, the asset is located 15 miles from the Denver International Airport and 10 miles from downtown Denver. Federal Express fully occupies the property and utilizes it as a mission-critical facility. Mike Wafer, Tim D’Angelo, Tim Prinsen and Jerry Hopkins of Newmark Knight Frank (NKF) represented the seller the in transaction. The NKF team also provided transactional assistance to the buyer.
Strong gains in population and travel spending highlight Colorado as an increasingly popular place to work and visit, boosting demand for hotel rooms in the state. Leisure travel spending has climbed by 28.9 percent over the past five years, surpassing $22 billion in 2018. More than half of those funds were spent on commercial lodging. Business travel is also bolstered by companies either entering or expanding in the state. These demand factors translate to hotel occupancy and revenue metrics that have consistently exceeded the national average since 2014. Colorado’s November annual average occupancy rate rose 90 basis points year over year to 68.1 percent, compared with the national metric that held flat at about 66.2 percent. Colorado’s annual average RevPAR grew 3.8 percent over that same span, more than triple the U.S. pace, to $98.48. Robust gains in both occupancy and RevPAR demonstrate how demand for Colorado hotel rooms has outpaced numerous supply additions. The state’s inventory of hotel rooms has expanded by about 13 percent over the past five years, with 4,226 hotel rooms under construction. More than half of the keys underway will be delivered in Denver and Colorado Springs. Notable new projects in the Denver metro include …
DENVER — Shorenstein Properties has completed the disposition of Denver City Center, a two-tower office asset located in downtown Denver. Brookfield Properties acquired the asset for $400 million, according to the Colorado Real Estate Journal. Denver City Center consists of a 42-story building located at 707 17th St., which includes the 20-floor Hilton Denver City Center hotel (not included in the sale) and 22 floors of office space, and Johns Manville Plaza, a 29-story office building located at 717 17th St. The buildings combined total 1.3 million square feet. Tim Richey, Mike Winn, Jenny Knowlton, Charley Will and Chad Flynn of CBRE represented the seller in the deal. Shorenstein Properties originally purchased Denver City Center with funds from its Tenth Fund for $286 million in 2013.