Page 2AA —
COLORADO REAL ESTATE JOURNAL
— November 5-November 18, 2014
Office
by Jill Jamieson-Nichols
A southeast suburban midrise
office building with a history of
strong occupancy sold to a group
making its first acquisition in Col-
orado.
Elion Partners, an Aventura,
Fla.-based real estate investment
firm, paid $8.75 million, or $98.12
per square foot, for Plaza Colo-
rado, according to public records.
The 89,179-square-foot building
is located at 5889 S. Greenwood
Plaza Blvd. in Greenwood Village.
“We were attracted to the asset
because of the strong tenant
base and upside potential,” Juan
DeAngulo, Elion Partners man-
aging principal, said in a state-
ment. “Plaza Colorado fits with
our strategy to acquire stabilized
assets with significant cash flow
while providing an opportunity
for value enhancement.”
The building was 85 percent
leased at the time of the sale, but
has averaged 90 percent occu-
pancy over the past eight years,
according to Transwestern Man-
aging Director Brad Cohen.
“Plaza Colorado has consistently
outperformed
comparable
buildings in
the
Green-
wood Village
and southeast
Denver office
m a r k e t s , ”
he said. “Its
exceptional
performance
in the south-
east Denver office market and its
prime location within the office
park made Plaza Colorado an
attractive asset for investors.”
Plaza Colorado was built in
1974. It occupies a 7.7-acre site
with on-site parking and easy
access to Interstate 25 via Orchard
Road.
“The views are absolutely tre-
mendous on this property,” said
Cohen. A rooftop patio drives a
lot of tenants to the building, and
while Plaza Colorado is not on
light rail, it is within a short walk
of the Orchard light-rail station,
Cohen said.
Significant
improvements,
including lobby upgrades with
Class A finishes, elevator modern-
ization and on-site amenities such
as a community room and fitness
center, are planned. The property
will be rebranded and reintro-
duced to the market next spring.
The transaction was Elion’s sev-
enth acquisition through its third
fund, which earlier this year closed
on investments in major markets
including Washington, D.C., and
Boston.
Cohen, Transwestern Managing
Director Larry Thiel and Andrew
Piepgras, Transwestern senior vice
president, facilitated the transac-
tion for the seller, Plaza Colorado
LLC. Elion Partners retained Tran-
swestern to provide leasing and
management services.
Other News
n
A California company that
markets and distributes agricul-
tural products will open a Denver
office at Cherry Creek Place IV.
San Francisco-based
Wilbur-Ellis
Corp.
leased 15,866 square feet of
office space on the fifth floor of the
building at 3300 S. Parker Road,
Suite 500, for its regional head-
quarters. It signed a seven-year
lease and will move into the space
Jan. 1.
Darrin Revious
of
NAI Shames
Makovsky
represented the ten-
ant.
Jeremy Reeves
of
Inverness
Properties
represented the land-
lord, the
Patricia Arnell Revoca-
ble Trust.
An unidentified government
entity signed a long-term lease
for 12,658 on the sixth floor of
the building, according to Reeves,
bringing overall occupancy to
approximately 90 percent.
s
Plaza Colorado has averaged 90 percent occupancy over the past eight
years, according to Brad Cohen of Transwestern.
Brad Cohen
her to Koelbel.
“Marshall was working with
Buz on kind of an informal
basis,” Lawrence said.
“Marshall previously had
been with Opus, which of
course had a long, long rela-
tionship with Buz and the
Koelbel family,” she said.
Lawrence said she and Koel-
bel hit it off right away.
“We share the same type of
cultural values,” Lawrence
said.
“Granite and Confluent and
Buz all want to do what is best
for the community.
“Life is too short to work
with people you don’t like and
respect and share the same val-
ues with,” she said.
Granite will buy 10 acres of
the 16-acre site, with Koelbel
retaining six acres. Koelbel also
will be a consultant on the Vil-
lage Center DTC.
Village Center DTC will be a
spec building, that is, the part-
ners will move forward on it
without any preleasing.
“We think the market is
strong enough to warrant a
spec building and this is a great
location, truly at Main and
Main,” Lawrence said.
The tower will be financed
internally.
“We don’t need to go outside
for debt or equity; it will all be
financed internally,” Lawrence
said.
“I think that is an impor-
tant point that we don’t need
financing; it separates us from
our competitors.”
Asked what size of a tenant
the Class A tower could accom-
modate, she quipped: “From
zero to 300,000 square feet.”
However, it is possible that a
single user will want the entire
building, she said, noting that
some companies have elected
to do build-to-suits along the
tight, southeast corridor.
“My gut tells me we are
going to attract the bigger ten-
ants, seeking 25,000 square feet
to 100,000 square feet,” Law-
rence said.
“According to CoStar, there
are a large number of tenants
along the southeast corridor
that signed leases five to seven
years ago whose leases will be
coming up,” the same time the
building opens, she said.
In addition, there may be a
number of large tenants mov-
ing into the area to take advan-
tage of Denver’s strong econ-
omy and workforce, she said.
Robert Whittelsey and Katy
Sheehy of Colliers Internation-
al will lease the building.
Blake Mourer and Brad
van Arsdale of Open Studio
Architecture are designing the
LEED-certified building, and
GE Johnson will be the proj-
ect’s general contractor.
“I think with our leasing
brokers, architect and GC, we
have really put together a great
team,” Lawrence said.
Construction is targeted to
break ground in March.
The tower is within walking
distance of the Village Center
light-rail stop and that is near a
number of existing restaurants,
retailers and other office build-
ings that are part of the Village
Center.
“This is definitely a transit-
oriented development,” Law-
rence said.
Given that there is so much
retail and so many restaurants
nearby, the tower likely will
have only minimal retail to ser-
vice the tenants, she said.
“One of the things we really
like about the location is that
everything is right there,” Law-
rence said.
Village Center will have a
one-turn access to Interstate
25 from Orchard or Arapahoe
roads.
The property also will be
adjacent to the full-service,
203-room Westin Greenwood
Village, also slated to break
ground in the first quarter of
2015.
Burton and Tanner combined
have developed more than 8
million sf of commercial real
estate, including 20 ground-up
developments in the southeast
submarket.
“Aligning Koelbel’s unique
infill, light-rail-oriented site
with Granite’s significant
financial strength and commit-
ment to the southeast market is
truly an exciting combination
for new development in Den-
ver,” Burton said.
Confluent, Granite and Koel-
bel & Co. are all privately held
companies.
Granite has developed more
than 8.9 million sf of commer-
cial real estate with a primary
emphasis on office properties.
Village Center DTC will add
to Granite’s existing portfolio
in southeast suburban Denver,
including Plaza Tower One,
also within the Village Center
area.
s
product coming on line,” said
Link.
Pressed by moderator Stepha-
nie Lawrence, managing director
of Granite Properties, as to when
the “spit hits the fan” again, Wulf
brought the house down with his
answer of “Jan. 16, 2020.” On a
serious note, he said he thinks
the market is more likely to be
derailed by something outside vs.
inside the real estate market, i.e., a
geopolitical event.
BobWhittelsey, principal of Col-
liers International, believes the
market may begin to shift around
2017 given the rising cost of living
and increasing construction costs.
“Those inflationary aspects are in
my mind what’s going to trigger
the halt.”
“Construction costs are high – as
high as we’ve ever seen them,”
said JayDespard, managing direc-
tor of Hines. When Hines built
its Eos at Interlocken office build-
ing in 2010, hard costs were $75
per sf. To build the same building
today would cost $105 per sf, he
said. That “still feels OK,” he said,
because, “The good news is rents
have tricked up with costs.”
Construction costs are ticking
up 0.75 percent to 1 percent a
month, and unlike in previous
cycles, there is a “tremendous
battle for labor” because so many
skilled workers left construction
for lucrative oilfield jobs dur-
ing the recession, noted Aaron
Townsend, preconstruction man-
ager for Swinerton Builders.
Conference speakers said one
of the reasons Denver could use
more office space – both down-
town and in the suburbs – is that
tenants are increasingly seeking
more efficient floor plates, natural
light, collaborativeworkspace and
indoor-outdoor work areas.
With the rise of the millennial,
“The work environment is not
about coming towork, here’s your
desk, be happy you’ve got a job
anymore,” said Shawn Murphy,
director of real estate for Com-
cast Cable’s West Division. Work-
benches, low walls, sit-stand sta-
tions, beanbags and even fur on
the walls were incorporated into
a 125,000-sf Comcast call center in
Minneapolis. “We’re allowed to
experiment right now and have
fun with it,” he said.
Tech tenants are expanding out
of the Boulder market, where
downtown office buildings are
commanding rental rates of $50
per sf full service gross, but they
are not necessarily leapfrogging
over the U.S. Highway 36 cor-
ridor to get to Lower Downtown,
according toChris Phenicie, CBRE
senior vice president. Although
absorption isn’t what it was in
the go-go days of the 1990s, there
has been 550,000 sf of deals in
the northwest corridor this year,
300,000 sf of which were net
absorption, andmore than 200,000
sf of that was Class A space, he
said.
And while it is true that there
are more technology tenants in
downtown Denver than there
used to be, not all are landing
in LoDo. Whittelsey said he cur-
rently is working with a tenant
that was focused on LoDo and
now is looking at 1801 California
Street because it can get high-end
space there with views. “They’re
actually leaning toward a different
solution than everyone is talking
about,” he said.
Chris Frampton, managing
partner of EastWest Partners, con-
curred with others that tenants
increasingly are seeking flexibility
in the length and amount of space
they occupy under a lease.
He added that, “The fascinat-
ing thing to
me has been
Brighton Bou-
levard over
the last year
and a half, and
the amount of
space that’s
been leasedup
there” – some
300,000 sf.
When an
audience member asked where
developers would build in 2020
if given a site in the Denver area,
Marshall Burton, managing part-
ner of Confluent Development,
said he thinks there is opportunity
in repurposing functionally obso-
lescent buildings in urban areas.
Frampton said he’d choose
Arapahoe Square because he
believes land still will be afford-
able and because of the city of
Denver’s support for redevelop-
ment in that area.
s
Chris Frampton
