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February 18-March 3, 2015 — COLORADO REAL ESTATE JOURNAL — Page 17AA
on the market at the Colora-
do Real Estate Journal’s 2015
Industrial & Data Center Sum-
mit and Expo at the Inverness
Hotel & Conference Center
Feb. 3. News was positive from
Northern Colorado to Colora-
do Springs, which is attracting
Denver buyers chasing higher
cap rates, according to Randy
Churchill Dowis of NAI High-
land LLC.
The north Interstate 25/
northwest corridor between
Denver and Boulder – typically
a small-tenant market – saw
seven transactions greater than
50,000 sf and two over 100,000
sf last year. “That seems to be
an ongoing trend that landlords
are very, very excited about
that we haven’t seen before,”
said CBRE Vice President Jer-
emy Kroner.
Boulder ’s inventory of
industrial space is shrinking
as properties are converted to
multifamily or office use, and
within 15 minutes of Boulder,
along I-25 north, “I think you’re
going to see some spec devel-
opment,” said Kroner.
Etkin Johnson Real Estate
Partners is set to announce
180,000 sf of new office/flex
construction in two buildings in
Broomfield and is finishing up
about 200,000 sf of spec indus-
trial/flex space at the Colorado
Tech Center in Louisville that it
expects to be 100 percent leased
this month. It’s also starting on
another 60,000 sf in CTC and
will break ground in September
on an additional 130,000 sf, said
Ryan Good, Etkin Johnson vice
president and partner.
For the first time in a decade,
spec construction also will
occur in the heart of Denver,
with Trammell Crow Co. plan-
ning to break ground in June
on the first
phase of its
1 million-sf
Cros s roads
C omm e r c e
Park near
51st Avenue
and Wash-
ington Street.
“What is
e x c i t i n g
about this
project it that there really is
something for everyone,” said
Sperling, who noted there will
be a range of industrial product
types and sizes.
Along I-70 to the east, United
Properties is building on its suc-
cess at Enterprise Business Cen-
ter with another 466,000 sf of
spec space, 100,000 sf of which
is spoken for. United Properties
Vice President Kevin Kelley,
whose company was among the
first two out of the ground with
new product this development
cycle and was wildly success-
ful with its product, said he’d
be “shocked” if the remaining
space isn’t
leased by the
time it deliv-
ers in April.
Across I-70
at Staple-
ton Busi-
ness Center
North, Pro-
logis plans
to start con-
struction of
a 250,000-sf building. Prologis
also is beginning infrastruc-
ture for development on land
it owns at the southwest quad-
rant of I-70 and E-470, which
will connect to its Prologis Park
70 on E-470’s east side. Majes-
tic Commercenter at I-70 and
Tower Road in Aurora has a
new 500,000-sf building – the
largest spec building ever built
in Denver – about 25 percent
leased and hopes to break
ground in April on an addi-
tional 450,000 sf.
Mark Bowen, vice presi-
dent and regional director of
Denver-based DCT Industrial,
which owns 1 million sf in the
Denver market that is 100 per-
cent leased, said DCT is looking
for development sites in Den-
ver. “The hardest part is finding
a piece of dirt that make sense,”
he said. Also, DCT expects to
acquire a five-building portfo-
lio in the northeast submarket
by early March. The project has
25,000 to 30,000 sf of vacancy,
and Bowen said tenants are
“knocking down my doors to
lease it before we even close.”
From an investment stand-
point, “We’ve seen more deals
than we’ve ever seen in this
market,” said CBRE Senior Vice
President Jim Bolt. “There’s
overwhelming demand, very
little product being offered,
very little product being built.”
There is some price resistance
with certain asset types, how-
ever; “Smaller offerings above
replacement cost are a tough
deal to get done today,” said
Bolt.
Nationally, an abundance of
foreign capital is chasing indus-
trial deals, said Colliers Inter-
national principal T.J. Smith.
Gross domestic product is
projected to increase 3.5 per-
cent this year, and, “That’s a
huge driver for industrial real
estate,” he commented.
Panelists said they don’t fore-
see dropping oil prices nega-
tively impacting the industri-
al market to a large degree,
although Bolt cautioned, “It’s
something to watch.” Oil
and gas companies are heav-
ily invested in Weld County,
where the industrial vacancy
rate is 4.37 percent and lease
rates have climbed to $7.12 per
sf triple net, according to Mark
Bradley of Realtec-Greeley.
Bradley said the sweet spot
in the market is for 10,000- to
12,000-sf industrial buildings
with yard, which are highly
sought after by oil and gas ser-
vice companies. “If we had a
dozen business parks full of
those buildings, they would
have all been absorbed last
year,” he said, adding there is
very little new construction.
Larimer County’s industrial
vacancy rate is 1.9 percent,
owing in part to absorption of
Class B and C buildings by
marijuana growers.
In Denver, marijuana growers
account for around 3.5 million
of the Denver metro market’s
approximately 22 million sf of
industrial space, according to
Chad Brue, managing partner
of Brue Capital Partners LLC.
Brue, who through various
entities owns 11 Denver indus-
trial buildings, or 415,000 sf,
that is leased to growers, said
500,000 to a million sf of indus-
trial tenant improvements are
under way in the market, yet,
“I think we’re going to see a
dearth of space coming on the
market in the next 12 months.”
Tenant sizes are growing, and
with the huge cost of improve-
ments going into buildings,
tenants will readily take over
any improved space that comes
to market, he said. When word
seeped into the market that a
17,000-sf tenant that is pay-
ing $15 per sf triple net might
default, Brue said he received
an unsolicited offer for same
space at $25 per sf triple net.s
Ann Sperling
Kevin Kelley
growing its current space,”
Paul Cardell, vice president of
corporate operations, said in a
press release. “As a tenant of
Gateway Park, we are already
familiar with its locational attri-
butes, outstanding amenities
and proactive ownership. This
is an ideal situation for our
new testing, repair and logistics
service operation and provides
additional room to grow our
business with our customers in
the Western U.S.”
West Chester, Pennsylvania-
based CTDI currently occupies
more than 100,000 sf in Gateway
Park. It expects to break ground
on the new facility in March.
Chris Nordling of Newmark
Grubb Knight Frank, along
with John Morrissey and David
Mackey of Jackson Cross Part-
ners in Philadelphia, represent-
ed the company in the land
acquisition.
“CTDI has been a great ten-
ant in our industrial portfolio
for the past 18 years and we are
very excited they selected Gate-
way Park for the home of their
new 204,000-sf development,”
said Bill Pauls, board chairman
of The Pauls Corp., Gateway
Park’s developer.
“We are so pleased to have
CTDI remain in Aurora and at
Gateway Park with its exclu-
sive cadre of tenants,” added
Aurora Mayor Steve Hogan.
Encompassing more than
1,200 acres in Aurora and Den-
ver, Gateway Park is a mixed-
use development with more
than 5.6 million sf of indus-
trial, office, retail, hospitality
and residential space. Major
tenants include Boeing, Serta,
Cardinal Health, Whole Foods,
Best Buy, Northrop Grumman
and the U.S. Department of
Defense. s
Communications Test Design Inc. will break ground on a build-to-suit in March.
rity,” Wiedenmayer said. “That
is why they are willing to buy
at lower cap rates than they
historically have.”
Legend Investment Group
helped the seller, Brad Brooks
of Sidford Capital, to put
together the deal.
Legend Investment found the
land and brought two nation-
al tenants, Mattress Firm and
Mike’s Sub, to the site
The two tenants occupy the
entire development. Zaitz
brought Mattress Firm and
Adam Rubenstein of Legend,
represented Mike’s Sub.
Mattress Firm takes 3,500
sf and Jersey Mike’s Subs has
1,500 sf.
“There were a significant
amount of buyers interested in
this,” Wiedenmayer said.
“We receivedmultiple offers,”
he said.
Prospective buyers, he said,
liked that the two tenants have
long-term leases, it’s a brand-
new center and its proximity
to the former Westminster Mall
that is being redeveloped.
Demographics around the
area, especially within a one-
mile radius, are extremely
strong.
There are 7,622 households
within a mile radius with an
average income of $93,898,
according to Legend’s research.
There also are 249 businesses
within a mile radius and 3,106
businesses within a three-mile
radius.
Quiat bought it to diversify
its holdings, he said.
Typically, he said buyers that
want these types of stable prop-
erties aren’t also shopping for
value-add deals.
“The value-add guys don’t
mind getting their hands dirty,”
Wiedenmayer said, in exchange
for the possibility of higher
returns.
“This is really a turnkey oper-
ation,” Wiedenmayer said.
“You buy it and there is noth-
ing to worry about,” he said.
John Winslow, principal of
Winslow Property Consultants
LLC, who was not involved in
the deal, echoed Wiedenmay-
er’s assessment of why inves-
tors are drawn to assets such as
Westminster Gateway.
“I think it is certainly one of
the highest prices per square
foot paid,” Winslow said.
He said cap rates are typically
lower with high-quality build-
ings, tenants and locations,
such as found at Westminster
Gateway.
Records show that the sell-
er paid $735,000 for the land
in August 2013 from Resolute
Investments, headed by Gary
Rohr.
The land sales price equates
to $23.22 per sf.
“Not only is the developer
making a great return on their
investment, this type of retail
investment has become one of
the key investments for retail
shopping center buyers,” Win-
slow said.
“The risk for the developer
and the new buyer is marginal
as the market has been estab-
lished in this area,” Winslow
said.
“These deals don't stay on the
market too long,” he said.
Other News
n ACF Property Manage-
ment paid $5.39 million to
Westwood Financial Corp. for
the 25,000-square-foot West-
view Retail Center at 9140
Westview in Lone Tree.
The sales price equates to
$215.64 per sf.
The Class A, single-story
retail building was built in
1999.
Brad Lyons, Matt Henrichs
and Ron Urgitus of CBRE
represented Westwood in the
transaction.
n Sun Development LP paid
$2.4 million to Silco Oil Co. for
a 16,933-sf gas station and con-
venience store at 1695 Watkins
Road in Watkins.
The listing agents were Dan
Clayton and Michael Bright
of BRC Real Estate. The coop-
erating broker was May Lou
Rincon of Re/Max Vintage.
n The Stanley Marketplace,
under construction in Aurora
near Stapleton, has landed
seven new tenants that are tak-
ing a total of 28,300 sf of space.
The tenants are: The Stanley
Event Center, 10,000 sf; Stane-
ly Beer Hall, 5,700 sf; Kind-
ness Yoga, 5,000 sf; Endor-
phin, 5,000 sf; Tootsies, 1,000
sf; Wax, 800 sf; and Kismet,
800 sf.
The Stanley Marketplace has
110,000 sf of leasable space.s