Page 32 —
COLORADO REAL ESTATE JOURNAL
— July 15-August 4, 2015
Office
by Jill Jamieson-Nichols
Stoltz Real Estate Partners
continued its buying spree in
Denver with 155 S. Madison, a
43,161-square-foot office build-
ing in Cherry Creek.
Stoltz paid $11.45 million, or
$265 per square foot, one of the
highest prices per sf for pure
office space in
Cherry Creek,
a c c o r d i n g
to
Patrick
Devereaux of
JLL.
The build-
ing
was
93
percent
leased. The
largest of its
23 tenants is
Wynkoop Brewing Co., which
has its administrative offices in
5,000 sf. The smallest tenant is
500 sf.
“One of the big keys to this
asset is it has a 3:1,000 park-
ing ratio, which is very rare in
Cherry Creek. One of the big
challenges of tenants trying to
occupy space in Cherry Creek
is availability of parking,” said
Devereaux, who said office
buildings in Cherry Creek’s core
typically have a single parking
space per 1,000 sf. “That makes
this asset very appealing to the
small tenant base,” he said.
Also, “It’s a great low-priced
alternative asset to some of the
other assets that are in Cherry
Creek,” Devereaux said. Newly
constructed office space in the
submarket averages around $35
per sf triple net, and rates at 155
S. Madison are $26 to $28 per sf
gross, he said.
Built in 1974, 155 S. Madison
was in need “significant capital
improvements” when the seller,
an affiliate of Ogilvie Proper-
ties, bought it in 2012, according
to Devereaux. “Ogilvie did an
unbelievable job of reposition-
ing and rebranding this asset
to attract a very stable, long-
term, small-tenant office base,”
he said.
“The building fits very well
within its competitive set.”
In-place rents are approximate-
ly $5 per sf below market, said
Devereaux, who represented the
seller with JLL’s Jason Schmidt.
There was “tremendous
interest” in 155 S. Madison,
Devereaux said. “We had 12
offers to purchase the asset, and
the interest ranged from private
individuals to foreign capital to
a pension fund adviser. After
Lower Downtown, Cherry
Creek is the most preferred infill
location for investment capital in
Colorado.”
Adjacent to Pulaski Park,
which houses the Gates Ten-
nis Center, the two-story build-
ing has unobstructed mountain
views over Cherry Creek Shop-
ping Center.
Stockton Baker of DTZ pro-
viding leasing expertise in the
transaction.
Stoltz Real Estate Partners,
based in Pennsylvania, has
acquired a dozen buildings, pre-
dominantly office buildings, in
the Denver area in a little more
than a year. It recently closed
on 1730 Blake St. in Lower
Downtown.
s
There was “tremendous” investor interest in 155 S. Madison, according to listing broker Patrick Devereaux
of JLL.
Patrick Devereaux
by Jill Jamieson-Nichols
Within two weeks of buying
Sherman Center, Centre Point
Properties leased up 11,000
square feet – a sign of demand
for office space in the Capitol Hill
neighborhood.
“We have a two- to three-year
leasing strategy, which we think
we’re going to beat,” said Centre
Point’s Tucker Manion.
Centre Point Properties affili-
ate Sherman Point Ventures
LLC bought the shiny gold
100,774-square-foot office build-
ing at 789 Sherman St. for $9.95
million, or $98.74 per sf.
“We own 1905 Sherman, so
we’re familiar with the market
in this area, and right now, given
the competitive landscape, it’s
tough to find buildings of this
quality at the basis we were able
to achieve,” said Manion.
That basis allows Denver-
based Centre Point to offer space
at $19.50 to $21 per sf full service,
while competing Class B build-
ings are in the $22- to $23-per-sf
range. The building was only 61
percent leased at the time of the
sale, and with the area’s vacancy
sitting around 4 percent, there is
tremendous upside in improving
occupancy. Plus existing rates are
27 percent below market.
The Sherman Center’s location
is attractive to tenants seeking
value and proximity to down-
town and Cherry Creek. It also
brought investors out in full
force.
“It was crazy. We had over 70
inquiries and I would say the
majority of those – more than 90
percent, were out-of-town buy-
ers,” said Ben Gilliam of Cold-
well Banker Commercial Alli-
ance, who represented the seller
with partner Jon Treter.
“I think it’s because of the
location. A lot of the interest we
had was buyers that were either
institutional or the next level
– private but with big funds –
that couldn’t get into LoDo or
downtown, or Cherry Creek,” he
said, adding the Sherman Center
represents a good-quality invest-
ment between those two sub-
markets.
The area also is attractive to
tenants because employees –
especially millennials – can live,
work and play in the neighbor-
hood, said Centre Point Prop-
erties’ Alan Bruno. Restaurants
and bars are within walking dis-
tance, and one of the new apart-
ment buildings going up within
a block will have a Black Eye
Coffee shop. A lack of surround-
ing high-rises allows for city and
mountain views.
Widely recognized for its gold
exterior, Sherman Center is a six-
story building that was built in
1973. It has covered parking plus
four surface lots and a common
conference room. The previous
owner upgraded the first two
floors, and Centre Point Proper-
ties plans to improve the com-
mon areas on the third through
sixth floors. It has move-in-ready
space and also plans to “white-
box” suites.
Colorado Nonprofit Associa-
tion occupies the entire second
floor. Most of the other tenants
are in the 3,000- to 4,000-sf range.
Contributing to the building’s
vacancy was Denver Public
Schools’ move from about 13,000
sf at the end of 2014.
Centre Point, which will move
its offices to the building, sees
opportunity in the vacancy and
in providing hands-on manage-
ment, said Bruno. “We’re obvi-
ously going to start marketing
the property pretty heavily,”
Manion added.
“Our overall strategy with all
of our properties is tenant reten-
tion,” he said, adding the basis
will allow Centre Point Proper-
ties to keep the property afford-
able over the long term.
Karen Kerman of Wells Fargo
arranged acquisition financing
for the property, which was sold
by a private family fund called
789 Sherman Street LLC.
s
Alan Bruno, left, and Tucker Manion of Centre Point Properties acquired Sherman Center in Denver’s Capitol
Hill neighborhood.
