April 6-April 19, 2016 —
COLORADO REAL ESTATE JOURNAL
— Page 13
Self-Storage
by Jill Jamieson-Nichols
A Thornton self-storage prop-
erty achieved a sales price of
$203 per square foot, a record
for a self-storage facility in Colo-
rado.
Sovran Self Storage Inc. bought
the 521-unit Extra Space Storage
facility from TRC Cos. Sovran
is a publicly traded real estate
investment trust that owns and
operates approximately 500 self-
storage facilities across the coun-
try.
“Demand for institutional-
quality assets in markets like
Denver has
reached an
unprecedent-
ed
level,”
said Adam
Schlosser, vice
president of
investments
in Marcus &
Mi l l i chap’ s
Denver office.
“It’s difficult
to feed the staggering amount of
capital trying to enter or expand
into self-storage investments,
and current pricing is creating
opportunities to acquire assets
that would otherwise rarely
come to market.”
Extra Space Storage is located
at 9000 Gale Blvd., at the corner
of Gale and Huron Street. It was
completed in 2011 and includes
drive-up and interior-access
units; a three-story, split-level
climate controlled building; and
three single-story buildings.
There also is an institutional-
quality leasing office, 18 security
cameras with multiple display
monitors and electronic keypad
access for tenants. Approximate-
ly 316,268 people live within a
5-mile radius of the property.
Charles “Chico” LeClaire,
Marcus
&
M i l l i c h a p
senior vice
president of
investments,
said
Extra
Space Storage
is, in his opin-
ion, the finest
self-storage
facility north
of
Colfax
Avenue.
It
represents new, state-of-the-art
construction with above-market
rents, he said.
“There’s no other competition
like it in that part of town,”
LeClaire said.
The price wasn’t released but
was listed in public records as
$9.43 million.
LeClaire said during the reces-
sion, there were “very, very few”
self-storage facilities construct-
ed, and that’s resulted in pent-
up demand. The cost of financ-
ing also has created an appetite
to invest in self-storage, he said.
“Class A properties are selling
for 5 cap rates and below,” he
said.
“We’re just starting to see
some people take some money
off the table because things are
so good.”
Although the $203 price for
Extra Space Storage is a record
for Colorado, LeClaire said Mar-
cus & Millichap sold a Class
A, fully leased property in the
Seattle area the same day for
nearly $300 per sf.
“They’re selling for record
prices all over the United States,”
he commented.
Schlosser and LeClaire rep-
resented the seller, a private
investment group that owns
numerous self-storage facilities
along the Front Range. They also
procured the buyer.
s
Marcus & Millichap sold Extra Space Storage in Thornton for $203 per square foot.
Adam Schlosser
Charles “Chico”
LeClaire
DPC, known for its repositioning
expertise, will spend $13 million
to improve the property and add
tenant amenities. It is weighing
options to add a parking deck
and increase density, but the first
order of business will be to put
the empty building back into ser-
vice, said DPC President Chris
King.
“We’re very pleased with the
buy. It’s an exciting opportuni-
ty for us, and it really fits our
model,” he said.
“DPChas a long history inDen-
ver of taking assets that need to
be repositioned and doing a good
job with them,” said HFF Senior
ManagingDirector JohnJugl. Jugl,
who represented seller Alecta
Real Estate Investment LLC with
HFF Senior Managing Director
Mary Sullivan, said opportunistic
repositioning opportunities pres-
ent their own set of challenges,
and owners need assurance that
the buyer has the experience and
wherewithal to execute.
“DPC had very balanced
expectations and very balanced
assumptions that gave us a good
deal of faith in their ability to per-
form,” he said.
Because of the value-add pro-
file, Denver Corporate Center II
and III was highly sought after,
he said. “It had more interest
than we’ve ever experienced
with nearly all suburban assets
to date.”
Denver Corporate Center is
within walking distance of res-
taurants, hotels, services and light
rail, said King.
In addition to a “very good
location,” said Jugl, it offers the
ability to improve a building
without disrupting tenants, plus,
“It has development potential.”
DPC Development is consider-
ing a strategy similar to its repo-
sitioning of Cherry Creek Cor-
porate Center, where it added
a parking deck and sold excess
land for an apartment commu-
nity. Denver Corporate Center II
and III has ample parking, but
a parking deck on the northeast
corner of the site would allow
for development of retail, hotel,
office or multifamily. “Even with-
out that parking, we started to get
inquiries for some of those uses,”
said King.
URS formerly occupied Den-
ver Corporate Center II. Denver
Corporate Center III has 23,000
sf of available space. Its tenants
include Farmers Union Service
Association, Collection Compa-
ny of America, Larimar Group,
Northern American Title Co., the
Denver Post and others.
The buildings were constructed
in 1982.
DPC Development Co. is a pri-
vately held company that devel-
ops and acquires commercial real
estate. Traditionally a value-add
buyer, it also is acquiring Class
A assets, as exemplified by its
recent purchase of Carrara Place
in Greenwood Village.
s
there will be a limited supply
of such centers in any market,
he noted.
Vestar faced a number of com-
petitors for Bowles Crossing,
said Mike Winn, who represent-
ed the seller, with fellow CBRE
partner Tim Richey.
Winn and Richey represented
the seller, L&B Realty Advisors.
The center, built between 1986
and 1996, had undergone a $90
million renovation by General
Growth, he noted.
“At this deal size, of course,
you are going to have predomi-
nately institutional investors
looking at it,” he said.
Tenants at Bowles Crossing
include a new Trader Joe’s,
DSW Warehouse, Ross Dress
for Less, Gordmans and a newly
renovated AMC Theatre.
The demographics are strong.
The average household
income within a 1-mile radius
is $101,723. In addition, 52,237
vehicles pass Bowles Cross-
ing daily at northbound Wad-
sworth Boulevard and 41,091
pass it on southbound Wad-
sworth each day.
Bowles Crossing sits on 53.98
acres, a site large enough to
accommodate future develop-
ments, including apartment
communities.
“I think a couple of things are
in play here,” Malin said.
“First, it is important to under-
stand that on a macro level, a
lot of people in this country
want to live, work and play in
the same environment. People
are leaning toward this kind of
urbanism, even in the suburbs.”
That trend is even more pro-
nounced in a market such as the
Denver area, “where you skew
to a lot of baby boomers and
millennials, who really want
that kind of lifestyle,” he said.
Housing at Bowles Crossing
makes sense, he said.
“At a micro level, if you look
at the history of Bowles Cross-
ing (which was built between
1986 and 1996), it was origi-
nally planned to be an enclosed
mall,” Malin said.
“But it was never built that
way. So the amount of poten-
tial retail improvements for the
entire site greatly exceeds what
is there today. But I don’t think
it is necessary, or a good idea,
to build out all of the space as
retail. Bringing a housing com-
ponent makes sense on both a
macro and a micro level.”
The housing, he said, “will be
back to the rear” of the site.
It’s too early to say how many
units would be built, he said.
“We would bring in an expe-
rienced multifamily developer
and joint-venture with them,”
Malin said.
“We have experience doing
JV partners on multifamily as
well as office developments,”
he noted.
Construction likely will take
12 to 36 months, he said.
As far as Orchard Town Cen-
ter, “That is right on schedule,”
Malin said.
“We’ve done a full rebranding
of the entire project, we put in a
new play area, new landscaping
and have added an H&M, as
well as six to seven new inline
tenants in the town center.”
A new building for a Mar-
shalls also was added, he noted.
Even before the ink was dry
on the Orchard Town Center,
Vestar was looking for other
opportunities in the Denver
area, culminating with Bowles
Crossing.
“We did not stop our search,”
Malin said.
“We are seeking other oppor-
tunities,” he added.
“Typically, we purchase assets
in the $50 million to $150 mil-
lion range. That is kind of our
sweet spot.”
s
Le Peep restaurant is one of the many tenants at Bowles Crossing.
AMC is one of the anchor tenants at Bowles Crossing.
