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Page 10 — COLORADO REAL ESTATE JOURNAL — December 7-December 20, 2016
Industrial
by Jill Jamieson-Nichols
DCT Industrial Trust contin-
ues to add to its Denver portfo-
lio, purchasing a Class A indus-
trial building in the Stapleton
area for $15.6 million.
DCT bought the
145,948-square-foot Champion
Windows building on 7.18 acres
at 10000 E. 45th St. in Denver
from Champion Realty Compa-
ny of Denver for $106.89 per sf.
The Class A building fronts
Interstate 70, offering signage
and tremendous visibility.
“This location is probably
second to none,” said Mark
Bowen, DCT Industrial Trust
senior vice president. “Visibility
and a quality asset right on I-70
– that’s pretty tough to beat. It’s
an A-plus acquisition for us,”
he said.
The front-park, rear-load
building was built for Champi-
on Windows in 2002. Champion
occupies approximately 116,000
sf and has a showroom front-
ing I-70. FTSS Flight Simulator
occupies just under 30,000 sf.
Both leases are at below-mar-
ket rates and are coming due in
the near term, which added to
the property’s appeal, Bowen
said.
Because of the quality con-
struction and location, DCT is
confident in its ability to renew
the existing tenants, or lease the
building, at today’s lease rates.
“We had multiple offers, and
DCT rose to the top and closed
very quickly,” said Bill Thomp-
son, first vice president with
CBRE. Thompson and Jim Bolt,
CBRE executive vice president,
were the listing brokers.
The property wasn’t wide-
ly marketed, and that played
in DCT’s favor, Bowen said,
explaining it’s difficult to
acquire properties in Denver
when they are broadly mar-
keted nationally.
The building represents state-
of-the-art construction, with
30-foot-high ceilings, ESFR fire
protection, interior flood drains,
skylights and more.
DCT owns approximately 2
million sf of industrial prod-
uct in the Denver market and
plans to start construction of a
168,000-sf, Class A speculative
building in Gateway Park in
Aurora, DCT Summit Distribu-
tion Center, in the first quarter.
DCT Industrial Trust is the
largest industrial real estate
investment trust focused on
North America with a portfo-
lio of approximately 72 million
sf. s
by Jill Jamieson-Nichols
It’s shaping up to be a record
year for Denver industrial sales,
with a large number of invest-
ment deals trading and others
set to close by year-end.
More than $582 million in
industrial assets over $2.5 mil-
lion changed hands as of the
third quarter, putting the mar-
ket on track to surpass its 2015
record-high volume of $839
million, according to CBRE’s
Denver Industrial Capital Mar-
kets Group. Investment deals
accounted for 72 percent of the
volume heading into the fourth
quarter, with investors buying
60 assets at prices in excess of
$2.5 million vs. 23 acquisitions
by users, which accounted for
28 percent of the volume.
“This has been a very active
year for investment sales and
will be through the end of the
year as there’s a handful of
a d d i t i o n a l
transactions
that are in
the pipeline,”
said CBRE
E x e c u t i v e
Vice Presi-
dent Jim Bolt.
The big-
gest deal to
date was the
$57.65 mil-
lion sale of 17 Class B industrial
buildings in Montbello Indus-
trial Park. Stockbridge Capital
Group, on behalf of the Los
Angeles Employees’ Retirement
Association, bought the 856,013-
sf portfolio from TA Realty for
$68.41 per square foot, $27.72
per sf more than TA paid for the
buildings less than two years
ago.
Pricing for industrial assets is
higher than ever, with invest-
ment deals averaging $82.45 per
sf, according to CBRE.
A 106,424-sf warehouse leased
to FedEx at Enterprise Business
Center set a high-water mark at
$178.53 per sf.
Denver industrial market fun-
damentals continue to be strong.
There’s been positive absorption
for 26 straight quarters, direct
vacancy is 4.8 percent and 40
percent of the 3.5 million sf of
industrial product under con-
struction is preleased.
In addition, investors are
drawn to Denver because cap
rates for like-kind properties are
around 100 basis points higher
than in coastal markets, accord-
ing to Bolt. “Attractive indus-
trial investment markets in the
West Coast have seen cap rates,
in some cases, sub-4 percent,”
he said.
According to CBRE’s Capital
Markets Pulse report, cap rates
for stabilized Class A properties
in Denver have declined 175
basis points since 2011. Among
peer markets, only Portland
recorded more cap-rate com-
pression.
Denver also has seen a flurry
of investment activity in Class
A multitenant space, which
doesn’t frequently come to
market. “Generally owners of
multitenant, particularly Class
A product, in the Denver area
want more property, not less,”
said Bolt. “So it’s very rare to see
multitenant Class A.
“We had a number of sellers
that were very market savvy
waiting for market conditions
to be right,” he said, explain-
ing owners of multitenant
properties that signed leases at
below-market rates during the
recession were waiting to renew
leases at today’s rates before
selling or refinancing. “Now
that’s happened, and some have
decided to sell.”
Whether the Denver market
can keep pace with 2016 volume
in 2017 is uncertain.
“There’s just a finite number
of owners that are candidates to
sell,” said Bolt. “You look across
the list of all the big developers
here in this market, and really
without exception none of them
are sellers. So there’s just a really
small group of potential sellers,
and the majority of those are
going to sell now.
“This year will turn out to be a
pretty good year,” he said.
Other News
n Lam Ho Investments LLC
paid $2.4million for the Lehrer’s
Flowers/Associated Wholesale
Florist retail/warehouse prop-
erty at 2100 W. Mississippi Ave.
and 1120 S. Zuni St. in Denver.
The seller was 2100 W. Missis-
sippi LLC.
The 2.6-acre property has
two buildings totaling approxi-
mately 32,494 square feet. Justin
Krieger, senior adviser at Pin-
nacle Real Estate Advisors LLC,
handled the off-market deal.
“The area is undergoing tre-
mendous growth, which is evi-
dent by the fact that the property
sold for almost four times what
it sold for 2.5 years ago. This is
the third deal I’ve closed with
my buyers in the area this year
and they are extremely bullish
on the area’s long-term pros-
pects and see our latest acquisi-
tion as a phenomenal develop-
ment site,” Krieger said.
n Livingston Real Estate
Holdings LLC bought a 14,346-
sf industrial building at 999
Tejon St. in Denver from Denver
Barnes LLC for $1.55 million.
The buyer plans a major remod-
eling of the property, according
to Russell Gruber of Newmark
Grubb Knight Frank, who rep-
resented the seller.
The building, located on
the east side of Interstate 25,
received several offers, Gruber
said.
Champion Windows occupies about 116,000 square feet in the building at 10000 E. 45th St. in Denver.
The FedEx building at Enterprise Business Center sold earlier this year for approximately $179 per square foot,
a high-water mark for Denver.
Jim Bolt