CREJ - Office Properties Quarterly

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April 2015 — Office Properties Quarterly — Page 15
and we have great tenancy too. For
foreign buyers who are looking for
good, safe investments, they look at
the train station and think this is a
safe, valued investment.”
However, while the location is an
important part of the buildings’ suc-
cess, other elements also contrib-
uted to the top-dollar price tag. The
buildings, like much of Denver, are
100 percent leased and occupied.
“I think there’s a lot of other intan-
gibles that created value in these
two products,” said Robert Cohen,
chairman and CEO of The IMA
Financial Group Inc. “Yes, another
building two blocks from here can be
just as beautiful and just as classy
and have long-term tenants, but its
not on the 50-yard line of Union Sta-
tion. Or it could be right across the
street at the 50, but not have a long-
term tenant. I think for the buyer to
get all of that, and to have a buyer
who’s not in the market who wanted
to come into it, helped accelerate
the price.”
GLL entering the Denver market is
an example of the increased interest
from domestic and foreign capital
that now views Colorado as an ideal
market. From January to November
2014, there were 27 office transac-
tions above $15 million. Of those, 14
acquisitions were with new inves-
tors to Colorado, and nine were with
a foreign capital source, according
to Patrick Devereaux, executive vice
president, capital markets, JLL.
“Denver is a market that we’ve
been interested in for a long time,”
said Ramm. “A component of our
overall investment strategy includes
employment growth and, by all
measures, the Denver metro market
clearly has been performing well.”
The submarket location of the two
buildings – defined by Cherry Creek
and Speer Boulevard to the west,
Platte River to the north, Coors Field
and 20th Street to the east, and tra-
ditional historic Lower Downtown
product to the south – is relatively
compact, said Ramm.
“There is 1.5 million square feet of
office and retail existing or planned
for that submarket and all the land
is spoken for; once it is fully built
out, that’s it,” he said. “Additionally,
we are one of the only places in
the LoDo submarket where tenants
can get brand new, energy-efficient
product with larger floorplates and
everything else one would expect
from a new building, because much
of the LoDo product is older, historic
buildings with functionally challeng-
ing space.”
The two office buildings – designed
to look like cousins, rather than
identical twin sisters – are part of
the historic landmark district devel-
opment. When designing the build-
ings, it was important that they
complement, rather than contrast,
their surroundings – the historic
Union Station, the brick warehouses
of LoDo and the contemporary rede-
velopment with the high-tech tran-
sit solutions, said Andy Nielsen, the
principal in charge of the projects
with AndersonMasonDale Architects.
“We tried to pick those up and
meld them together so the buildings
could mediate between the historic
station and the historic warehouse
context but also be contemporary in
their expression,” he said.
One of the major aspects of the
master development plan for the
Union Station project was to cre-
ate an urban environment in which
employees feel like they have every-
thing at their fingertips. This desired
city vibe goes beyond the classic
definition of a mixed-used environ-
ment that offers retail on the bottom
and office above.
“It’s a perfect symbiotic relation-
ship,” said Frampton. “It’s truly a
neighborhood and truly a city. We
do have retail on the bottom, but
we have a true urban setting on the
bottom. It’s well beyond just having
Subway. You can drive down Arapa-
hoe Road, and you’ll see that all the
office buildings have retail in them.
It’s not that. It’s an authentic urban
experience.”
This new take on a mixed-use
environment is a trend that Den-
ver is seeing more and more. Large
warehouses in the River North dis-
trict are embracing the community
aspect with large success.
“I certainly hope the projects that
develop will have some of the same
characteristics that make the whole
Union Station development work,
and that’s the use of pedestrian
active areas on the ground plane,”
said Nielsen. “Making sure there’s a
sense of amenities along the street
that give people a reason for being
there, and keep people coming and
going so there’s vibrant activity – that
urban feel – there’s lots going on and
lots of choices.”
The desire to embrace the urban
environment is often associated with
the influx of millennials moving to
Denver and joining the workforce.
More than 25 percent of Denver’s
population growth since 2000 has
been millennial, said Devereaux.
“These two buildings are in a very
strong submarket (LoDo), which is
definitely on the upswing as a live-
work-play neighborhood attractive to
millennials (and therefore to employ-
ers) and which has some unique
characteristics that make it very
appealing from an office investment
point of view,” said Ramm.
“Everybody is moving to cities, and
it’s partly for jobs, but it’s also partly
for the appeal,” said Frampton. The
ability and desire to have a true com-
munity experience, rather than the
suburban experience, is attractive to
many. “People, for whatever reason,
more than ever, want that,” he said.
“That’s why you see so much growth
around here.”
This communal aspect of the devel-
opment is in large part attributed to
the Wynkoop plaza area. To incorpo-
rate the plaza into the buildings, the
IMA Building features indoor-outdoor
areas, which are a highly sought-after
amenity for new office buildings. The
idea of bringing the indoors outdoor
is very much part of the Colorado
lifestyle, Cohen said.
The building features balconies on
each floor, as well as a private plaza
area on the ground floor connecting
to the public plaza and a terrace on
the top floor. “When you’re down-
town working, you rarely get outside
in the middle of the day to have a
meeting, and now we can do that,”
he said.
Additionally, both buildings offer
many of the considered must-have
office amenities – a third-space envi-
ronment, collaborative areas, work-
out facilities, security, parking, and
convenience for employees who bike
or use public transit to get to work.
Another feature all generations are
demanding more from Denver prop-
erties is a conscious effort toward
sustainability and the importance
of LEED certification. “It was very
important to us,” said Cohen. “We
have an environmental department
here, we have a younger millennial
workforce here, and I would say that
to most of them, that matters.”
Both wing buildings are LEED Gold
certified. Nielsen said there is man-
date for state projects that buildings
meet LEED certification, which is
driven by public’s demand for it.
“Developers are finding that there’s
a benefit, at least for certain LEED
certifications,” he said. “People like
the idea of supporting sustainable
design. If you’re going to put your
name on the outside of a building,
you like the idea that it’s got a LEED
plaque that goes along with it.”s
Courtesy Frank Ooms Photography 2014
The wing buildings were designed to complement, rather than contrast with, their surrounding buildings, a nod to the historical
elements while staying contemporary.
Courtesy Frank Ooms Photography 2014
A lot of the buildings’ value is in their proximity to the transit-oriented development of
Union Station.