Colorado Real Estate Journal - January 3, 2018
DPC Development Co. did some heavy lifting at the Cherry Tower office building but left some value on the table when it sold the building for $28.93 million. Albuquerque, New Mexico based Goodman Realty Group will continue updating the prominent 226,185-square-foot tower at 950 S. Cherry St. in Denver, which has upside in rents and increased occupancy. “We’re going to be doing quite a bit of upgrading, making it very contemporary and hip,” said Goodman Realty founder and CEO Gary Goodman. Goodman intends to make the building more inviting with a new entry canopy and 10-foot porcelain tiles on the exterior. There also will be HVAC work, and additional improvements to the lobbies, hallways and common areas. DPC Development bought Cherry Tower, located in the Glendale area, for $21.2 million in 2014 and repositioned the building by making approximately $1.4 million worth of repairs to the parking deck; turning a well-lit and unused lower-level law library into tenant space, and leasing that up; and redoing the lobby and common areas. It also added a conference room, modern café and “first-class” gym – “all the amenities that today’s office buildings require and that tenants are looking for,” said DPC Development Co. President Chris King. “It’s a very good building. It’s just a great location and really a strong presentation in the market. If you’re sitting at Infinity Park, you look right at that building, so everybody knows where it is. It was a good building to own. We liked it a lot, and I think it made a nice statement about our company.” Greenwood Village-based DPC achieved “about 85 percent of our business plan,” King said. The company typically holds assets for three to four years and was nearing that time frame. “We renewed a bunch of tenants. The average rent in the building was still well below market, and so we felt like we were selling this asset to a new buyer with upside in rents,” said King. “We had a great response from both private capital groups as well as institutional groups, so we had no shortage of interest,” said Cushman & Wakefield Director James Brady, who listed the building for sale with Cushman & Wakefield Managing Director R.C. Myles and Associate Campbell Davis. Cherry Tower’s largest tenants include Fidelity National Title and the law firm of Leventhal & Puga. Occupancy from the time of listing to sale rose from 78 to 82 percent. “It as a true value-add office opportunity in Denver,” said Brady. “Not a lot of those come up in our market because the fundamentals are so good, but we had in-place rents that were 20 percent below market and value add through the lease-up of the vacancies.” “It was a competitive bid process,” King added. “We had a number of offers, and Goodman was really well qualified and presented themselves well. No doubt they know what they’re doing. I think they’ll do a really good job with the building,” he said. Goodman said his company intends to expand its presence in Denver and is attracted to submarkets near downtown. “Downtowns everywhere are on fire, but they’re getting very expensive, heavily congested, and you’ve got markets right outside downtown like the Cherry Creek and Glendale submarkets that still have an urban feel, are very close to downtown, but less congested and less pricey,” he said. The company owns two other Colorado assets: Pine Creek Village Center, a mixed-use property in Colorado Springs, and Hoffman Heights Shopping Center in Aurora.