Colorado Real Estate Journal - February 4, 2015
Rich Morean has been a fan of Greenwood Corporate Plaza for years. “I was a big fan of it even when I was with Kennedy Associates” a decade ago, said Morean , who is now an executive vice president of capital markets and a principal of Portland, Oregon-based ScanlanKemperBard Cos., better known as SKB. “I would have loved to have owned it,” Morean said. Last month, Morean got his wish. SKB bought the six-building Greenwood Corporate Plaza, which appears to be the largest office deal so far this year in the Denver area. The Greenwood Corporate Plaza also is the largest single office campus along the southeast corridor, according to the seller. According to public records, SKB paid $91.5 million for the office campus. The buildings cover a total of 616,098 sf, according to records. That means that SKB paid about $148 per sf. Greenwood Corporate Plaza is on almost 40 acres at Interstate 25 and Orchard Road in Greenwood Village. “Greenwood Corporate Plaza is so well located,” Morean said. “It’s near Fiddler’s Green and you have all of these great neighborhoods nearby, like Cherry Hills and Greenwood Village,” he said. And it’s hard to beat the setting, he said. “I love that this is on this a 30-acre-plus, sprawling campus,” Morean said. “It is just gorgeous.” It also is close to a light-rail stop along Interstate 25. The entire southeast corridor is undergoing a renaissance, with a number of new office buildings on the drawing board, he said. “You can just feel the energy,” Morean said. Future office developments will bode well for SKB, as it will be able to lease space at rents in an A location that will be far less than new buildings need. “These new buildings are projected to cost $300 per square foot to build,” Morean said. “They will need to charge at least $5 or $6 more per square foot than us to have their deals pencil out,” he said. He said current gross lease rates are in the $22.50 to $23 per sf range. SKB will embark on a plan to spruce up both the outdoors and the interior of the buildings. “I would describe this as more of a core-plus holding, rather than as a value-add opportunity,” Morean said. “We are going to take a B or B-plus asset in an A location and make it an A or A-minus asset,” he said. Former Denver development titans Jay Roulier and Bill Walters built Greenwood Corporate Plaza from 1979 to 1981. “I love that they built six basically identical buildings,” Morean said. “There is nothing cute about them,” he said. “They are very functional buildings with large floor plates.” He said they would have no problem accommodating tenants from 2,000 to 10,000 sf, as well as one space available of about 20,000 sf. “This is what is known as a ‘sticky’ asset,” Morean said. “That is, once a tenant leases, they tend to stay here. That is because whether they are downsizing or expanding, they can almost always find a spot that fits their needs.” Mike Winn, who marketed and sold the campus with fellow CBRE brokers Tim Richey and Chad Flynn, said there was a lot of interest in it from institutional investors. “They liked it because it was big,” Winn said. “It’s rare to be able to buy six buildings with over 600,000 square feet in a landscaped, campuslike environment. They liked that they could buy six buildings at one time, rather than having to buy six, 100,000-square-foot buildings.” He agreed with Morean that the campus is flexible when serving the needs of tenants. “When you have six buildings, they can work with you by moving you around to another building, if necessary,” Winn said. Greenwood Corporate Plaza has withstood the test of time, he said. “It really has,” Winn said. “They were ahead of their time by building such large floor plates,” he said. The seller was Denver-based Equity West Investment Partners and its partner, San Franciscobased Broadreach Capital Partners. Equity West purchased Greenwood Corporate Plaza in October 2004 for $37.25 million, or about $60 per sf. It was only 30 percent leased when Equity West purchased it, while its occupancy rate is now about 85 percent. Morean, who is based in Denver, typically doesn’t get involved in SKB acquisitions, as that is not his core responsibility at the firm. Outside of Denver, at SKB he focuses on building diverse capital market relationships with institutional investors and family offices. Equity West, on its website, described Greenwood Corporate Plaza, which it called the largest single office property along the southeast corridor, this way: “Exceptionally functional 34,000- sf rectangular floor plates in two pods with center three-story atrium lobby appeals to a broad array of corporate tenants. The property includes a four-acre mixed-use development site that could house in excess of 100,000 sf (of) additional sf.” “David Naus and Steve Schwab (principals of Equity West) did a great job of getting the asset to where it is today,” Morean said. Morean spearheaded the Greenwood Corporate Plaza because he is so familiar with the Denver-area market. SKB is interested in making other investments in the Denver area, Morean said. “We could do smaller deals of $15 million to $20 million, but we could easily do deals of $100 million or more, if we had the right partners, the right buildings and the right opportunity,” Morean said.