Colorado Real Estate Journal - February 5, 2014
Alberta Development Partners, based in Greenwood Village, with a partner, opened the Cornerstar regional shopping center in Aurora just as the Great Recession was kicking off. “Although this project made its debut in the midst of the economic downturn, the quality of the development, its prime location, and Alberta Development Partners’ local market knowledge and tenant relationships were key factors in making Cornerstar a success,” Philip Russick, principal with PCCP LLC, Alberta’s partner in the center at East Arapahoe Road and Parker roads, said in a statement. Russick was alluding to the fact that Alberta and PCCP recently sold 430,000 square feet of the 685,000-sf center to Phoenix-based Cole Real Estate Investments for $116.5 million. Target, one of the anchors, was not part of the sale, as it owns its building. The price per sf for the 430,000 sf that sold equates to almost $271. By contrast, Forest City recently sold 914,000 sf of the Orchard Town Center in Westminster for $123.5 million, or about $135 per sf. “That is an unbelievable price,” said John Winslow, a local consultant who was not involved in the deal. “That has to be a record on a per-square-foot basis for that type of regional center,” Winslow said, noting it is not uncommon for smaller retail projects to fetch more on a per-sf basis. He said the amount Vestar, also of Phoenix, paid per sf for the Orchard Town Center is much more typical. Winslow said he can’t explain the difference, as both centers have excellent locations in their respective submarkets and both have a strong tenant mix. “I will tell you that the guys at Cole are really smart and do not make many mistakes,” Winslow said. Cole is a real estate investment trust that owns more than 1,000 properties valued at more than $7.6 billion. It primarily invests in single-tenant buildings rented to creditworthy tenants. “The high o c c u p a n c y (98.3 percent), location of the asset and strong tenant lineup make the property a good acquisition opportunity for Cole Real Estate Investments,” a Cole spokesman told CREJ. The center was listed, marketed and sold by a CBRE team that includes Brad Lyons and Ron Urgitus. “There was tremendous interest in this” from prospective buyers, Lyons said. “There are not perceived to be many of these assets of any size available in the Western U.S. that are not valueadd deals,” Lyons said. The only respect in which Cornerstar is a value-add deal is that the sale includes several pads that can be built on. “This is more of a core, stabilized asset than a value-add deal,” Lyons said. Anchor tenants that were included in the sale include: • A 24 Hour Fitness, with 88,125 sf; • Dick’s Sporting Goods, 501,107 sf; • Sprouts, 25,909 sf; • HomeGoods, 25,039 sf; • Ross, 25,000 sf; • Office Depot, 20,285 sf; • Ulta, 20,208 sf; • Cornerstar Wine & Liquor, 20,156 sf; • Old Navy, 15,000 sf; • DSW, 15,513, sf; and • Ace Hardware, 12,600 sf. The PCCP/Alberta joint venture purchased 158 acres of land for the development of Cornerstar in March 2006, and sold a 9.7-acre site to Target in December 2007 and an 18-acre site to a multifamily developer in August 2008. The center itself opened in November 2008, just as the nation was heading into its first national real estate downturn since the Great Depression that started in 1929. However, the real estate market has made a strong comeback, with prices at times even eclipsing those achieved during the go-go years of 2005-2006. “With a lack of stabilized, Class A retail real estate in the region, we felt it was a strategic time for this disposition,” Russick said. Donald G. Provost, a principal with Alberta, said its partnership with PCCP was a “key element in making our vision for this retail center a reality. Cornerstar is truly a trophy property with all the fundamentals existing to provide Cole with a successful asset now and in the future.”