Colorado Real Estate Journal -
Western Development Group is poised to begin construction on a long-awaited office tower in the heart of Cherry Creek North. The entire $100 million, mixed-used development is called 250 Columbine, but the office portion is at 200 Columbine St. In addition to the eight-story, 80,000-square-foot office tower, the development will include 70 luxury condominium units and 30,000 sf of retail on the ground floor of the project on Columbine from Second to Third avenues. “Hopefully, we will start our project at the end of August or early September,” said Roy Kline, a managing director at Western Development. “We have hired PCL as the general contractor and OZ Architecture is designing it,” Kline said.“This is going to be a rather iconic building,” said David Steel, president of Western Development. “It already has generated a lot of interest” from potential tenants. Indeed, one of the unusual aspects of the building is that it is a spec building. That is, it is being built without any prelease commitments from tenants. Even in today’s recovering commercial real estate market, it is extremely unusual to move forward with a building without a substantial preleasing commitment, typically at least 50 percent. Office developments can move forward, if they are build-to-suits for financially strong tenants that plan to occupy all or most of a building. “It’s very rare in the market today to build a spec building,” Kline said. “For one thing, you can’t get it financed,” he said. One of Western Development’s principals is Christian Anschutz, son of Denver industrialist Philip Anschutz, which makes financing less a problem than for many other developers. “Cherry Creek North is a very rare submarket,” Kline said. “There are some very high-end, boutique clients, such as private banks, which really need to be in this ZIP code and there is nothing available for them. We are serving a very specific need.” Indeed, both Kline and Steel were hard-pressed to recall the last time a Class A spec office building had been constructed in Cherry Creek North. “Forever,” Steel quipped. “There is the Janus headquarters, which was probably the last Class A office building, but it is a user building, not a multitenant building.” While lease rates have not yet been set, they will be competitive with the top office rates in downtown and Cherry Creek North.
A proposed nearby office tower planned by Bill Pauls reportedly has signed a deal for a net rent of north of $30 per sf. Of course, high rents will price many tenants out of the building at 200 Columbine. “You are not going to move your back office accounting or put a call center in here,” Kline said. “You’ll go to the suburbs for that. This will be for the executive-level tenant.” While some neighbors initially complained about the development, which had been in the works for years, it is not the tallest building in the area. For example, the nearby J.W. Marriott hotel is taller. After considering all of the various sides, the Denver City Council last November voted to change the zoning, allowing the development to move forward. “We are very pleased with our new land plan,” with the new zoning, Steel said. “We got the density we wanted and needed. With the previous zoning, the parking ratios didn’t work.” Steel said he thinks the vast majority of residents, as well as the entire city and region, will be very pleased with 250 Columbine when it opens in 2015. “The city, with its old zoning, is getting away from its old density, floor-area-ratio zoning to more form-based zoning,” Steel said. People will appreciate how the tallest part of the development is at Second Avenue and Columbine Street and then buildings move down in height toward Third Avenue. “The buildings will look modern, of course, but from a land planning perspective they will appear as if that is how growth had always been planned,” Steel said.