Colorado Real Estate Journal -
The Denver-area retail market “is a tale of two cities,” said Jim Brady, head of the Capital Markets group for Cassidy Turley Fuller Real Estate. “On one hand, you have the well-located and well anchored centers that still have strong rent rolls and command high prices and have a lot of interest when they are sold,” Brady said. “On the other hand, you have the Class C properties with poor locations that are unanchored. They are very challenging.” Brady and fellow Cassidy Turley Fuller brokers Jeff Halsey and R.C. Myles recently handled one of the more challenging retail transactions. Tyler Bray, a retail leasing expert at the firm, also played a role in the transaction. It wasn’t a very big deal, but it is a microcosm of what is happening with Class C retail properties. “The process was fun to watch,” Brady said. Brady and his team recently sold Village at Parker I at 10530-10550 S. Progress Way in Parker. The center was built in 2007. “It had about 14,000 square feet all together,” Brady said. “One building had about 9,000 sf and the other about 5,000 sf.” It was 64 percent leased with three local tenants: a hair salon, doggie day care center and a company that prepares meals to go. Its lender, LNR Partners, took the center back.“It was a case of declining rents and some tenants that had left the center,” Brady said. “It wasn’t on Parker Road. It did not have great visibility and tenants were struggling. Why should you be in a Class C location when you can move into a Class A location and pay about the same in rent?” They sold it for $780,000, but it wasn’t a typical sale. “It sold at an auction,” Brady said. “LNR wanted to sell it that way. It was our first auction, but we are going to have some other ones in the coming months. It was a very interesting experience.” The center attracted “five or six bidders.” The winning bidder intends to turn it into a church. “All of the bidders were investors, except for the church guy,” Brady said. “As the price went higher, alI of the investors, one by one, dropped out.” Brady doesn’t know the name of the church or its denomination. “I think one of its board members bought it under his own personal title and he probably will quit-claim it to the church,” Brady said. He said he doesn’t think it will take very much in tenant improvements to convert it into a church. “I think a church is a pretty good secondary use for a center like this one,” Brady said. “It’s not on a main road, but that won’t matter to a church, which by definition is a destinated use. People who want to go there will find it.” He said he expects the church will keep some tenants in space it doesn’t need to produce some income. And while the center “has an average amount of parking,” it probably will be enough to meet the needs of a small church. LNR, he said, “was very pleased with the sales price. And as an user, I think the church also is pretty happy.” He estimated it would cost about $125 per sf to reproduce the building on the site, while the church paid about $55 per sf. “I think it was a good deal for the seller and a good deal for the buyer. The auction required that they close within 30 days, so you could say the transaction closed in 30 days.”