Colorado Real Estate Journal - March 18, 2015

Tenant buys headquarters building

by Jill Jamieson-Nichols

A group affiliated with UDR Corp. bought the company’s headquarters building in Highlands Ranch Business Park for $24.06 million, according to public records.

Highlands Ranch Shea Center LLC sold the 119,841-square-foot building at 1745 Shea Center Drive to 1745 LLC for $201 per sf.

(See photo on Page 2AA) The buyer is affiliated with UDR Inc., a multifamily real estate investment trust that occupies approximately 50,000 sf in the building.

Shea Properties developed the four-story, Class A building in 1999. It features a sandstone exterior, “elegant” lobby and “spectacular” mountain views, according to Shea’s website. It’s also close to retail, dining and Highlands Ranch Golf Club.

Neither Shea nor the buyer could be reached for comment on the transaction.

UDR is an S&P 400 company.

Other News

-With all eyes on the oil and gas industry, it’s still hard to say how the Denver office market may be affected, but other industry sectors should soften the impact, according to a recent Savills Studley report.

“Oil and gas is off right now, but it’s too early to tell if this is just a blip that will correct itself or if we are on the cusp of a downturn like 2008,” Rob Link, Savills Studley executive vice president, said in discussing the company’s fourth-quarter report on the Denver office market.

“Strength among health care, tech and professional service companies should offset some of the pullback in the oil and gas sector,” said Executive Vice President Jim McGrath. The suburbs are less reliant than the central business district on the energy sector.

The southeast suburban submarket registered moderate rental rate growth in the fourth quarter of last year and is poised for the first speculative construction in several years, Savills Studley noted.

Overall availability in the Denver office market is likely to tighten this year with a number of larger tenants looking, and in some cases recently signing leases, for large blocks of space. Midsize searches (30,000 to 40,000 sf) also will support demand.

Savills Studley’s report says office-using employment in Denver was 4.4 percent above its prerecession peak as of November 2014, reflecting three years of sustained economic growth.

“Local companies continue to expand and a steady flow of businesses from other markets has helped boost activity as well. Expansion largely offset the reduction in space that a fair number of companies achieved by decreasing the amount of space dedicated to each employee or by consolidating multiple operations,” Savills Studley said.

As availability in the central business district and Lower Downtown decreased in 2014, leasing activity spread to suburban markets.