Colorado Real Estate Journal - March 18, 2015

United Properties leases space in Enterprise center’s Phase 2

by Jill Jamieson-Nichols

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United Properties continues to draw tenants to Enterprise Business Center in Stapleton, signing its first lease in a 466,540-squarefoot speculative industrial building that it is developing.

Priority Wire & Cable, a wire and cable supplier, leased 88,575 sf to expand its national network of distribution centers into Colorado.

“It’s good to see another new company to Denver,” said CBRE Senior Vice President Mike Camp.

“They feel like it’s a place that has a good, vibrant economy and they need to be here to service their customers,” he said.

Priority Wire & Cable is based in Little Rock, Arkansas. Camp and Corby Rolin of CBRE represented the tenant in the lease transaction.

The building is the fifth to be built at Enterprise Business Center and comprises the second phase of the park, located near the southwest corner of Interstate 70 and Havana Street. General contractor Murray & Stafford will complete construction by the end of April. Ware Malcomb is the architect.

“We were fortunate that Priority Wire & Cable selected our location and helped kick off the lease-up of the next phase,” said Kevin Kelley, vice president of United Properties. “Large blocks of available space are diminishing quickly in the central area, and as a result we are negotiating with multiple users for the remaining vacancy.” Newmark Grubb Knight Frank brokers Mike Wafer and Tim D’Angelo handle leasing at Enterprise Business Center, which launched the Denver market’s current round of speculative industrial construction and helped make preleasing of industrial space in the market commonplace.

The industrial market is tight and continues to tighten in spite of the construction underway in the market, said Wafer. “The construction that’s underway is not keeping up with demand,” he said, adding there are very few large blocks of space available.

The first phase of Enterprise Park, a Class A industrial development, consisted of four buildings with more than 701,000 sf, 670,770 sf of which is leased.

United Properties is a Minneapolis-based commercial real estate development and investment company.

Other News

-2014 was the strongest year for industrial construction in the Denver market since 2008, with more than 2.8 million square feet delivered, according to CBRE.

“While some developers err on the conservative side with rents still not cresting prerecession levels and rising construction costs, there is strong growth in both speculative and build-to-suit construction owing to high demand, particularly for Class A space,” the company said in its 2015 Denver Market Report. More than 3 million sf was under construction as of the fourth quarter, up 17.9 percent from the previous year.

Drivers for the increased activity included a big improvement in residential construction – a 45.9 percent increase in permits for single- and multifamily homes. The marijuana industry has absorbed an estimated 3 percent of Denver’s inventory, mostly Class B and C space, helping push prices higher in certain market segments, CBRE noted.

Last year’s industrial construction included the largest speculative industrial building ever constructed in the Denver market, a 500,000-sf warehouse at Majestic Commercenter. More construction is projected to break ground this year, including Crossroads Commerce Park, a Trammell Crow project planned to include approximately 1 million sf.

The vacancy rate at the end of the fourth quarter – the 19th consecutive quarter of positive absorption – was 4.6 percent, according to CBRE. Approximately 3 million sf was absorbed, nearly twice the amount absorbed in 2013 and the largest amount since 2007.

-An investor paid $1.58 million for a 30,060-sf industrial building at 6191 E. 38th Ave. in Denver, a deal indicative of demand for space by traditional vs. marijuana grow companies, said George Moseley of Sheldon-Gold Realty Inc. The property, whose zoning doesn’t allow marijuana uses, drew significant activity and eight offers. The going-in cap rate was 6.45 percent on a below-market lease with more than three years remaining, Moseley said.

“It’s a good building. It’s older, but it’s in good shape, clean environmentally,” said Moseley, who represented the seller, Korenic Properties LLC. Indvest LLC, represented by Ilya Klein of Unique Properties LLC-TCN Worldwide, was the buyer.

A. Alliance Moving and Storage occupies the property.

-Natural Food Works, an operational partner for organic and natural food brands, subleased 21,655 sf of industrial space at 4220 Carson St. in Denver for its third facility, which also will serve as its headquarters.

“This will allow us to bring in new production processes, including adding high-pressure processing capabilities to further support the growing natural, health brands in the Rocky Mountain area. In addition, the new space has two floors and plenty of refrigeration, as well as room for expansion,” said Robb Casoria, Natural Food Works CEO. “We recently had two of our eight clients move their base of operations from the East Coast this past year, more evidence that the Boulder-Denver area is the epicenter of the natural/organic food industry.” Natural Food Works subleased the space from Udi’s Bakery, which continues to occupy a portion of the building. The property is located within Mountain West Business Park at Interstate 70 and Peoria Street.

Neil Littmann and Scott Reichenberg of The Colorado Group Inc. represented Natural Food Works. Drew McManus of Cushman & Wakefield of Colorado represented Udi’s.