Colorado Real Estate Journal -
Investors have regained their appetite for Class A suburban office assets, and Plaza Tower One is Denver’s case in point. Granite Properties’ acquisition of the 468,885-square foot Greenwood Village office tower is, dollar-wise, the largest suburban asset ever to trade in Colorado. No one contacted about the transaction would release the price, but public records show the property at 6400 S. Fiddlers Green Circle sold for $82.5 million – well above the typical investor threshold for suburban office assets in Denver. The price equates to $175.94 per sf. Granite Properties plans to invest millions more in upgraded finishes on multitenant floors, new signage throughout the property, significant system upgrades, elevator modernization, parking garage improvements and an enhanced exterior plaza and landscaping. “This is an exciting opportunity for Granite that is just the first step in growing our Denver platform. We take great pride in our buildings and look forward to enhancing Plaza Tower One with the improvements we have planned,” Stephanie Lawrence, Granite’s managing director, said in a statement. Suburban office assets fell out of favor in Denver and across the country toward the end of 2011, but all that changed just in the last month to 90 days, said CB Richard Ellis broker Tim Swan. “I think it’s optimism about real estate fundamentals and where we think we’re going as a real estate market and as an economy, but also it’s capital market dynamics,” he said, adding the market is more fluid and, early in the year, investors are flush with capital to place. “It starts with the general sense of optimism across the capital spectrum, and it’s backed up by positive trends locally,” said CBRE broker Geoff Baukol. More than 515,000 sf of office space was absorbed in the southeast suburban market over the last three quarters, he said, noting that the vacancy rate for Class A space hasdropped to 9.7 percent. Investor interest in Plaza Tower One was “significant,” according to Swan, who represented seller Clarion Partners with Baukol and CBRE broker Kevin Shannon. “If there is an iconic suburban asset in metro Denver, this is it,” Swan said. “This building was built as Chevron’s regional headquarters, and the architecture and the structure of the building reflect that. It’s unique.” A 22-story tower next to the Village Center Station light-rail stop, the building sits on one of the highest office sites in Denver, offering panoramic views of the city and Front Range. “The opportunity to own the market’s premier suburban office asset, which is directly on light rail, is rare,” said Baukol. Amenities include an on-site fitness center, cafe and conference center, as well as a fully enclosed parking garage. Plaza Tower One is Energy Star labeled and LEED Gold certified, which Granite Properties said aligns with its commitment to sustainability and creating “exceptional work environments” for tenants.
The largest of the 40 tenants are TCF National Bank, ThyssenKrupp Robins, Via West and Merrill Lynch. The property was 88 percent leased at the time of the sale, with varying lease expirations over the next five to 10 years. The largest block of available space is 16,000 sf. Lease rates in the building, which has a parking ratio of three spaces per 1,000 sf, are $25 to $29 per sf full service. A Colliers International team led by Bob Whittelsey will handle leasing for Plaza Tower One. Swan and Baukol expect to see continued interest in investment-grade assets in Denver this year. “Barring some unforeseen macroeconomic or geopolitical event, we think there are going to be a lot more assets – both suburban and central business district – that might have received lukewarm reception in the late third and fourth quarters of last year that this year will be viewed far more positively,” said Swan. Denver is a preferred market nationally, added Baukol. “Properties, therefore, are going to be sought after, and that’s going to be a big factor in their pricing and their success in the market.” Plaza Tower One is Granite Properties first acquisition in the Denver market since it bought Granite Tower in 2005. The company sold Granite Tower in 2010 for $149 million. A privately held commercial real estate investment and management company with offices in Denver, Atlanta, Dallas, Houston and Los Angeles, Granite Properties has acquired or developed more than 20 million sf of commercial real estate totaling $3.4 billion since 1991. It intends to grow is Denver portfolio through acquisitions of Class A and B office assets.