Colorado Real Estate Journal -
Speculative industrial development is returning to the southeast Denver industrial submarket. Central Development and Bradbury Cos. are developing a 98,875-square-foot, 24-footclear building at HighField Business Park, a 100-acre development near E-470 and Peoria Street. HighField III, the third building to be built in the park in the last three years, will be the first spec building in the southeast industrial submarket in five years. It is on a fast track for delivery in November – not a moment too soon, according to industry experts. Absorption of industrial space in Denver spiked last year, accounting for the second-highest absorption number on record, 4.2 million sf. The market has seen 13 consecutive quarters of positive absorption, and southeast tenants that need 15,000 sf or more have very limited options. “The activity over the last few years is unprecedented, and that is why we are so confident about the spec development and team we have in place. Similar to the broader real estate market, the industrial market has experienced an imbalance in supply and demand,” said Tom Bradbury, principal of Bradbury Cos., whose family has owned the HighField land for 70 years. “In three years, the park has really come of age, and it will be a significant player in this next market cycle,” said Jeremy Records, Central Development principal. According to CBRE Vice President Jeremy Ballenger, two buildto-suit deals at HighField exemplify the types of users active in the southeast submarket. Gordon Holdings Inc./Polystrand, which makes reinforcedthermoplastic composites for the trucking, automotive, air cargo and wind energy industries, opened a 120,000-sf corporate headquarters and manufacturing facility last spring. Applied Control Equipment, which provides automation solutions to industries including oil and gas, life sciences, mining, chemicals, and food and beverage, will occupy a 63,981-sf build-to-suit. HighField Building III is a tiltup concrete, front-park, rear-load building with 10 dock doors (expandable to 21) and five drivein doors. The project will offer a 1.6:1,000 parking ratio, heavy power, ESFR fire protection and divisibility to 12,600 sf. Intergroup Architects designed the building. DSP Builders is the contractor. “We have seen a noticeable flight to quality in the market. This property will provide functional space to tenants looking for Class A and those needing expansion options of 50,000 square feet or more,” said CBRE First Vice President Tyler Carner, who represents the owners with Ballenger and CBRE Executive Vice President Jim Bolt. Although it will be new construction, rental rates will be comparable with market rents and will vary depending on the type of use, Records said. “It could be a full flex-type user all the way to a true distribution use,” Ballenger commented. According to Ballenger, continuing strong absorption in the southeast submarket and an absence of new construction “has resulted in a suddenly tight market with especially few Class A options.” Tenants looking at least 15,000 sf with ceiling clearance of 24 feet or greater have five options. “You typically see 30 to 40 15,000-square-foot deals a year, and you’ve got five options right now,” he said. At 50,000 sf or more, there are zero options south of Hampden Avenue, he said. The upshot is tenants are renewing leases in existing, older buildings. “If you want to stay southeast in that size range, it’s a renewal or build-to-suit,” Ballenger said. Denver’s overall industrial vacancy rate is a mere 4.9 percent. HighField III is being built on 6.5 acres at the northwest corner of HighField Parkway and Compark Boulevard. HighField Business Park has an additional 60 acres for development of industrial, flex and office space, including corporate campus uses.