Colorado Real Estate Journal - December 2, 2015
Majestic Realty Co. has added 530 acres to its Denver-area land holdings to meet anticipated demand associated with e-commerce. Potentially housing some of the biggest industrial buildings to be built in Denver, the land extends east from the company’s 1,000-acre Majestic Commercenter at Interstate 70 and Tower Road to E-470, and from 26th Avenue to 38th Avenue. The new “e-Commercenter” positions Majestic Realty to deliver product to a wide range of users, from smaller retailers to the Amazons of the e-commerce world, according to Majestic Executive Vice President and Development Director Randy Hertel. It will accommodate up to 7 million square feet at build-out, including four buildings of 1 million sf or more. “E-commerce is driving the commercial real estate industry in ways we’ve not seen before. We’re seeing greater demand in the 1 million-and-up square-foot range with land requirements and tenant improvements slightly different than the traditional warehouse and distribution building,” said Hertel. “With this additional flexibility in our overall park structure, we’re well positioned to accommodate the increasing activity and wide range of user needs, from build-to-suit to land sales and speculative development.” Majestic bought the land from the Grimm family, third-generation homesteaders. According to Majestic Realty, online retail sales are expected to reach $370 billion by 2017, up from $231 billion in 2013. That translates into greater demand for logistics facilities tailored to the needs of e-commerce. “It’s speed to market, speed to the consumer and wanting to locate these large e-commerce facilities close to consumers,” said Hertel. Majestic Realty has developed five 1 million-sf buildings for Walmart in the last 24 months in places including Southern California, Atlanta and Florida. The large size is necessary because, “They’re storing so many products and a high quantity of products as well,” he said. “Our interest with this property was knowing that the trend for the e-commerce-sized facilities was running rampant throughout the country. Really, it’s just a matter of time before they would end up coming into the Denver/Aurora marketplace,” Hertel said. “Companies are circling the metro market to find solutions for their e-commerce needs. It’s a question of when, not if,” said Cushman & Wakefield Senior Associate Taylor Hazard. Majestic Commercenter’s location along Interstate 70 and now E-470, as well as proximity to Denver International Airport, is a “huge benefit” for users, Hertel said. The company intends to use the new acreage for large build-to-suits for sale or lease, or land sales, to large e-commerce users. Speculative building will continue to occur within the existing park. Cushman & Wakefield Director Kirk Vanino, along with Hazard, represented the seller in the land transaction and will market the new site with Majestic Realty. “Our primary industrial corridor hasn’t seen a new industrial development like this in 20 years,” said Vanino, who noted the acquisition bookends the I-70 industrial corridor. “What will set this development apart is the ability to attract traditional industrial occupiers as well as now having room for massive distribution centers and/or e-commerce facilities needing 1 million square feet with ample parking,” Vanino said. Majestic Realty acquired Majestic Commercenter in 1995 and has 14 buildings totaling 3.5 million sf, including a 500,000-sf speculative building completed in 2014 and a 450,000-sf spec building scheduled for completion late this year. The park’s vacancy rate is in the single digits. “When we first started developing the Commercenter, we were building 200,000-square-foot buildings that were divisible down to four units if necessary,” Hertel said. “Today, the typical building we are developing is more like 500,000 square feet, but now it is only divisible to 100,0000 to 150,000 square feet, two to three times larger than what we were building in the late ‘90s.” Majestic Realty Co. is the largest privately held developer and owner of master-planned business parks in the United States.