Colorado Real Estate Journal - April 6, 2016
Long before Vestar recently paid $76.15 million for Bowles Crossing, it had its eye on the open-air retail center in Littleton. “We had our eyes on that center for a couple of years,” said David Malin, a vice president of acquisitions and development for Phoenix-based Vestar. Why? “No. 1, we are very bullish on the Denver market overall,” Malin said. “We just think it has the right fundamentals for our capital partners’ investments for the long term.” And the 409,457-square-foot Bowles Crossing, which sits on almost 54 acres at 8055 W. Bowles Ave., is right in Vestar’s wheelhouse “All we invest in is large-format, open-air retail,” Malin said. It also wants to own the dominant center of that type in its submarket. Bowles Crossing is, without doubt, the alpha dog of open-air retail in the high-demographic southwest Denver area, according to Malin. The same was true in 2014 when Vestar paid $123.5 million to Forest City Enterprises for its Orchard Town Center in Westminster. “Of course, we didn’t decide that we would buy our first center in the north part of town and then decide our second one should be at the other end of the metro area,” Malin said. “That’s not how those things work,” he said. ‘When you are buying the dominant open-air retail center, you are not going to find one on every corner,” he said. In other words, they are few and far between, and there will be a limited supply of such centers in any market, he noted. Vestar faced a number of competitors for Bowles Crossing, said Mike Winn, who represented the seller, with fellow CBRE partner Tim Richey. Winn and Richey represented the seller, L&B Realty Advisors. The center, built between 1986 and 1996, had undergone a $90 million renovation by General Growth, he noted. “At this deal size, of course, you are going to have predominately institutional investors looking at it,” he said. Tenants at Bowles Crossing include a new Trader Joe’s, DSW Warehouse, Ross Dress for Less, Gordmans and a newly renovated AMC Theatre. The demographics are strong. The average household income within a 1-mile radius is $101,723. In addition, 52,237 vehicles pass Bowles Crossing daily at northbound Wadsworth Boulevard and 41,091 pass it on southbound Wadsworth each day. Bowles Crossing sits on 53.98 acres, a site large enough to accommodate future developments, including apartment communities. “I think a couple of things are in play here,” Malin said. “First, it is important to understand that on a macro level, a lot of people in this country want to live, work and play in the same environment. People are leaning toward this kind of urbanism, even in the suburbs.” That trend is even more pronounced in a market such as the Denver area, “where you skew to a lot of baby boomers and millennials, who really want that kind of lifestyle,” he said. Housing at Bowles Crossing makes sense, he said. “At a micro level, if you look at the history of Bowles Crossing (which was built between 1986 and 1996), it was originally planned to be an enclosed mall,” Malin said. “But it was never built that way. So the amount of potential retail improvements for the entire site greatly exceeds what is there today. But I don’t think it is necessary, or a good idea, to build out all of the space as retail. Bringing a housing component makes sense on both a macro and a micro level.” The housing, he said, “will be back to the rear” of the site. It’s too early to say how many units would be built, he said. “We would bring in an experienced multifamily developer and joint-venture with them,” Malin said. “We have experience doing JV partners on multifamily as well as office developments,” he noted. Construction likely will take 12 to 36 months, he said. As far as Orchard Town Center, “That is right on schedule,” Malin said. “We’ve done a full rebranding of the entire project, we put in a new play area, new landscaping and have added an H&M, as well as six to seven new inline tenants in the town center.” A new building for a Marshalls also was added, he noted. Even before the ink was dry on the Orchard Town Center, Vestar was looking for other opportunities in the Denver area, culminating with Bowles Crossing. “We did not stop our search,” Malin said. “We are seeking other opportunities,” he added. “Typically, we purchase assets in the $50 million to $150 million range. That is kind of our sweet spot.”