Colorado Real Estate Journal - April 20, 2016

Melcor adds Syracuse Hill I to its southeast office portfolio

A company that recently bought two southeast suburban office assets has added a third building to its holdings in that submarket.

Melcor Developments Arizona Inc. purchased Syracuse Hill I from Triton Investments for $10.5 million, or $121 per square foot. The 82,695-sf building is located at 6021 S. Syracuse Way in Greenwood Village.

“The ownership group had recently renovated the common areas of the property, which helped significantly in increasing the overall occupancy of the property, although much of the in-place rent factor was significantly below current market rate standards,” said Riki Hashimoto of Newmark Grubb Knight Frank.

Hashimoto said in addition to the existing vacancy, Syracuse Hill I had approximately 40 percent rollover exposure in the first 18 months.

“Although this may seem like a risky proposition for the asset, the investment market really embraced this factor of having the opportunity to move the current rental rates more in line with market standards,” he said, adding there is an opportunity in some case to increase rents by $6 to $8 per sf.

There were several parties interested in the asset, but Hashimoto said the seller was comfortable with Melcor. Both companies have ties to Canada.

“The buyer was looking to add to their current Denver portfolio, and this asset fit nicely into their investment criteria. I had a lot of faith in their ability to perform based upon their current buying patterns in the marketplace,” said Hashimoto, who handled the transaction with Dan Grooters. Both are executive managing directors in NGKF Capital Markets.

Most of Syracuse Hill I’s tenants are in the 3,000- to 5,000-sf range; however, Leidos Inc. occupies approximately 11,000 sf. It is one of the building’s original tenants.

The three-story, reflective glass building was built in 1982.

Melcor Developments Arizona is the U.S. affiliate of Melcor Developments Ltd., based in Edmonton, Alberta, Canada. The company recently acquired Office Plaza at Inverness in Inverness Business Park and the Offices at the Promenade in the Denver Tech Center.