Colorado Real Estate Journal - June 1, 2016
A local investor recently paid $4.85 million for Centennial Corner, a retail center near a Walmart Supercenter. The investor, who did not want to be named, paid $259 per square foot for the 18,719-sf, two-building center at 10909 E. Arapahoe Road in Centennial. “It was an off-market deal,” said Tom Ethington, who represented the seller in the transaction with Robert Edwards. Both Ethington and Edwards are senior advisers at Pinnacle Real Estate Advisors. Kevin Calame and Matt Lewallen, also senior advisers at Pinnacle, represented the buyer. The buyer had sold an apartment building in the Denver area and purchased Centennial Corner in a 1031 exchange. “I would not say this has a high cap rate (at 6.1 percent), but the delta between apartment cap rates and retail cap rates is pretty wide in today’s market,” Ethington said. “The buyers took the opportunity of this sellers’ market in multifamily and traded into a higher cap rate retail asset with less management,” Calame said. The center will have a stabilized cap rate estimated at 7.5 percent once two empty spaces, for a total of 2,760 sf, are leased. “This has stable income from national tenants, but it also has a value-add component with the two small spaces that are available,” Ethington said. Woodbury Corp. of Salt Lake City developed the site in 2007. “It was built along with a larger parcel that included the Walmart,” Ethington said. “Woodbury was kind of the master developer of the entire site,” he said. “The time was right for the Woodbury Corp. to sell this asset as they realized their original development goals for Centennial Corner,” Ethington added. “With Walmart as the shopping center anchor, the new owners should enjoy continued rent growth, creating long-term value-add appreciation,” he said. Walmart, of course, was not included in the acquisition. Domino’s Pizza and Anytime Fitness are among the major tenants at Centennial Corner. While Woodbury hired Pinnacle to provide an “opinion of value,” Centennial Corner would have generated a lot of interest if it had been shopped to the entire market, Ethington said. “The buyer was a good fit because he was in an exchange and came along at a good time and at the right price,” Ethington said. “But, yes, given the value-add component with the lease-up, the shopping center is really anchored by a Walmart Supercenter, and (given the) shortage of deals like this, there is a good backlog of buyers who would have been interested in it,” he said. It also is in a high demographic area. Pinnacle’s research found that within a 1-mile radius of Centennial Corner, the average household income is $100,380. Within a 3-mile radius, the average household income jumps to $113,088. The median household income is $86,377 and $87,533 in a 1-mile and 3-mile radius, respectively. The site also has a lot of traffic, with an average daily traffic volume of 61,256 vehicles along Arapahoe Road. Other News Stella’s on 16th, a new restaurant concept offering café style service, has leased 6,760 square feet on the ground floor of the Triangle Building developed by East West Partners. Stella’s on 16th will move into the ground-floor space at 1550 Wewatta St. this fall. “Stella’s on 16th is the perfect addition to the Triangle Building as it will appeal to people on the move in the Union Station area,” said Chris Frampton, managing partner at East West Partners. “We also love that it’s a new concept as the Triangle Building is becoming a magnet for entrepreneurism in the Denver community,” Frampton added. Stella’s on 16th, with seating for about 150, will prepare and serve gourmet sandwiches, salads, soups and seasonally inspired dishes. It also will provide artisanal cheeses, charcuterie, freshly baked pastries, desserts, and handcrafted culinary products from around the world. It will be open seven days a week. Anchor tenants in the Triangle Building include WeWork and Liberty Global. They already have moved in. Autodesk, a leader in 3-D design, engineering and entertainment software, recently committed to lease more than 20,000 sf. It plans to move into the Triangle Building in late June. “The Triangle was a natural fit for us when choosing a location for Stella’s on 16th,” said Brian Cohen, proprietor of Stella’s on 16th with his wife, Stella. “Having WeWork in-house supports the philosophy of Stella’s and being in close proximity to Union Station, which has become the Grand Central Station of Colorado, integrating all forms of transportation in one place, you really could not ask for a better locale,” Cohen said. An unidentified buyer paid $975,000, or $206.22 per sf, for a 4,728-sf, single-tenant retail building leased by Burger King at 6801 W. 120th Ave. in Broomfield. Cody Stambaugh, Matt Ritter, Jeff Johnson, and Peter Sengelmann with the Johnson Ritter Team at Pinnacle Real Estate Advisors represented the seller in the transaction. “The Burger King tenant has a short-term lease at the property, expiring in the end of 2016, which complicated the deal for many investors. But we were able to secure a developer who plans for future redevelopment on the site,” Stambaugh said.