CREJ - page 1

by Jill Jamieson-Nichols
Panorama Corporate Cen-
ter has traded for $190.62
million in yet another block-
buster deal for the southeast
suburban office market.
Denver-based EverWest
Real Estate Partners and capi-
tal partner Independencia
Asset Management bought
six of the buildings within
the Class A office park at
Interstate 25 and East Dry
Creek Road, at the Dry Creek
light-rail station in Centen-
nial. Independencia is affiliat-
ed with a Chilean investment
company.
“Our strategy (with Inde-
pendencia) is to buy assets
along transportation hubs.
We now have two fairly
major office projects along
the rail,” said EverWest Man-
aging Principal Larry Lance.
The other is the Broadway
Station office complex.
The Panorama transaction
included 780,649 square feet
of office space, along with a
6.31-acre development parcel.
While the price wasn’t dis-
closed, the number that was
publicly recorded translates
to $244.18 per sf.
United Launch Alliance
and Comcast lease four of the
buildings. Overall occupancy
was 93.8 percent at the time of
the sale, about the same as it
was when seller Miller Global
Properties bought the park
two years ago for $145.3 mil-
lion, or $176.80 per sf. That
deal also included a seventh
building, which Miller Global
recently sold for $9.08 mil-
lion.
When Miller Global Prop-
erties bought Panorama
Corporate Center, two major
tenants – Charles Schwab
and Archstone – had already
given notice that they would
vacate. “They had a campus
that was very well leased, but
with some significant known
vacancies,” said John Jugl,
senior managing director at
Holliday Fenoglio Fowler.
Yet, “Before the tenants could
even go dark, Miller Glob-
al leased the space to great
users without experiencing
any downtime,” said Jugl,
who handled the most recent
and previous sales with HFF
Senior Managing Director
Mary Sullivan.
Schwab built a new campus
in Lone Tree, and Comcast is
taking the two buildings it
occupied at Panorama Cor-
EverWest Real Estate Partners and Independencia Asset Management bought six buildings and a
development site at Panorama Corporate Center.
by John Rebchook
The Denver-area apart-
ment market, which has ben-
efitted by an unprecedented
stretch of rising rents and
falling vacancies, may finally
be showing signs of falling
back to earth.
However, no one is pre-
dicting the type of apartment
bust that followed other
boom periods. Two experts
recently addressed the poten-
tial that more supply is being
added than is needed, espe-
cially in the downtown Den-
ver area.
While demand is still
strong in the Denver area,
“We are putting up a little
more than we need,” Glenn
Mueller, a professor at the
Franklin L. Burns School of
Real Estate and Construction
Management at the Univer-
sity of Denver, said at last
month’s Emerging Trends
in Real Estate conference.
Emerging Trends is the annu-
al national and local forecast
by the Urban Land Institute.
Last year, there was
demand for about 8,000 units
and 10,000 were built, Muel-
ler said.
This year, “There is demand
for 9,000 units and we are
putting up 12,000,” Mueller
said.
“That is an oversupply,” he
said. “We are building slight-
ly more than we need.”
Separately,
apartment
appraiser Cary Bruteig,
who publishes Apartment
Insights, an online database
and analytical report, recent-
ly released his fourth-quarter
report, which showed some
softening of the market.
Bruteig’s findings include:
• In the fourth quarter, the
overall vacancy rate of apart-
ments with 50 or more units
rose to 4.87 percent. That
is not only 74 basis points
higher than the 4.17 percent
vacancy rate at the end of
2014, but also it is the largest
quarterly increase since the
first quarter of 2009, in the
wake of the global financial
crisis, Bruteig’s report points
out.
• Monthly rents showed
the largest quarterly drop
since Bruteig launched his
report 11 years ago. The aver-
age metrowide rent dropped
by $20 to $1,293, or $1.50 per
square foot. While a relative-
ly small dip, it was the first
quarterly drop in six years.
•Year-over-year, rent growth
was 8.6 percent. While that is
quite high, it represents a big
drop from the 12.5 percent
year-over-year drop from the
third quarter.
• Average metrowide con-
cessions increased to $18 per
month, the largest concession
in almost three years. It also
is almost four times the $5
per month concession in the
third quarter. Concessions in
the fourth quarter accounted
for 1.39 percent of the gross
rent.
On the positive side,
demand is still strong.
Bruteig’s report shows that
1,470 units were absorbed,
representing the best fourth-
quarter performance since he
launched the report.
A total of 6,659 units were
absorbed last year. That is
the second best year in the
11 years of the survey. It was
only topped by the record
7,071 units absorbed in 2014.
Healthy absorption reveals
that rental demand is strong,
This slide was shown at last month’s Emerging Trends conference.
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