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Denver Skyscraper Sells for $67 Million

March 19, 2018

 

 

Denver Skyscraper Sells for $67 Million

A Denver skyscraper has sold for $67.2 million, per Denver County public records. It was sold by Unico Properties and purchased by "1660 Lincoln St Property LLC," registered to 40 Danbury Rd. in Wilton, Connecticut. The company at that address is Westport Capital Partners. It did not respond to comment in time for publication. In 2013, Unico purchased the property for $38 million, and renovated the building, ultimately cutting its energy use by 56 percent. Renovations included adding a fitness center and painting it silver. Unico also did not respond in time for publication. Tenants of the building include CRL Associates, Trinity Petroleum Management, CCR Law Firm, Hunnicutt & Appelman and the Denver Business Journal. 1660 Lincoln St. was built in 1972 and is 279,942 square feet. (Denver Business Journal)

 

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With I-70 Construction Headaches Looming, Developers Spy an Opening in Adams County

The industrial real estate market along Interstate 70 is Spandex tight. Add in that the highway is staring down the barrel of a multiyear reconstruction sure to snarl countless tractor-trailers and panel trucks in traffic jams after it starts this summer, and what have you got? If you’re a developer sitting on fertile industrial ground along another north metro highway, you have opportunity. Crews are scheduled to break ground April 3 on the first building of 76 Commerce Center, a 1.8 million-square-foot industrial park at the juncture of Interstate 76 and East 160th Avenue in Brighton. About a dozen miles southwest, in Westminster, another builder is nearly done tilting up the walls on four industrial buildings that will add 325,000 square feet to that city’s commercial cache. “When we saw the I-70 construction plans, this really became the infill site that we were looking for,” 76 Commerce Center developer Paul Hyde said last week. “It’s our opinion we’ll be able to get to either end of I-70 without the traffic.” His company, Hyde Development, is partnering with Mortenson construction to build six Class A industrial buildings on 122 acres in Brighton over the next five to six years, starting with next month’s 266,000-square-footer. Newmark Knight Frank is in charge of wrangling tenants for the spec project. Representatives have called preleasing activity “brisk.” A rendering of the first building slated for 76 Commerce Center, a 122-acre industrial park coming to the I-76 corridor in Brighton. Crews are scheduled to break ground on the 266,240-square-foot spec building April 3, 2018. The team so believes in its beat-the-traffic sales pitch, it is using a Google Maps-inspired image — with I-76 colored in green and I-70 and north Interstate 25 in red — in its marketing materials. But that’s not all it’s selling would-be tenants. The property is located across the highway from a residential neighborhood, a few blocks from a King Soopers and a little over a mile from a shopping center with a collection of restaurants. It’s also in a part of the metro area that is expected to see the strongest population growth over the next handful of years, meaning plentiful local employees. Since 2000, Brighton has seen its population nearly double to more than 38,000 people, according to U.S. Census Bureau data. “It’s the opposite of what normal industrial development is like. Normally, we’re first. Here, we’re last,” Hyde said. “And it has the labor force that people have been having such a hard time finding.” At Huron Street and West 116th Avenue, Chicago-based Conor Commercial Real Estate counts a similar collection of perks for its four-building project. The Park 1200 Tech Center, an infill project within the existing Park 12 Hundred infill development, could begin welcoming tenants this summer, developers say. Located behind the giant satellite-dishlike headquarters of Digital Globe (formerly Avaya), Park 1200 Tech Center is surrounded by neighborhoods, shopping and dining options, and sits across the street from a Regional Transportation District park-n-Ride. It is a few miles south of the I-25/E-470 interchange, offering tenants an I-70-less travel option to the airport. “What we’re seeing is a lot of manufacturing and technology-centric users, they want the amenity base for their employees,” said Derek Buescher, a development manager with Conor. Amazon is getting in on the north-metro act. The e-commerce juggernaut’s next Colorado facility — an 855,000-square-foot, robot-laden fulfillment center — is under construction at I-25 and East 144th Avenue in Thornton. The planned 76 Commerce Center — featuring 32- to 36-foot clearance heights coveted by logistics and distribution companies these days — could serve as a proving ground for I-76 as an industrial corridor, said Jeremy Ballenger, a former industrial developer and senior vice president with real estate services firm CBRE. “People are certainly watching it to see how it turns out as a litmus test,” he said. One thing is certain: Large industrial tenants are thirsty for options. Along the I-70/Denver Intentional Airport corridor — the Denver area’s largest industrial submarket, with more than 82 million square feet of space — Ballenger last week counted two available options for tenants seeking 200,000 square feet or more of Class A space. “I think the example of just how few opportunities there are on I-70 is driving a lot of developer interest up I-76,” he said. “It’s very, very difficult to find a development site on the I-70 corridor.” (Denver Post)

 

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Is Cold Storage Heating Up?

A new report by CBRE, entitled, “Cold Storage: About to heat up?” said an increase in online grocery sales will likely result in an increased demand of as much as 35 million square feet of U.S. cold-storage space shifting from retail stores to warehouses and distribution centers within the next seven years, according to a new report from CBRE. The rise of e-commerce will be the biggest disruptor in the segment, impacting where food is stored and how it gets to people’s homes. “The U.S. market for warehouses and distribution centers has been on a multiyear run, but there still are segments in the relatively early stages of their growth, like cold storage,” David Egan, CBRE’s global head of industrial & logistics research, said in a prepared release. “As e-commerce expands further into the grocery business, the resulting growth of the food supply chain and demand for new, climate-controlled warehouse space could very well be the new opportunity that investors and developers have been seeking.” Currently, the U.S. has a capacity of about 3.6 billion cubic feet of food-commodity cold storage, which is situated in 180 million square feet of industrial space, and 2 billion cubic feet of similar capacity covering 300 million square feet of retail space. The USDA noted that states flush with the largest food-commodity industrial cold-storage space—such as California, Washington and Florida— are most likely near major food producers and population centers. Analysis by CBRE confirmed this, as it found greater concentrations of food-grade, cold-storage facilities occur in states with substantial agricultural production, large populations or both. CBRE estimated California as having the most industrial cold-storage space (nearly 400 million), followed by Washington state (271 million), Florida (260 million), Texas (231 million) and Wisconsin (228 million). FMI/Nielsen revealed that while online grocery sales represented just $19 billion in 2017, accounting for 3 percent of total grocery sales for the year, projections are the category will rise to $100 billion by 2024, which would represent 13 percent. The CBRE cold-storage report concluded that depending on the property type used to fulfill online grocery sales, up to 35 million square feet of cold storage for food distribution could be shifted from retail to industrial properties. (Commercial Property Executive)

 

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Global Property Investors to Increase Commercial Purchase Activities in 2018

According to CBRE's newly released Global Investor Intentions Survey 2018, commercial real estate investors worldwide are planning more acquisitions in 2018 compared to last year, with industrial and logistics the most targeted asset class. CBRE's 2018 survey reveals that the balance between those investors planning to spend more on commercial real estate over those planning to spend less is 33%-up from 24% last year and reversing a three-year trend in the other direction. The balance of investors planning to sell more real estate over those planning to sell less rose to 27% from 15% in 2017, signaling a potential increase in market liquidity. "Investors are taking advantage of the current strength of the market to diversify and make necessary changes to their portfolios. Planned acquisitions will be balanced by disposals, which is healthy for the marketplace and is likely to ease downward pressure on cap rates. While investors remain interested in core and gateway markets, they are also willing to go beyond in search of income and are targeting emerging real estate sub-sectors, such as retirement and student housing. This is positive for portfolio returns and also ensures that capital meets the needs of a changing society," said Chris Ludeman, Global President, Capital Markets, CBRE. Globally, income (38%) is the key factor motivating investors to place capital in real estate this year. This is consistent across regions and has been trending up over time. Commercial real estate's ability to offer diversification, both by asset class and geographically, is also considered an important factor by global investors. Industrial and Logistics property (commonly known as I&L) is the most popular real estate sector (41%) for global investors in 2018, followed by office (21%) and multifamily/Private Rented Sector (PRS). On a regional basis, I&L is the most attractive sector in the Americas, with office falling behind multifamily. In APAC, office is still the preferred sector for investors due to the size of that region and its relative liquidity, while I&L is benefiting from increased interest due to structural changes in the region. In EMEA, offices and I&L are even in terms of preference, although logistics has seen a steep year-over-year increase in interest. Global interest in real estate "alternatives" has grown significantly, with 67% of investors actively pursuing opportunities in assets like senior and student housing in 2018. Retirement living has seen the greatest growth in investor interest, as thoughtful investors seek to capitalize on demographic change in advanced economies toward an older population structure, as well as more standardized retirement living solutions. Student housing has also increased in popularity, especially in EMEA. North America (39%) is the top regional destination for global real estate capital, despite rising interest rates reflecting a potent mix of economic growth and currency weakness. Western Europe (32%) has seen a rise in popularity, due to improving economic fundamentals and recent elections in key markets such as France and the Netherlands. In APAC, relative preference for "Developed Asia" has grown, with much of this increase attributable to Asian investors shifting from North America as their preferred location. "Our research suggests another strong year for global real estate, with investors remaining positive about its ability to provide income return and diversification benefits, along with the continued emergence of interesting new sectors. That said, investors remain apprehensive about the potential for global economic shock or interest rates that increase faster than now expected," said Richard Barkham, Global Chief Economist, CBRE. (World Property Journal)

 

Survey Says Agility, Reduced Real Estate Costs Among the Biggest Advantages of Flexible Office Space

A new survey from The Instant Group, a workspace innovation company, and the global architectural firm HLW, asked co-working operators, landlords and corporate and private occupiers how a flexible workspace approach impacted their businesses. The survey, based on more than 500 responses, found that companies using flex space felt agility was the greatest value, allowing them to assign employees to a space on short notice, as well as easily expand or reduce the amount of space at any site when needed. They also cited added benefits, including reduced real estate costs, flexibility and greater productivity. The survey also found that while company respondents were neutral about the brand of a flex space operator, nearly half (42 percent) want elements of their own brand in the space they occupy. The report’s authors suggest that this is an area operators need to address to broaden their appeal. “Choice of an operator brand is geographical, because there aren’t many national or global co-working operators like WeWork and Spaces on the scene yet,” says Ryan Hoopes, Dallas-based senior associate at real estate services firm Colliers International, who heads the firm’s global flexible workspace advisory practice. The survey found that landlords, on the other hand, are concerned with an operator’s brand, as they believe the presence of flex space might impact their buildings’ value and that an operator’s brand may contribute to the building’s worth. Hoopes says that there is debate around whether the presence of a flex space operator does, in fact, boost the value of an office building, and suggests it depends on the buyer. “We are on the side that believes that while it may currently not add value from a capital markets standpoint, it almost certainly adds significant intrinsic value to an asset that will translate much better as the flexible workspace movement builds,” he notes. The survey found that the number one driver for landlords to add a flexible operator to their building is that it brings in new tenants. “Co-working space provides a low barrier to entry for small businesses and start-ups that may eventually grow into larger spaces of their own,” Hoopes says. “Co-working space is a product of businesses no longer wanting to make a long-term real estate commitment.” He adds that a report from Deloitte’s Center for the Edge found that 50 years ago the life expectancy for a S&P 500 company was 75 years. Today it’s 15 years and declining. End users of flex space said that flexibility and adaptability—the ability to choose where and when they work—have a positive impact on how they engage with work. Other benefits include expanding their professional networks, business opportunities and a greater feeling of energy. Nearly half of respondents (42 percent) expect to spend less time working in a traditional office setting in the future, but a larger portion of occupiers (55 percent) see themselves working from a variety of locations. As a result, an overwhelming majority of flex-space occupants cited wireless connectivity and wireless security as the most important technology-related features in their workspace, as those factors support work flexibility. John Williams, who heads marketing at The Instant Group, attributes growth in flex space to operators’ understanding that end users want community and experience and are catering to these desires. Borrowing from retail and hotel operators, he says they are creating workplace destinations, which represents a sea change in the office sector. The report notes that the range of co-working and flex space has grown exponentially. As the market is made up of predominantly smaller operators, they are in a position of knowing their target audience well and can tailor their offerings accordingly. (National Real Estate Investor/Patricia Kirk)

 

 

 

 

CURRENT

1 MONTH PRIOR

1 YEAR PRIOR

FED TARGET RATE

1.50

1.50

1.00

3 MONTH LIBOR

2.12

1.84

1.14

PRIME RATE

4.50

4.50

3.75

10 YEAR TREASURY

2.85

2.91

2.54

30 YEAR TREASURY

3.08

3.16

3.15