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Denver Commercial Real Estate Firm Buys Broadway Building for $17M

February 12, 2018



Denver Commercial Real Estate Firm Buys Broadway Building for $17M

A Denver commercial real estate firm has bought the Offices at the Art building on Broadway for $17.1 million. Northstar Commercial Partners said it bought the 52,000-square-foot, three-story building at 1221 Broadway at the Denver Art Museum complex. The building is fully leased by communications software company Four Winds Interactive. The Denver Business Journal profiled the company in May 2016. "This will be one of the top acquisitions in the Denver market for newer office space and we're thrilled to be involved, especially with Denver as our hometown," said Brian Watson, chairman and CEO of Northstar, in a statement. Watson is also running for state treasurer of Colorado; a race that has already attracted a bevy of candidates. "We are drawn to the iconic nature of this beautiful building in the Denver Art Museum Complex, its attractiveness as a fully-leased asset for a longer term hold, and we see additional positive opportunity being the ones to own it locally," Watson added. (Denver Business Journal)



Glendale Office Building Sells for $40M

A 12-story office building in Glendale has sold for $40.5 million, according to property records. Chicago-based M&J Wilkow Ltd. said in a statement Monday that it purchased the Cherry Creek Corporate Center at 4500 Cherry Creek South Drive as part of a joint venture with New York-based DRA Advisors LLC. The sale, recorded last week, includes a four-story parking garage in addition to the 238,000-square-foot tower. The seller was Denver-based EverWest Real Estate Partners, which paid $32.55 million for the property in December 2013, according to city records. The building is 85 percent leased, according to M&J, which will manage the property. The firm said in a statement that the building, constructed in 1978, recently underwent a $15 million renovation, and additional improvements are planned. The property is M&J’s only holding in the Denver market, although the firm previously owned Triad at Orchard Station, a 415,000-square-foot office park in Greenwood Village. It sold for $46.6 million in October 2015. (BusinessDen)



Green Roofs: Denver Property Managers Talk Concerns, Challenges

Property managers are asking themselves how a new ordinance requiring the installation of rooftop gardens will impact the cost to run their properties. The cost of the so-called "green roof initiative," which voters approved in November, will fall on developers, but questions around water, rent and structural concerns remain. The ordinance says that buildings over 25,000 square feet must dedicate a percentage of the roof to green, vegetative space. Developers could use a combination of plants and solar panels to achieve the green roof size required for their building, but 30 percent or more of the roof must be green. Existing buildings do not need to immediately add a green roof, but will upon roof replacement. The ordinance does outline an exemption for existing buildings if they are unable to provide the mandated green roof upon replacement, for example, due to the major structural alterations it would require. The proposed ordinance says that the building owner could make an application to the Denver Planning Board, who then could completely exempt the building from the requirement, or allow the building to have a smaller green roof than what would be required. A cash-in-lieu payment would be required when a smaller green roof is constructed. Multifamily residential buildings of up to four stories are exempt. The coverage required for industrial buildings is different as well; 10 percent of the roof, up to a maximum of 25,000 square feet. The version of the ordinance Denver voters passed is unlikely to be the final one. The city of Denver formed a Green Roofs Review Task Force that will develop modifications, clarifications and improvements to the bill. Any changes to the initiative would require a super-majority of 10 city council votes, so the mandates to the ordinance will be finalized later this year. "Water is king, certainly in Denver," said Josh Shoemaker, regional director of management services at Newmark Knight Frank (NKF). Newmark Knight Frank is a New York-based commercial real estate and property management firm with offices in Denver. "The lack of rain that would keep green roofs viable, alive and healthy would mean you need irrigation systems on the roof. That's an additional cost and structural modification to what exists," Shoemaker added. Paul Schloff, regional manager at JLL and co-chair of Denver Building Owners and Managers Association's (BOMA) government affairs committee, added that it can be difficult to successfully grow plants in the Denver area, and trying to grow them on a roof would add even more challenge. "We’re going to be using a lot of water," he said. "The plants might not even grow very well — we don't know." Shoemaker said he is concerned about the potential problems there could be in introducing water to a roof where it didn't previously exist. "If you've got any roof leaks or any penetration, that extra water is just going to compound that problem," he said. "A lot of buildings weren't designed to carry that initial load of the green roof, or don't have the proper structures for drainage that will be required. Not to mention irrigation. But Denver Green Roof Initiative, the organization that championed the initiative prior to the election, said that green roofs are practical options for storing storm water and will take the place of "costly" stormwater detention systems. The organization added that the saved costs should be returned to the tenant. "It certainly adds another element to our preventative maintenance program, as well as another element to to our expertise," Daniel said. "Right now, we aren't exactly horticulturists. We're going to have to learn that trade." Joe Daniel, a senior property manager with NKF, said he thinks the initiative will impact rent, both for residential and commercial tenants. "In a downtown office space, tenants pay their share of operating expenses," he said. "Those expenses are [most] definitely going to [go] up — an increased maintenance load and an increased use of water." Asked what the effects of the ordinance might be for property managers, Brandon Rich, senior managing director at Greystar, highlighted tenant impact. "The biggest impact will be increased costs, which will put upward pressure on rents or divert resources from amenities or other services," he said. Paul Schloff, regional manager at JLL and co-chair of Denver Building Owners and Managers Association's government affairs committee, also voiced concern over existing buildings. "It’s one thing to make this a requirement for a new building, but it’s especially onerous to make this a requirement for an existing building," he said. Schloff said many structures that would fall under the ordinance requirement — anything over 25,000 square feet — were not designed with the added weight on the roof in mind. Industrial buildings, especially, have increased vulnerability, according to several property managers. "Industrial is typically more horizontal with a much larger roof area, but less rentable square feet," Schloff said. "And the rent is cheaper than office space." When the time comes for existing industrial buildings to repair their roofs, some worry that the cost of installing a green roof will be unattainable. "I think industrial and retail will suffer most," Shoemaker added. "Those are single-story, sometimes two-story, but they have a much larger roof." Shoemaker added that training personnel to keep up with the roof or hiring a gardener will be another expense. We like it, but it needs work. Schloff, like many property managers, ultimately liked voters' intention of cleaning up the environment, the focus of the ordinance. "But they don’t understand the economics of it," he said. CBRE Denver managing director Simon Gordon agreed. "While we strongly support sustainable practices at our buildings, we have some concerns about the viability and long-term effects of implementing some of these initiatives," said Gordon said. Daniel added that he wished green roofs had been "incentivized instead of mandated," or that stakeholders had been consulted in the writing of the code. BOMA has representatives on the task force that will make the final changes to the ordinance before it gets mandated later this year. "We’re [BOMA] hoping we can have some influence as the details are worked to make it more economically reasonable," Schloff said. (Denver Business Journal)