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Granite Place Achieves Record Price Per Square Foot

January 8, 2018

 

 

Granite Place Achieves Record Price Per Square Foot

Granite Place at Village Center set a new high-water mark for southeast suburban office product at a sales price of $423.78 per square foot. Arapahoe County records show Crestone Partners and an institutional partner paid $126.95 million for the newly completed Class AA building, a speculative project that was fully leased prior to delivery. Granite Properties and Confluent Development, which developed the 299,568-sf Granite Place, now are looking at the possibility of developing a twin building, which would be about the same size. Granite Place at Village Center is a 10-story, LEED certified building at 6175 S. Willow Drive in Greenwood Village. It’s a five-minute walk from the Arapahoe at Village Center light-rail station and was 100 percent preleased to Charter Communications and CSG International. The previous record sales price for suburban Denver office building was $414 per sf, set with the sale of CoBank Center, also in Greenwood Village, in late 2015. Although Granite Place at Village Center is a sizeable asset for the southeast suburban office submarket, there was “strong” interest from investors, including foreign capital, according to Stephanie Lawrence, senior managing director of Granite Denver. CBRE brokers Tim Richey, Mike Winn, Jeff Shell, Chad Flynn and Jenny Knowlton handled the sale. A Holliday Fenoglio Fowler LP team led by Senior Managing Director Eric Tupler arranged $70.68 million in financing for the acquisition. Principal Real Estate Investors provided the six-year, fixed-rate, interest-only loan. Designed by Open Studio Architecture, Granite Place at Village Center has a large community area on the ground floor where employees can work and socialize, and showcases art by local artists. It also has full-height glass, providing plentiful natural light and mountain views. There also are conference facilities with a boardroom, large training room and prefunction staging area, a gym-quality fitness center with showers and locker rooms, a full-service café, an acre of outdoor common space and an adjacent parking garage, shared with the Regional Transportation District, that accommodates more than 1,000 cars. “That Granite Place was 100 percent leased six months before completion speaks to the high-quality workplace environment that Granite and Confluent are known for developing as well as how active and desirable the Denver southeast market is,” said Lawrence. “Companies are drawn to the Village Center area for its diverse workforce and its proximity to light rail and retail amenities, driving the demand for premier office space. We look forward to turning our attention to developing Phase II, which will be adjacent to Granite Place and similar in quality and size,” she added. Granite Properties is heavily invested in Greenwood Village as owner of Plaza Tower One, High Pointe Tower and Prentice Plaza. “We totally believe in the location,” said Lawrence. Granite and Confluent are evaluating the second building and haven’t announced plans to begin construction. “We’re thrilled to build on our success of identifying prime locations to develop high-quality, amenity-rich office space in metro Denver and look forward to continuing our relationship with Granite for additional development,” said Marshall Burton, president and CEO of Confluent Development. Granite Properties is a privately held commercial real estate investment, development and management company with offices in Dallas, Houston, Atlanta, Denver and Southern California. It has completed more than $6.1 billion in real estate transactions and more than 26 million sf of real estate development and acquisitions. Denver-based Confluent Development is a full-service real estate investment and development company that owns and develops ground-up commercial real estate throughout the United States. (Colorado Real Estate Journal)

 

Silicon Valley Will Soon See a 'Mass Migration' of Tech Companies and Talent, Says Redfin CEO

Amazon's search for a second headquarters outside Seattle is just the beginning of a tech exodus from expensive coastal cities to cheaper inland locations, Redfin CEO Glenn Kelman said Wednesday. "Silicon Valley is going to leave Silicon Valley — that's already happened," Kelman told CNBC's "Power Lunch." "The technology companies, the Wall Street companies, they're chasing the talent, [and] the talent is chasing affordable housing." Kelman, head of the online real estate brokerage and data company, predicted an accelerating shift out of coastal cities as homeowners seek to avoid the higher tax rates of the recently passed Republican tax bill. Densely populated and pricey cities, he said, are already losing residents and businesses. "Google employs more engineers outside of Silicon Valley than it does in Silicon Valley, and if Google can't afford Silicon Valley, then no one can." The "mass migration" to the center of the country is populating cities that were "economically dead five or 10 years ago," Kelman said. Cities like Denver, San Antonio and Houston are primed to be the next hubs, he said. "It used to be that in California we owned the future. We felt like everything was happening here first," Kelman said. "And now you see that swagger, that confidence in the center of the country. People in Detroit, people in Texas think they own the future." (CNBC)

 

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Graham Street Realty Buys 2nd Set of Metro Buildings

San Francisco-based Graham Street Realty added to its Denver portfolio with a pair of Englewood office buildings. Pyramid Pointe, a 120,279-square-foot building at 9777 Pyramid Court in Meridian International Business Center, and 384 Inverness, a 51,523-sf building in Inverness Business Park, sold for $19.4 million. Westcore Properties and American Realty Advisors sold the properties in a deal handled by Newmark Knight Frank Executive Managing Directors Riki Hashimoto and Dan Grooters. “We are excited about these new acquisitions, which are well-located relative to the new locus of executive and workforce housing in the southeast corridor, and we look forward to the opportunity to lease near-term rollover in a strong market,” said David Messing, Graham Street Realty co-managing principal. Pyramid Pointe, built in 1995, is a three-story building that was 98 percent leased at the time of the sale. State Farm has a lease for 1 ½ floors that runs through the end of 2018; however, it is vacating the space. “These types of buildings that have some contractual income still in place yet a value-add component to them are quite intriguing in the marketplace,” Hashimoto said. The building has a conference room and fitness center. Suites range from 1,000 to 40,000 sf. GSR plans “incremental” upgrades to the property. The building at 384 Inverness, built in 1985, offers smaller-format office space and a two-story atrium lobby. It has about 20 tenants, and occupancy was 96.4 percent at the time of closing. Graham Street Realty plans to improve the property’s landscaping and lobby finishes and perform parking lot maintenance. Both buildings offer access to retail, light-rail stations and recreational amenities. “We had owned those properties with our partner for several years, the fund was winding down and we felt that those properties were ripe for sale,” said John Fefley, Westcore senior director in Denver. “But it was not without bittersweet feelings because the Westcore team had worked on those properties since 2001, going all the way back to the previous ownership of Mack-Cali,” he said. Fefley said Westcore was pleased with the price of the transaction as well as the buyer. The company continues to look for office and industrial acquisition opportunities in the Denver metro area and along the Front Range. Hashimoto said Pyramid Pointe and 384 Inverness were offered as a portfolio along with a couple of other buildings the ownership was looking to sell, “So, we had single building offers and portfolio-type offers. These were the two that made the most sense to transact together,” he said. Both private and institutional capital looked at the offering. Pyramid Pointe and 384 Inverness were the second set of assets Graham Street Realty purchased in the Denver metro area in the past 12 months. It bought Aurora Corporate Plaza, a three-building property, and Corporate 25 in Centennial in a combined $34 million transaction in late 2016. Graham Street Realty is a private commercial real estate investment firm with assets in the Western United States. It focuses on value-add multitenant office investments. (Colorado Real Estate Journal)

 

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Forecast: U.S. Economy, Stock Market and Denver Real Estate Headed for Slowdown

The U.S. economy will run strong for two more quarters before peaking this summer and sliding into a mild recession early next year, predicted economist Alan Beaulieu, a specialist in long-term economic cycles. “You should have a good year, at least the first half. The economy is about to shift into a slower rate of growth,” Beaulieu, president of ITR Economics, told the Association for Corporate Growth Denver at a luncheon Wednesday. The coming recession will be “very, very mild” and more technical in nature, with two quarters of declining gross domestic product. The stock market should correct, not crash, before the official numbers show a downturn, catching some investors off guard. “It is an opportunity rather than an event to be feared,” Beaulieu said. An exception to that stance would be if a nuclear exchange occurs with North Korea, which he called a wild card. Economic growth has accelerated, and the danger is that many will use “straight-line” thinking and assume it to keep going. Watch for businesses to start spending money in extravagant ways, ranging from buying corporate jets to fancy lobby remodels and senseless giveaways like coffee mugs with company logos on them, he warned. Back in 2014, Beaulieu told his Denver audience to get aggressive for the next four years. In 2015, he said U.S. growth would slow but the country would skirt a recession despite a big drop in oil prices, slower industrial production and choppy stock markets. In 2016, he urged executives to focus on hiring good workers ahead of labor shortages and said concerns about a collapse in China were overblown. He predicted oil prices had bottomed and would recover to between $50 and $55 a barrel a year later, which they did. Last year, he said the U.S. and global economies were politically agnostic and would continue to march forward despite concerns about the new presidential administration. Beaulieu on Wednesday expressed skepticism that tax cuts would push the economy forward as backers claim. Although he supports lower tax rates on a personal level, “the economist in me knows this is a bogus plan.” To the degree that tax cuts and other initiatives goose the economy, they will do so in a market where qualified workers are hard to find. There are more than 5 million unfilled job openings, including 411,000 in manufacturing, he said. “What we need to create in this country is labor, not jobs,” said Beaulieu. The other problem is that tax cuts risk adding to the national debt at the same time as millions more Baby Boomers start drawing on government support. Congress has failed to address that fundamental shortfall, Beaulieu said. Colorado should hold up better than most states during the coming slowdown. But Beaulieu said the metro Denver housing market has overshot the mark and price gains will level off. Higher living costs will also complicate the search for workers. “You will have to pay people more to move here, because pot is not everything,” he said. After a brief slowdown next year, Beaulieu forecasts a roaring economy through the 2020s. But eventually, an aging population, growing government expenditures, unsupportable debt burdens and higher interest rates will send economies crashing, he said. Beaulieu has consistently called for a downturn around 2030 that will rival the Great Depression a century prior, with unemployment rates running up to 30 percent and wage cuts of 25 percent. When asked what will be different this time around, he said people will have technology. “The apps will tell you were the food is being handed out,” he said. (Denver Post)

 

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Denver Apartment Rent Hikes Outpaced Nation's, Says New Report

Average apartment rents in Denver rose more than the nation's in 2017, according to a new report. According to Texas-based RealPage Inc., rents in Denver rose 3.2 percent last year, above the national average of a 2.5 percent gain. Among the 50 largest metros across the country, Denver ranked 15th for annual rent growth and the market’s typical monthly rent is $1,404, according to a RealPage spokesperson. She added that Denver's apartment current occupancy rate is 94.3 percent, the same as it was a year ago. "With about 12,000 additional apartments scheduled for completion in 2018, a competitive leasing environment should persist in the near term. It could be tough for property owners and operators to push rents much in the neighborhoods that will get the most new product, including the urban core," the spokesperson said in a statement. Nationally, Sacramento, California led the nation in rent growth with a 6.5 percent increase in 2017, according to RealPage research, and Minneapolis leads the country in occupancy rate, at 97 percent. Last week, the Denver Business Journal reported that, according to Apartment List, Denver's median two-bedroom rent was up 1.6 percent over the last year, and the city's median rent of $1,310 is over the national average of $1,160. (Denver Business Journal)

 

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CURRENT

1 MONTH PRIOR

1 YEAR PRIOR

FED TARGET RATE

1.50

1.25

.75

3 MONTH LIBOR

1.70

1.52

1.00

PRIME RATE

4.50

4.25

3.75

10 YEAR TREASURY

2.47

2.34

2.37

30 YEAR TREASURY

2.81

2.73

2.96