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Texas Real Estate Company Purchases Office Building in Lakewood for $25M

December 18, 2017



Texas Real Estate Company Purchases Office Building in Lakewood for $25M

C-III Capital Partners, an asset management and commercial real estate services company based in Texas, purchased the Union Towers office building in Lakewood for $25 million. Union Towers is a 198,916-square-foot, 10-story building located at 165 S. Union Blvd. that includes covered parking, key card access and is a 15-minute walk to the Regional Transportation District's Federal Center station. It's one of the tallest along South Union Boulevard. C-III purchased the property from TA Realty, a Boston-based real estate agency. A C-III spokesperson said they did not want to comment on the purchase. C-III is located in Irvine, and has offices across the country including New York, Nashville and Dallas. (Denver Business Journal)



Colorado's 2018 Economic Outlook Looks Good Even as Growth Slows

Colorado will add fewer jobs in 2018 than in recent years, but growth will continue at rate that will likely make neighboring state jealous. Entrepreneurs will lead the way with risk-taking new ventures and the industries that will continue to drive job growth will be professional and business services – which includes cybersecurity and cloud computing. Colorado’s construction industry will tread water with jobs as it faces labor shortages and growing costs. The oil and gas industry, assuming at least modest improvement in energy prices, could see 6 to 9 percent increase in valuation in 2018. Meanwhile, the ag economy is projected to do just a bit better in 2018 than it did in 2017 with net farm income climbing up to $1.37 billion. And even with growth in e-commerce, Colorado’s retail trade employment is projected for 2.1 growth in 2018. These are the highlights of the annual forecast in the Colorado Business Economic Outlook from the University of Colorado Boulder, Leeds School of Business.“We have a tighter labor force – we can’t find people. It was the theme last year. It’s more significant this year,” said Richard Wobbekind, senior economist and associate dean for business and government relations and executive director, business research division, Leeds School of Business. After growing 57,300 jobs in 2016, the pace of employment growth slowed down in 2017, with the state adding 56,300 jobs for 2.2 percent growth. In 2018, growth will likely slow to 1.8 percent and the state will add about 47,100 jobs. But Colorado’s projected 1.8 percent growth will still be the envy of neighboring states, Wobbekind said. Even with slower growth, Colorado is still expected to be among the top 10 states with the fastest growing economies. The forecast report, which was released today, is based on analysis of the past year and compiled with input from business leaders, educators and government agencies. Growth slowed in 2016 but then reaccelerated in the first half of 2017. By the second quarter of 2017, real GDP had picked up 3.8 percent – making Colorado third in the country for the pace of GDP growth. Personal income dipped from its growth rate of 6.7 percent in 2014 and 3.9 percent in 2015 to .2 percent in 2016. But then, personal income rebounded to 3.9 percent year-over-year in the second quarter of 2017. Business and consumer confidence shot up in the wake of the national election, Wobbekind said. The slowest growing sectors are likely to be information and natural resources and mining. But overall, all industries are expected to add jobs. The state’s economy has benefited from Colorado’s entrepreneurial attitude. The state has had strong growth in new business formation -- and that is projected to continue into 2018.“The state’s strong job growth rate over the last five years is bolstered by relatively high number of young firms compared to total businesses in Colorado,” the report says. Going forward the state also will boast a more educated population in terms of the number of people with a bachelor’s degree than every other state in the union except for Massachusetts. It’s is among the reasons why the state has seen strong growth in professional services.“Our feel, on this in general, this is an area companies can recruit to the labor force they need," Wobbekind said. "Millennials want to come here. That is an important sub-piece.” The state has benefited by that net migration – which accounted for the 60,000 of the 90,125 population increase in 2016 bringing Colorado’s population to 5.5 million. More than 95 percent of the newcomers came to the Front Range, with 65 percent of them moving into metro Denver. And while the state’s population growth is expected to slow in the coming year, the sky is not falling, Wobbekind said. The population is projected to grow by 90,600 between 2017 and 2018. “Although Colorado’s growth is forecast to slow, it is forecast to continue to outpace the nation growing at roughly twice the (national) rate. Colorado is forecast to increase from 1.7 percent of the U.S. population currently, to 2.1 percent by 2050,” the report says. (Denver Business Journal)



New Owner to Renovate, Rebrand Dry Creek Office Buildings

The buildings at 10700 and 10800 E. Geddes Ave. in Englewood, rebranded as Inova Corporate Center, will undergo a major renovation. An opportunistic investor picked up a pair of Englewood office buildings in an $18.2 million value-add deal. Dry Creek Property LLC, owned by a fund managed by Westport Capital Partners LLC, purchased 10700 and 10800 E. Geddes Ave. from Colony Northstar Inc. affiliate Dry Creek II & III Holdings-2 LLC. The buildings total 185,957 square feet and were about 50 percent occupied at the time of the sale. Formerly known as Dry Creek Corporate Center, 10700 and 10800 E. Geddes are just east of the Interstate 25-Dry Creek interchange in Inova Dry Creek Business Park. They will be rebranded as Inova Corporate Center. “We are pleased to add to our Denver portfolio and look forward to transforming this great asset,” Russel Bernard, Westport managing principal, said in a statement. “There is a lot of exciting growth happening in the southeast market in Denver, and much of this growth is moving toward projects featuring modern tenant amenities, which is what we intend to bring here,” added Sean Armstrong, principal and portfolio manager. Westport plans a major renovation of the three-story buildings. “In partnership with Inova Dry Creek, we will be offering united tenant amenities such as a light-rail shuttle and rotating food trucks for tenants,” Armstrong added. Ryan Stout, Nate Bradley and Zach Williams of Cushman & Wakefield will handle leasing. Liberty Mutual is the largest tenant at the property with approximately 36,000 sf of space. Allstate vacated its space a couple of years ago, and McAfee left prior to the buildings’ sale. There was “quite a bit” of investor interest in the buildings from value-add buyers nationally, according to David Tilton of Newmark Knight Frank, who represented the seller with NKF’s John Jugl and Paul Donahue. Westport Capital Partners purchased its first Colorado asset, 7100 E. Belleview Ave. in Greenwood Village, in late 2015. It created a new lobby with modern artwork, soft seating and shuffle board; an outdoor tenant pavilion; a conference facility with updated technology; fitness center with showers and lockers; and an on-site deli. The company plans a similar renovation for the East Geddes buildings. “We are looking forward to the opportunity to partner with Westport Capital Partners to reposition and stabilize a well-located asset in a newly reactivated and highly sought-after market,” commented Stout. Westport Capital Partners is a real estate investment company that invests in opportunistic, value-add and core-plus real estate on behalf of institutional and private clients. It maintains offices in Wilton, Connecticut; Los Angeles; Bozeman, Montana; and London. (Colorado Real Estate Journal)



Lenders and Developers Turn Cautious on Metro Denver Over Costs, Worker Shortages

Metro Denver’s real estate boom may still have room to run, but developers behind several high-profile projects in the region said they are turning cautious. “I don’t know if we will get another development deal out of the ground,” said Matt Joblon, CEO of BMC Investments, which last year opened the Halcyon Hotel last year in Cherry Creek and before that the Steele Street Luxury Rentals. Joblon was on a panel of a half dozen developers and financiers that the University of Colorado at Boulder’s Leeds School of Business hosted as part of its 2018 Outlook forum Monday. Rising materials costs, higher impact fees and a scarcity of construction workers are making it both more expensive and difficult to get projects built, said Joblon. “People can’t make the deals pencil out,” Joblon said. More are biding their time, but some developers are turning to riskier lending sources or accepting returns so low they have no margin of error if anything goes wrong. “We are being patient and waiting. There will be a comeuppance,” predicts Andy Klein, founder of Westside Investment Partners in Denver. Klein has shifted his attentions to less expensive markets in the state, including Colorado Springs, where Westside is developing Victory Ridge, which will host In-N-Out Burger’s operational base as it expands along the Front Range. “The biggest issue we have is the poor housing supply,” said Cooper Williams, a principal with Essex Financial Group in Denver. Darren Fisk, CEO of Forum Real Estate Group, said seven years ago it cost about $110,000 a unit to build an apartment out in the suburbs. Today, it costs around $250,000 a door, which requires a rent that won’t fly in the suburbs. “People aren’t willing to pay $2,000 a month to rent (an apartment) in the suburbs,” he said. Even if a city donated the land, he couldn’t make the math work. Nor are developers hopeful that local governments and nonprofit groups can crack the affordable housing nut despite pouring millions of dollars into the effort. “Government has zero chance of solving the affordable-housing problem,” said Joblon, whose firm purchased hundreds of class C apartments built in the 1970s before it shifted to more high-end projects. In 2010, tenants in those older units paid about 25 percent of their income to cover rent. Because wages haven’t kept pace with living costs, they are expending 40 to 50 percent of their income. Still, Denver remains a bargain for someone relocating from California, said Fisk, who supplied Google with its Boulder campus. Silicon Valley companies, when they relocate workers to a lower cost market, are giving them the equivalent of a big bump in pay. Developers this decade have heavily focused on luxury apartment projects in Denver’s urban core, where higher-earning tenants are willing to pay a premium to live closer to work and nightlife. But even there, so much new supply is hitting the market that landlords have become more lax in qualifying tenants, which Joblon warned could lead to a steep jump in move-outs and tenants who leave without notice. If there is a saving grace, lenders also see the rising risks and are pulling back. Last decade, a lot of debt was packaged into securities and sold off to unsuspecting investors. Bankers, who used to lend up to 75 percent of a project’s cost aren’t going any higher than 65 percent, said Luke Price, a lender with the real estate banking group at US Bank in Denver. “Everyone wants to put money into Denver,” said Brain Watson, CEO of Northstar Capital Partners. “I believe Colorado and Denver specifically have good legs.” But Watson, whose firm is working with Seattle-based Amazon as it decides on where to place its second headquarters, said the region’s rising living costs and worker shortages are concerns. “The biggest issue for them are employees — can they find them?” he said. (Denver Post)

Chipotle Leases New HQ on 15th St. for 2018 Move

After nibbling at potential office sites all over downtown Denver, Chipotle has settled on a location for its new headquarters. The company announced Wednesday it has signed a 15-year lease on five floors – about 126,000 square feet – in the 40-story office tower nearing completion at 1144 15th St. It will occupy the 20th through 24th floors, spokesman Chris Arnold said. The move, slated for late 2018, will consolidate Chipotle’s Denver office operations. Arnold said the company moved into space at 1401 Wynkoop St. in the fourth quarter 2007, then took on additional space at 1515 Wynkoop St. in 2015. He said the total square footage it currently occupies is “very close” to the amount it’s leasing in the new tower.“The chief benefits of the move are that it puts all of our Denver office staff back into a single building — which provides a more cohesive and collaborative environment — and that we have options for more space in that building to accommodate future growth,” Arnold said in an email. Chipotle said 450 employees work at its Denver offices. The new space will feature a large employee lobby and social area anchored by a staircase that connects two of the floors, according to Chipotle. Arnold said the restaurant chain had been looking at options for a new headquarters site “for some time.” It has struggled in recent years, weathering food-safety scares and a lackluster public response to its introduction of queso. Shares of Chipotle (NYSE: CMG) closed at $319.70 Wednesday, down 57 percent from its August 2015 peak. It announced in November that it’s looking for a CEO to replace Steve Ellis, who started the company in 1993 with one restaurant on Evans Ave. across from the University of Denver. Houston-based Hines is the developer of the 1144 Fifteenth office tower. It is the city’s fifth-tallest building, and the tallest constructed here in more than 30 years. Denver-based investment management firm Unicom Capital has signed a lease for the building’s top floor. Other companies moving into the space next year include Optiv Security, Gates Corp. and Greenberg Traurig LLP. (BusinessDen)