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Page 12 - April 5-18, 2017 Colorado Real Estate Journal
Industrial
by Jill Jamieson-Nichols
Landlords with available indus-
trial product in the central Denver
submarket are in prime position
to capture tenants being displaced
by redevelopment of the National
Western Stock Show complex,
Interstate 70 reconstruction and
the continued exodus of industrial
users out of River North.
B S I ’ s r e c e n t l y s i g n e d
117,000-square-foot lease at Hub
25, Westfield Co.’s new project at
601 E. 64th Ave., is a prime exam-
ple. The food-service equipment
company is losing its existing
location to the National Western
Center project, which will impact
an estimated 500,000 to 1 million
sf of industrial users, according to
CBRE Senior Vice President Tyler
Carner.
“If it were up to them, they
would have continued to stay
and operate where they currently
are,” saidMatt Trone, a managing
director at Cushman &Wakefield
who represented BSI with Steve
Hager, also amanaging director in
Cushman & Wakefield’s Denver
office. “It’s a very tight market,
and to find a facility that was ideal
for their operations certainly was
not an easy task,” he said.
According to Carner, who
represented
We s t f i e l d
with partner
Jeremy Bal-
lenger, “If you
combine I-70
recons t ruc -
tion, light rail,
the National
Western Stock
Show and the
RiNo repurpos-
ing of industrial space, we think
roughly 2 million square feet of
industrial users are being dis-
placed.” Many of those tenants/
users hope to remain centrally
located for their customers and
employees.
“(BSI) had employees that were
scattered all throughout the Den-
ver metro area. They were very
focused on finding a location that
would minimize the risk of them
losing skilled labor,” said Trone.
“Certainly, a lot of (displaced
users) want to stay centrally
located, and so they’re struggling
to find space because there’s just
a lack of central product. Fortu-
nately, there is development tak-
ing place, such as Hub 25, that is
going to accommodate some of
them,” said Carner.
The cost difference between
existing space
and available
space, particu-
larly if it’s new,
can be consid-
erable, how-
ever.
“Some of
these users
have been
in relatively
attractive lease
situations for a long period of
time. There’s certainly efficiencies
gained fromnewconstruction that
are notable and worth paying for,
but the cost for them to relocate
their businesses, both from a mov-
ing standpoint and from a lease
rate position, are challenging,”
Carner said. “I think BSI did real-
ize that, while their lease expenses
were increasing, they’re certainly
gaining some efficiencies.”
BSI is one of the larger reloca-
tions to occur as a result of the
National Western and I-70 proj-
ects, “but there will be others in
their size range as well,” said
Carner.
“There are a lot of tenants and
end users that are getting dis-
placed. We are definitely seeing a
number of companies that are in
that situation,” said Trone.
There also are companies con-
cerned about congestion expect-
ed to occur on I-70 when recon-
struction between Brighton and
Colorado boulevards gets under-
way in 2018. That creates addi-
tional demand for quality space
in the central submarket and,
he believes, also will push users
north up the Interstate 25 corridor.
“I thinkwith this kind of perfect
storm, I really see a big transition
into an industrial submarket that
didn’t have much of a presence in
the past,” Trone said.
In the central submarket, there
are a handful of new industrial
developments underway, includ-
ingHub 25, which has three avail-
able buildings totaling 304,499 sf,
Crossroads Commerce Park, Cen-
ter Core and Central 62. s
by Jill Jamieson-Nichols
Just over half a million square
feet of industrial product in
Denver recently sold to a Hono-
lulu buyer for $46.2 million.
LYK Peoria LLC and LYK
Havana LLC, entities affiliated
with Lum Yip Kee Ltd., pur-
chased five buildings ranging
from approximately 41,000 to
168,000 sf in two transactions.
They included the $27.7
million purchase of a pair of
approximately 167,900-sf build-
ings at 11585 and 11685 E. 53rd
Ave. in Denver Business Center.
Tenants include Larson Ware-
housing & Distribution, 24/7
Express Logistics and Priest-
Zimmerman Inc., according to
CoStar Group.
The other transaction, total-
ing $18.5 million, included three
nearby buildings in Stapleton
Industrial Center that are leased
to tenants including All Ameri-
can Seasonings, KM Sales and
Integrated Control Systems.
Located at 10500, 10550 and
10600 E. 54th Ave., the buildings
range from 41,711 to 74,190 sf,
according to CoStar.
The Class B buildings were
built in 1985. The seller was
Realty Associates Fund VIII LP,
a fund affiliated with Boston-
based TARealty LLC.
Colliers International Brokers
T.J. Smith, Brad Calbert and Tom
Stahl reportedly handled the
transaction, but neither they nor
the buyer would comment on it.
TA Realty sold a portfolio
of 17 other Class B buildings
in Denver last year for $57.65
million. s
by Jill Jamieson-Nichols
The last 193,000 square feet
of a 323,000-sf industrial prop-
erty that Real Capital Solutions
bought for – believe it or not
– $10 just sold for $11.2 million.
That’s not the whole story,
however.
North Denver Industrial Park
was contaminated with PCBs
when RCS, then Colorado and
Santa Fe Land Co., bought the
property at East 38th Avenue
and Steele Street from the city
of Denver in 1998. The buyer
agreed to, and completed, envi-
ronmental remediation prior to
retrofitting and retenanting the
property.
The property consists of two
rows of interconnected build-
ings at 3821-3851 and 3857-3881
Steele St. that, during World
War II, were part of one of the
largest U.S. Army medical
supply depots in the United
States. Noted architect Temple
Hoyne Buell worked with the
Army Corps of Engineers on
the design.
“The buildings resonated
with us. It’s incredible brick and
timber of a scale that you don’t
really see in a lot of spaces,
so it’s not your typical indus-
trial space,” said Ari Stutz of
Downtown Property Services.
Stutz, along with partners Ken
Wolf and Steve Meier, bought
the southernmost building on
the property in 2013 and just
acquired the bulk of the build-
ing to the north.
“We think that over time we
can change and convert uses
away from storage and indus-
trial into more creative uses,
whether it’s some type of cre-
ative office, or artist galleries or
artist studios where they can
make art and sell it there. We
like where Denver is growing.
We think it’s coming in this
direction, and so we thought
it was a good investment now
and could turn into a better
project in the future,” Stutz said.
The 193,000 sf that sold was
100 percent occupied. Ten-
ant sizes range from 10,000 to
20,000 sf.
According to Judy Lawson,
RCS vice president of com-
mercial, Real Capital Solutions
invested more than $4.3 mil-
lion into environmental reme-
diation, and capital and tenant
improvements during its first
three years of ownership. It also
cured deferred maintenance
and retrofitted interior spaces
for occupancy by a variety of
local tenants. The city of Denver
provided tax-increment financ-
ing to help with renovations
and lease-up.
Denver Storage Solutions
bought a portion of the north
building for $2.6 million in
2010. s
Tyler Carner Matt Trone
BSI, which is being displaced by the National Western Center, leased
building A at Hub 25.
North Denver Industrial Park was built as the Denver Medical Depot, which began operating in 1942.
handled the sale. “We saw inter-
est from all kinds of buyers, from
private buyers to institutional
buyers. It was another example
of huge demand for quality
industrial product in Denver.”
The transaction was among
three recent industrial portfolio
sales in the Airport/Montbello
submarket. Lum Yip Kee Ltd.
paid $46.2 million for five build-
ings sold by a TA Realty affiliate,
andAirport Business Center sold
for $36.43 million. s
LBA
Ford AV and Kaman are among tenants at Mountain West Business Park.