Colorado Real Estate Journal - May 4, 2016
SteelWave, a new company with a long history, is making its multifamily development debut in the Denver area with a $100 million apartment community in Aurora. SteelWave, formerly Legacy Partners Commercial, has purchased 15 acres adjacent to the Iliff light-rail station, where it plans a 424-unit apartment community. It paid $6.75 million, or $10.22 per square foot, for the land, sold by Fashion Bar Associates. The company’s equity partner is Junius Real Estate Partners, a JPMorgan subsidiary. The light-rail station opens later this year. The community is a true transit-oriented development, said Barry DiRaimondo, CEO of SteelWave, based in Foster City, California. “It truly is,” DiRaimondo said in a phone interview with the Colorado Real Estate Journal. “It is truly not even a 5-iron shot from the station,” DiRaimondo said. The three- and four-story community will have high-end finishes and all of the amenities that residents expect, but it will not be like the luxurious apartments being built around downtown Denver, he said. “This is working-bee housing,” DiRaimondo said. “This is for the midlevel executive who might work at the Denver Tech Center or the research people and young physicians at the Fitzsimons medical campus,” he said. “We also will draw from Buckley,” he added. About 137,000 people work in the tech center, Fitzsimons and Buckley. He expects average rents to run about $1.60 per sf. “We’re not looking at the $3 (per square foot) rents you are going to see in LoDo,” DiRaimondo said. Also, with an average size of about 900 sf, the Iliff Station development will be bigger than a typical new urban community, he noted. “We think it will fill a niche that is really underserved,” DiRaimondo said. “I think if you look at the appeal of this and the appeal of being in downtown, you are really comparing apples and oranges,” he said. “It’s a totally different rental profile,” DiRaimondo said. “The guy who is going to look at our place and the guy who is going to look at LoDo are not the same guy,” he said. Apartment broker Craig Paton of the Denver office of Transwestern represented SteelWave in the land purchase. The architect is KTGY. Most buildings will be three stories with attached garages and semiprivate entryways. There will be one, 100-unit building close to the train station, which will have four stories and a fifth-story loft as part of each of the top floor units. The Cavallari Group out of Los Angeles found the property and is handling the entitlements for the development. Construction is expected to start in June. Although SteelWave was only created last year, it really has a history that stretches back about 45 years. “It really all started with the retirement of Preston Butcher, the patriarch of Legacy Partners,” DiRaimondo said. Butcher had launched Legacy Partners Commercial in 1998, after separating from the much older Lincoln Property Co. “At that point in his long and distinguished career, Barry decided he wanted to play a bit more defense than offense,” DiRaimondo said. In order to accommodate his game plan, DiRaimondo, who had been the president of Legacy Commercial, primarily an office and industrial developer, and other senior executives bought out Butcher. “He had been the majority owner and now he is a minority owner and a non-managing partner,” DiRaimondo said. “At the same time, we really wanted to focus on multifamily housing, but that was really difficult to do because Legacy Partners Residential focused on multifamily,” he explained. “You can’t really have two guys under the same flag. It gets way too complicated,” DiRaimondo said. “It’s really not unlike when Preston split Lincoln Property to start Legacy. It’s better to have a clean separation.” However, because they have deep history in markets like Denver, they are far from being the new kid on the block. “From our perspective, it is just a jersey change,” DiRaimondo said. He doesn’t think they will have many opportunities to repeat the community next to Iliff Station community in the Denver area. “You just don’t find 15 acres available next to a rail station available very often,” DiRaimondo said. Going forward, he said SteelWave will focus on mixed-use developments, many of which also may be TOD sites. “They would combine retail, office and housing,” DiRaimondo said. “We really think the future is that people want a place where they can live, work and play.” One thing that won’t change is his bullish outlook on Denver. “We love the Denver area,” DiRaimondo said. “We have been in Denver for many, many years on the commercial side. It already is one of the key cities for our growth and focus and that will continue.”