Denver City Center Gets New Owner
- Feb 04, 2020
Shorenstein Properties LLC has sold the 1.3 million-square-foot Denver City Center. The terms of the transaction were not disclosed, nor was the buyer. Commercial Property Executive was, however, able to identify the buyer as Brookfield Properties.
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The LEED Gold property in downtown Denver consists of two adjacent office buildings. The first is 707 17th St., a 42-story building that includes 22 floors of office space and the 20-floor, 407,700-square-foot Hilton Denver City Center hotel (which was not a part of the sale). The second building, known as Johns Manville Plaza, is a 29-story, 693,500-square-foot office building. The property’s amenities include a selection of restaurants, a fitness center and access to multiple public transit options.
This acquisition adds substantially to Brookfield’s holdings in Denver, which now total about 5 million square feet of office space. The company already owned the 54-story 1801 California, about a block from City Center, and Republic Plaza, a 56-story office building about four blocks south of the other three properties.
Shorenstein had acquired City Center in 2013 through its Tenth Fund. The company reportedly was able to bring occupancy up from about 72 percent to 94 percent, in part by expanding on-site amenities, updating common areas and improving the marketability of vacant suites.
Tim Richey, Mike Winn, Jenny Knowlton, Charley Will and Chad Flynn with CBRE represented Shorenstein in the transaction. In a prepared statement, Knowlton called the sale “downtown Denver’s largest single office transaction in over a decade.”
The fundamentals of Denver’s office market are “rock solid,” with a foundation of strong job growth in professional, scientific and technical services, which had risen more than 8 percent year-over-year (or about 12,000 jobs) as of last July, according to a third-quarter report from Cresa.
The downtown submarket has an average vacancy of 9.7 percent on an inventory (Classes A and B) of 37.6 million square feet. Though substantially below the stunning 2 million-plus square feet of absorption in 2018, the projected 2019 absorption was roughly on par with numbers going back to 2013. Average office rents downtown were $34.97 per square foot and trending downward, as a further 1.5 million square feet of space is under construction, also according to Cresa.
Last June, Hines and an equity partner received a $220 million fixed-rate permanent loan, arranged by HFF, for 1144 15th St. in downtown Denver. The 40-story, 673,852-square-foot, Class A building had been completed only the previous year.