W. P. Carey Acquires Denver-Area Class A Office Building
- Dec 05, 2013
W.P. Carey Inc., a New York City-based REIT noted for its sale-leaseback and single-tenant net lease deals, has jumped into the growing Denver area office market with the acquisition of a Class A property in the ParkRidge Corporate Center in Douglas County, Colo., for $40 million.
The 161,000-square-foot ParkRidge Six office building currently has a mix of tenants on short-term leases, but starting in 2015 the entire building will be leased to tw telecom inc. for use as a national call and operations center and other support services. The deal, reached earlier this year with previous property owner, Denver United L.L.C., is a 15-year net lease. The corporate headquarters for tw telecom is located nearby, also in the ParkRidge Corporate Center in Lone Tree, Colo.
“Given its strategic proximity to tw telecom’s corporate headquarters, critical operational role and long-term lease with a credit rated tenant, the acquisition is consistent with our established investment parameters and is a solid, high quality addition to our portfolio,” Jason Fox, W.P. Carey managing director and co-head of global investments, said in a news release.
ParkRidge, a 74-acre business center located in the Denver metro area’s Southeast submarket, is easily accessible to downtown Denver. It has recently attracted expanding or relocating companies, including Charles Schwab, Visa, Redwood Trust and Hitachi Data Systems.
The building, constructed in 2001, is currently in unincorporated Douglas County but the city of Lone Tree has agreed to annex the property into the city and is providing tw telecom with economic incentives, according to a news release from Inverness Properties L.L.C., the property manager when the lease was signed earlier this year. Douglas County is also providing economic incentives to tw telecom to locate its national operations and call centers to ParkRidge Six.
The economy in the Denver area is growing, leading to increased demand for office space, according to several commercial real estate firms.
“The Metro Denver market followed up a strong first half of 2013 with another quarter of high growth, experiencing decreasing vacancy, rising rental rates, and a number of significant investment transactions,” Cassidy Turley noted in its Office Market Snapshot report on Denver for the third quarter.
“Demand for office investment opportunities remains enthusiastic with $698 million in transaction volume during the quarter, bringing year-to-date volume up to $1.5 billion. Core assets in the Downtown and Southeast submarkets continue to be the focus of activity,” the Cassidy Turley report added.
A third-quarter report from Marcus & Millichap points to recent approval of the Colorado Advanced Industries Acceleration Act, which provides grants for high-tech industries including energy, aerospace, advanced manufacturing, engineering and information technology, as helping to drive office demand.
“An attractive business climate will continue to encourage businesses to expand and add employees in the Denver metro, contributing to vacancy reaching 15.2 percent by year end, a sharp 180-basis point decline from last year. This follows an 80-basis point drop during 2012,” stated the Marcus & Millichap OfficeResearch Market Overview for Denver’s third quarter.