Denver Case Studies
Creating and Sustaining a Presence for Nearly a decade in the Denver Market Lincoln Property Company Commercial 2000 South Colorado Boulevard | Tower I - Suite 3700 Denver, Colorado 80222 Tel: (303) 893-1886 | Fax: (303) 893-4055 | www.lpcdenver.com
Colorado Center •
Project
•
Client
ASB Capital Management
•
Purchase Date
January 2006
•
Size
625,000 SF on 12 Acre Parcel
•
Planned Development
2000 South Colorado Boulevard, Denver CO
300,000 SF Office 60,000 SF Retail 200 Room Hotel 185 Unit Apartment Building
Overview • 1 million SF of entitled mixed use space (office, retail, multi- family residential, hotel, and parking structures) • Fully approved plans and are shovel ready • Located near I-25 and CO Blvd intersection and directly across from light rail station Investment Strategy • LPC to manage, market and lease entire property • Capitalize on location and TOD attributes of project • Maintain market rents and high occupancy levels to position asset for future development • Establish presence in Denver market and reputation communicating Colorado Center is a premier Class A office building and prime location for corporate HQ • Aggressively compete to be a leader in building sustainability Results • 65% leased to 96% in 18 months and grew rents by 30% during that time period • Renewed two floor Tenant through 2019 and completed numerous large block transactions • Received Energy Star ratings throughout property consistently since 2008 • Awarded LEED Gold certification at Tower II in 2010
Chaparral Business Park •
Project
•
Client
•
Dry Creek Corporate Center II and III
7257-7337 South Revere Parkway, Centennial CO
•
Project
10700 & 10800 East Geddes Avenue Englewood CO
Colony Realty Partners
•
Client
Colony Realty Advisors
Purchase Date 2007
•
Purchase Date
2007
•
Size 146,175 SF; 9 Separate Buildings
•
Size
185,958 SF; 2 Separate Buildings
•
Development Cost
$12.75 million $87.00 SF
•
Development $28 million Cost $150.00 SF
•
Sale Price
N/A
•
Sale Price
N/A
Overview • Assisted in sourcing acquisition opportunities • Assisted with underwriting efforts • Completed and present due diligence information to client
Overview • Assisted in sourcing acquisition opportunities • Assisted with underwriting efforts • Completed and present due diligence information to client
Investment Strategy • Strategically prospect long term quality tenants • Reposition property using value add strategy and implementing long term capital improvements
Investment Strategy • Establish DCCC II & III as a leader in sustainability • •
Results • Successfully maintain occupancy levels upward of 92% • Exceeded lease rate and occupancy expectations through an economic down turn • Completed numerous capital improvements in 2010: new directory, monument and tenant signage,, landscaping,
Implement hands-on property management approach Strategically prospect long term quality tenants
Results • Awarded LEED Gold status for DCCC II & III in 2010. • Implemented the Property Logic work order system for Tenant use • On-site property engineer to respond immediately to Tenants.
Aurora Corporate Plaza •
Project
12100-12250 East Iliff Avenue, Aurora CO
•
Client
State of Illinois Teacher’s Pension Fund
•
Purchase Date
August 2002
•
Size
335,000 SF; 5 Separate Buildings
•
Development Cost $21 million / $63.00 SF
•
Sale Price
$28.47 million / $85.00 SF
Overview • Opportunistic acquisition with extensive near-term rollover. • Class B+ office building acquired at approximately 50% of replacement. • Sound structural construction with large, effective floor plates. • Potential rollover of 275,000 SF during the first 24 months of ownership • Sub-market vacancy of 20% at time of purchase Investment Strategy • Reposition asset through improved management, leasing and facility maintenance • Negotiate “blend and extend” renewals with all tenants that have termination rights or upcoming lease expirations. • Implement Property Logic - Automated Property Management software to improve tenant interaction and service Results • Leased 100,000 SF in 12 months • Reduced operating expenses by 12% within 12 months • Eliminated 5 of 6 termination rights • Exit strategy 18 months ahead of schedule • Successfully implemented Property Logic • Drastically improved tenant / landlord relationships • Exceeded proforma returns
Inverness Business Park Speculative Development •
Project
365,367 & 369 Inverness Parkway, Englewood CO
•
Client
Invesco Realty Advisors
•
Purchase Date
March 2002
•
Size
116,400 SF; 3 Separate Buildings
•
Development Cost $9.31 million / $80.00 SF
•
Sale Price
N/A
Overview • Opportunistic development due to high submarket vacancy • Developed three (3) Class A single-story office buildings • Zero (0%) loss-factor with large, efficient floor plates. • Sub-market Vacancy of 20% at time of completion Investment Strategy • Fill project with new tenants within 24 months of completion. Results • Leased 112,000 SF in 24 months - 96% occupancy • Closest competitor - 15% occupied over same period • Coordinated large TI construction projects for new Tenants
Lincoln Distribution Center Repositioning / Redevelopment •
Project
445 West 53rd, Denver CO
•
Client Pension
State of Oregon Teachers
•
Purchase Date
August 2002
•
Size
201,500 SF including 4+/- additional acres of land
•
Development Cost $4.1 million / $20.00 SF
•
Sale Price
$50.00 SF
Overview • Previously the Montgomery Ward’s distribution Center • Purchased the vacant property out of bankruptcy • Opportunistic re-development with over $1.4 million needed for improvements • Central Denver sub-market was at 8% vacancy at time of purchase Investment Strategy • Implement 12-month renovation schedule • Lease project to 1-2 new tenants within 24 months of completion Results • Renovations completed within 10 months of purchase • Leased property to 100% within 18 months • Sold as part of a portfolio sale to Institutional investor • Achieved proforma returns for operator.
LPC Denver The LPC Denver team has achieved notable success since it’s reorganization in 2002. During this time, our focus on providing first-class service to both office and industrial clients has helped grow our 3rd party business to over 1 million square feet. This success can be attributed to a team of focused real estate professionals dedicated to providing superior, valueadded real estate services that are tailored to the specific goals, opportunities, needs and challenges of our clients. Our areas of expertise include Leasing and Property Management where our attention is on creating and executing marketing programs, prospecting, negotiating and closing transactions quickly without losing sight of the details. Property Management is focused on developing and executing management plans, keeping operating expenses low while striving for tenant satisfaction. Construction Management is an integral part of this process considering the impact that tenant finish can have on an operating budget. Tenant Representation services include evaluating qualified alternatives and proposals, negotiating business terms, construction management and move-in. Our Acquisition Services include identifying assets for purchase and performing comprehensive property evaluations, financial analysis, due diligence assistance and equity participation when necessary. “In all our efforts, we focus solely on creating value for our clients.”
With over 50 years of leasing experience and 10 decades of combined property management experience, we understand the impact quality leasing and management has on the future value of your property. Each member of the Denver team has extensive experience in closing real estate transactions with over 1,000,000 million rsf leased in 50 different transactions within the past five years. The Denver team is well supported by the national resources of Lincoln Property Company. The firm has proprietary systems and personnel support in such crucial areas as Accounting, Financial Analysis, Development and Construction Management. Our team maintains positive and productive relationships with the top brokers, tenants and owners in the Denver area. This helps us to maintain current and accurate information on lease rates, market trends, building sales and space availability.
“The Denver team understands that our future growth will be based upon our client’s satisfaction.”
Lincoln Property Company Denver Leasing & Property Management Team Scott Caldwell, Senior Vice President Scott joined Lincoln Property in early 2001 as Senior Vice President. He is responsible for the overall management of the Denver operations. Those duties include new business development for property management and leasing services, 3rd party brokerage assignments, as well as office and industrial property acquisitions. Before joining Lincoln Property Company, Scott spent 8 years as a broker in the office services group of Grubb & Ellis in the Denver, CO office. During that time he was responsible for leasing over 1.5 million rsf of office space on behalf of his clients. During his 12-year tenure in commercial real estate, Scott has experienced the development, property acquisition, property management, and brokerage perspectives of commercial real estate.
Mark Homlish, Vice President Mark joined Lincoln Property Company in early 2002 as Vice President. His duties include new business development, office leasing and tenant representation. Before joining Lincoln, Mark spent two years as General Manager for CMD Realty Investors and five years as a broker with Colliers Bennett & Kahnweiler, both in Denver. During that time, he was responsible for office leasing in excess of 2.5 million rsf in five different sub-markets throughout the Denver metro area. Since entering the commercial real estate industry in 1994, Mark has been involved with the development, property acquisition, landlord and tenant representation perspectives of commercial real estate.
Erin Marilley, Marketing Manager Erin joined Lincoln Property Company in April 2010. As the Marketing Coordinator, Erin is responsible for marketing efforts on all properties in the LPC Denver portfolio. In addition to managing listing information, Erin processes and tracks sale and leasing transactions for the Denver office. Prior to working with the LPC Denver group, Erin worked as an Assistant Development Manager on the Snowmass Base Village project. While working on the Base Village project, Erin was responsible for obtaining approvals for PUD amendments, owners rep for 80,000 +/- SF of mixed use space during design, project managed two sales centers totalling 6,000 SF with a total budget over $5 million. She comes to us with a BS in Business emphasizing in Operations Management and Real Estate from the University of Colorado at Boulder.
Tamara Varney, Tenant Services Coordinator Tamara joined the Lincoln Property team in the summer of 2011 as our Tenant Coordinator. She has worked in depth with Wells Fargo Bank N.A. for the past six years. She has organized numerous events for Wells Fargo as well as managed a successful team with in the company. Tamara has received several rewards and acknowledgments around her service and participated in the Aurora district customer service project for Wells Fargo Bank.
Lincoln
Property Company
Scope of Services • Leasing Services • Property Management • Construction Management Services • LEED Consulting • Development Services • Advisory Services • Corporate Services • Receivership Services
Lincoln Property Company
The
Citadel
3200 Cherry Creek Drive South Leasing & Marketing Listing Recommendations Exclusive Listing Period: Twelve (12) months Asking Lease Rate: $28.50-$30.50/rsf Lease Rate Escalations: $0.50/rsf per year Tenant Improvements: Turn-key based upon credit and term Lease Term: 3-10 years Concessions: Free Gross Rent (outside the term) Marketing Strategy E-mail announcing new leasing and management team CoStar / Xceligent / Loopnet Direct mailer to Tenants in the area Floor plans mounted and displayed in all vacancies New brochure LPC leasing signage on premises Schedule introductory meetings with all existing Tenants Broker Event following the completion of spec suites Tenant Appreciation Initiatives (Event Tickets, Gift Cards, Gift Baskets, etc) Keys to Success New building identity Tenant retention Entertain all possible deals Identify the “Right Deals” - Don’t Let Them Get Away! Proactive / Creative / Responsive Streamline leasing process starting with the showing thru occupancy
The
Citadel
3200 Cherry Creek Drive South Tenant Experience Lincoln Property Company develops a customized leasing strategy for each asset. Our primary goal is to pro-actively maintain and increase occupancy, and to create the opportunity for the property to continuously increase value. Existing Tenants: Schedule introductory meetings with each Tenant to understand current space needs, discuss possible future space needs and ensure they are being accommodated at the Citadel. Future Tenants: Implement a focused and systematic prospecting approach to identify potential tenants. Research the Tenant to confirm they are an established, credit worthy company, and fully understand the requirement to assess whether or not the Citadel would be a good fit. Touring: Personally meet the broker and prospect on site with a complete tour package. Tour Package to include: property brochure, floor plans, market information, and general area information. Visit each appropriate vacancy and discuss the recent improvements (paint/carpet), upgrades for spec suites, the poster size floor plan, possible space plan changes, etc. Denver - Upcoming Expirations Within 18 Mos No. of Tenants Total SF Highlight key reasons for tenant retention: 3,000 SF - 5,000 SF 157 602,045 • Comfort with Ownership and Leasing Representatives 5,001 SF - 10,000 SF 115 768,176 • Class AA 10,001 SF - 15,000 SF 45 548,823 • New Spec Suites • Streamlined Leasing Process easy for the Tenant • Local Property Management • On-site Building Engineer
The
Citadel
3200 Cherry Creek Drive South Broker Experience Lincoln Property Company recognizes the importance of Broker relationships. To effectively target tenants we identify active brokers in the submarket and launch a direct marketing campaign. Electronically Inform:
Create blast e-mail correspondence: • Announcing new management and leasing assignment • New brochure and corresponding vacancy floor plans • Broker Incentive(s)
Broker Event / Gathering: Host a broker event for a select group of individuals to promote the property Incentivise: Visa gift card for every qualified showing Commission bonus for specific criteria Broker Relations: Timely response during marketing and leasing processes Aggressive ‘deal making’ Streamlining legal process during lease negotiations Ensure commissions and fees are paid quickly Brokerage Leasing Fees:
Deal Type
Direct
CoOp
New Lease
$1.00 SF/Yr
Outside $1.00 SF/Yr LPC $0.50 SF/Yr
Renewal
$0.50 SF/Yr
Outside $1.00 SF/Yr LPC $0.25 SF/Yr
The
Citadel
3200 Cherry Creek Drive South Suggested Property Improvements
“Ready-to-go-Suites” Mounted suite display Brochures, floor plans, logo water bottles
General Suggestions for Reinforcing Class AA Standards:
• Garage Valet • 24/7 information hotline • Concierge
Consistent Marketing Remove KBS logo
Dry Cleaner
Restaurants
Limo / Taxi / Transportation
Event Tickets
Etc.
• Connect with Cherry Creek North Mobile Concierge Fresh Landscaping Common area “picnic” pods. Outside seating / Umbrellas Signage to Mask Concrete
• Evaluate elevator operation • Mask concrete garage vent, possibly with signage
Reserved Parking for Prospective Tenants Valet Service Evaluate Garage Operations *Photos taken by LPC on 12/4/2012
The
Citadel
3200 Cherry Creek Drive South Vacancy Study & Lease up Submarket Midtown Colorado Blvd /Cherry Creek CBD
RBA 1,046,496 3,306,352 16,883,714
SF Available 89,088 486,237 2,286,758
Vacancy 9% 15% 15%
Average Lease Rate $/SF $21.57 $21.00 $28.89
3,000 SF - 5,000 SF 32 Properties 131 Spaces Average Lease Rate $26.64 SF
35 Properties
5,000 SF - 10,000 SF 115 Spaces Average Lease Rate $28.43 SF
29 Properties
10,000 SF - 15,000 SF 81 Spaces Average Lease Rate $28.66 SF
Citadel Lease Up Suite Size 220 1,558 280 3,296 400 3,496 720 2,226 225 1,446 370 5,779 620 2,120 Total 19,921
Lease Date Oct-12 Nov-12 May-13 Sep-12 Sep-13 Nov-13 Aug-13 15%
Rate $27.50 $27.50 $27.50 $27.75 $29.96 $29.96 $29.96
TI $0.00 $10.00 $40.00 $18.00 $30.00 $30.00 $30.00
Abatement 2 Months 3 Months 3 Months 2 Months 2 Months 2 Months 2 Months
The
Citadel
3200 Cherry Creek Drive South Competitive Set Class
RBA SF
YOC
Vacant SF
% Leased
Asking Rate
Operating Expenses
First Avenue Plaza 44 Cook Street
A
124,174
1984 Renn 2010
39,849
68.3%
$27.00
$12.28
First Avenue Plaza 55 Madison Street
A
137,716
19,422
87.2%
$27.00
$12.35
American National Bank Bldg 3033 E 1st Avenue
B
162,117
1982
40,268
87.1%
$31.00
$13.00
Fillmore Place 100 Fillmore Street
A
87,993
1982
15,029
91.1%
Withheld
$10.50
201 Columbine Street 2401 E 2nd Avenue
B
50,966
1999
0
100%
US Bank 210 University Blvd
B
129,649
1979
8,593
99.1%
$29.00
$13.62
101 University Blvd
B
59,997
49,067
18.2%
Withheld
$9.74 (Tax Undisclosed)
10,830
59.9%
$55.00 / NNN
TBD
Building Name & Address
1982 Renn 2010
1970 Renn 2012 Coors Foundation HQ 2nd Avenue & St. Paul
B
27,000 (Proposed)
2013
Lincoln Property Company Denver 2012
Denver Ranks Nationally
LPC Denver - Overview Portfolio Size:
Number of Properties:
Services:
Staff:
Source: ULI - Emerging Trends in Real Estate 2012
2,322,369 SF Office 958,406 SF Industrial/ Flex 135,933 SF Retail 3,416,708 SF Total 22 Office 12 Industrial /Flex 2 Retail • Leasing Services • Property Management • Construction Management Services • Development Services • Investment Services • Corporate Services • Receivership Services 17 Team Members
Investment Prospects for Commercial/ Ranked Number 11 out of 51 Multifamily Properties City Walkability Score 60.4 Washington D.C. Ranks No. 1 with score of 73.1
Denver Leading Industries 6%
5%
Manufacturing Trade, Transportation, and Utilties
15%
20%
Information Financial Activities
4%
Professional and Business Solutions 3%
Education and Health Services
10%
Leisure and Hospitality
7%
12%
Institutional Owner Relationships - Denver Metro Area ASB Capital Management
Other Services Government Mining, Lodging and Construction
18%
Denver Office Market
Colony Realty Partners
Stats YTD - 12/10/2012
Invesco Lincoln Realty Advisors Phoenix Property Company
Sub Market
Wells Real Estate Fund
Total Inventory SF
Total Vacancy SF
CBD NW
25,227,941 9,265,608
3,516,896 1,039,749
14.0% 11.0%
(486,115) 100,556
$28.95 $23.90
SES
20,285,987
2,309,277
11.0%
286,013
$22.83
Denver Market
185,663,692
22,416,303
12%
2,135,078
$26.06
2011 - 2012 LPC Notable Transactions Willis Insurance - New Lease Colorado Center
51,000 RSF
PCL Construction - Early Lease Renewal Colorado Center
45,000 RSF
8420 Rosemary - Key Bank OREA Sale
$750 K
700 12th Street, Golden - Sale
$1.2 Million
Total LPC Trasactions 2010 - 2012 YTD Year
Denver’s Commitment to Growth Project
Estimated Cost (Millions)
Denver International Airport / Stapleton Infill Project
$4.8 Billion
I-25 Expansion / Light Rail / Fast Tracks Union Station to DIA Light Rail (2016 Completion) Denver Convention Center (Expansion)
$1.8 Billion
Sports Authority Field - Denver Broncos
$365
$1.1 Billion
Class A Rate $/SF
Denver CBD Office Market - Breakdown Among Classes
Submarket
$340
Total SF
2010
Number of Transactions (LL Rep and T Rep) 38
249,839 SF
Pepsi Center - Denver Nuggets & Colorado Avalanche $160
2011
64
649,874 SF
Platte Valley Redevelopment
In Progress
2012 YTD
65
642,996 SF
LoDo/ Platte Valley Downtown Midtown
Union Station Redevelopment
In Progress
Uptown
Scott Caldwell • Senior Vice President • scaldwell@lpc.com Mark Homlish • Vice President • mhomlish@lpc.com Lincoln Property Company • 2000 South Colorado Blvd • Tower I - Suite 3700 • Denver CO 80222 • 303.893.1886 • www.lpcdenver.com
Vacancy Total Net % Absorption SF
Class A (SF)
% of Total CBD
Class B (SF)
% of Total CBD
4,354,444
7%
4,139,013
9%
Class A & B Direct Vacancy (%) 9%
5,506,961 6,285,157
18% 20%
3,382,562 2,172,672
11% 7%
12.9% 11.4%
6,853,350
22%
1,934,727
6%
12.3%