Denver Campus Commands $105M

First Avenue Plaza. Image courtesy of JLL Capital Markets

Acting on behalf of a fund managed by a subsidiary of Ares Management Corp., JLL Capital Markets has orchestrated the sale of First Avenue Plaza, a two-building office complex in Denver.

The 264,000-square-foot asset fetched $104.8 million, according to records from Denver’s Office of the Clerk and Recorder. JLL pulled double duty on the deal, as the firm’s Debt Advisory team arranged financing for the buyer, Granite Properties.

Sited in Denver’s upscale Cherry Creek area, an established luxury lifestyle district, First Avenue Plaza consists of the 127,000-square-foot 44 Cook and the 137,000-square-foot 55 Madison towers. Along with a shared 752-space parking facility, the mid-rise buildings grace a full block of the coveted neighborhood and stand within easy reach of best-in-class amenities and executive housing.

The investment community was nothing short of taken with First Avenue Plaza. “The interest was substantial, as Cherry Creek is one of the best performing submarkets in Denver,” Peter Merrion, managing director with JLL Capital Markets, told Commercial Property Executive. “We received numerous bids for the assets and saw a lot of competitive buyers.” JLL Capital Markets’ Mark Katz and Hilary Barnett joined Merrion in representing the seller and procuring the buyer.

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The lending community proved equally eager to capitalize on the First Avenue Plaza opportunity, attracted to the property for the very same reason, Merrion added. Ultimately the JLL Debt Advisory team of Eric Tupler and Leon McBroom secured a five-year, floating-rate loan on Granite’s behalf through a national bank.

With 44 Cook and 55 Madison having opened in 1984 and 1982, respectively, Fist Avenue Plaza has been a mainstay in Cherry Creek for decades; however, the property has been spruced up to better serve today’s users. Beginning in 2019, the seller commenced an improvement strategy that included upgrades such as a new tenant amenity lounge and outdoor patio as part of an effort to help companies attract and retain talent. The current lease level of 88 percent is evidence of the program’s success.

Investment sales tell a positive tale

While the overall office sector in the U.S. pales in comparison to the likes of the industrial sector in terms of the current favorite among commercial real estate investors, the office market in Denver is performing well enough for sellers like Ares to turn a nice profit on a transaction. First Avenue Plaza last traded in 2014, when Dividend Capital Diversified Property Fund Inc.—later known as Black Creek Diversified Property Fund Inc., which Ares acquired in July 2021—purchased the complex for $75 million.

And although uncertainty continues to hover over Denver’s office market as net absorption remains in the negative and the vacancy rate closed 2021 at 20 percent, according to a JLL report, sales and sale prices indicate a robust interest in office product among investors. Investment sales volume outpaced 2020 levels in 2021, according to the report, and pricing exceeded pandemic-era lows by notable margins. The forecast for the Denver office market is bright all around.

“We are seeing continued tenant and investor demand to either grow in Denver or move here, so we are bullish,” Merrion said. “The in-migration and population growth fundamentals coupled with good governance and desirable lifestyle attributes are helping Denver out-compete other cities.”