A historic office building at the corner of 17th and Champa streets in downtown Denver sold to a joint venture for $17.64 million cash.
The former Colorado Business Bank Building at 821 17th St. is the first Colorado acquisition for Long Beach, California-based Harbor Associates, a value-add investor that bought the property in a joint venture with Goldman Sachs Asset Management Private Real Estate. Kasef LLC, an ownership group managed by Evan Makovsky of NAI Shames Makovsky, was the seller.
Completed in 1907, the nine-story, approximately 115,000-square-foot building was the first multistory office building west of the Mississippi River to be built of reinforced concrete. Charles and Claude Boettcher financed the building to showcase the capabilities of their Colorado Portland Cement Co., according to the National Register of Historic Places.
The building was significantly remodeled in 1927 and restored by the seller in 2001.
“This property represents one of our best achievements in the realm of historical restorations,” said Makovsky. “Painstaking efforts were put into this property to restore it to the state that the original architects intended. We then entered into a façade easement to ensure that this treasure is preserved for future generations.”
The building retains its original marble finishes, oak windows, ornate artwork, vintage chandeliers and bank vaults, which Harbor Associates said will be core elements of its repositioning strategy.
The Broker Restaurant has occupied the lower level since the 1970s. Colorado Business Bank vacated its space early this year, pushing vacancy to 90 percent.
The new ownership will renovate the vacant space into a creative office environment, refresh the historic lobby, and add bike storage, locker rooms and showers, as well as on-site food and beverage amenities. The building will be named The Vault.
“We’re seeing across all our projects and markets that a large percentage of today’s tenants prefer the open floor concept that allows for collaboration and transparency, more natural light and a better overall work experience,” said Justin Loiacono, Harbor principal. “Our finished product will include exposing the concrete ceilings along with the original marble and terrazzo flooring, and each floor will include a dedicated tenant amenity area.”
“Harbor is a great buyer and we are excited to have them enter the Denver market,” said Dorit Fischer, partner and broker at NAI Shames Makovsky, who handled the transaction with NAI Shames Makovsky’s Darrin Revious and Todd Silverman. “They have an incredible track record and are thrilled for the opportunity to create 100,000 square feet of office space in a historic building.”
“We appreciate how special the opportunity is to breathe new life into one of Denver’s most architecturally significant buildings. Our business plan is to retain the great history of the asset while adding the amenities and modern offices and restaurant improvements required by today’s tenants,” said Jon Choi, principal with Harbor Associates.
Choi said the building “is an incredible piece of Denver’s history and an exciting office choice for tenants who recognize and appreciate unique value.”
“Its local legacy is perhaps best represented by the many impressive vaults on the building’s lower levels. From its commercial banking lobby to its subterranean private dining rooms, the building and its vaults have boasted a wealth of history, stories and legends for more than a hundred years,” he said. “That’s what’s inspired the building’s new name – The Vault.”
“We sourced this acquisition off market, drawn to the architectural character of the building, and closed on the project all cash,” added Loiacono. “We like the fundamentals of the Denver market and continue to find interesting opportunities to invest in the value-add space through our deep network of brokerage relationships and ability to move quickly. We have a robust pipeline of activity behind this transaction and look forward to continuing to build our Denver portfolio.”
The former bank building is within a block of two light-rail stops, as well as bus stops and bike lanes. It’s a block off the 16th Street Mall and within walking distance of Denver Union Station. Harbor retained Tryba Architects, which was involved in the Union Station renovation, to lead repositioning of 821 17th.
“We like the property’s central location within Denver’s primary office core. The majority of the existing traditional high-rise office stock is located within blocks of The Vault, and we think our differentiated and authentic creative product will be appealing to many of these tenants,” said Loiacono.
“A lot is happening in this pocket with Shea (Properties’) recently completed high-rise multifamily project, new hotel openings and top restaurants, including French 75, and Guard and Grace,” he said, noting several other large new construction commercial and residential projects also are in the works.
Loiacono said the ownership plans to hold the asset for “many years.”
“We view this as a cornerstone location within downtown Denver that will only get better over time.”
Lease rates will be “well below” new construction. Chris Phenicie with CBRE and Sam Zaitz with Legend Partners will head leasing efforts.
“Colorado Bank Building represents our ninth value-add office acquisition in the last two years as a firm and expands our portfolio into the Denver market. We are very excited to be making our first acquisition in downtown Denver,” commented Paul Miszkowicz, principal for Harbor Associates. “We intend on building on our recent momentum by sourcing new opportunities and pursuing similar strategies in high-demand submarkets to meet our acquisition goal of $250 million over the next 12 months.”
Joe Sumberg, co-head of GSAM PRE, said, “We are excited about the opportunity to re-energize such a historically significant building in downtown Denver. Colorado Business Bank represents our second office investment in Colorado this year as we continue to increase our exposure to top-performing markets such as Denver, where tenant demand for creative office space continues to grow. We look forward to working with Harbor Associates to reposition Colorado Business Bank into a highly amenitized and differentiated creative office building.”
The transaction was GSAM PRE’s second office investment in Colorado this year. It was part of the group that acquired 21 buildings in Flatiron Park in Boulder in March.
Jason Pomerantz, CEO of NAI Shames Makovsky said, “We parted with this asset to take advantage of favorable market conditions at a time when our focus is directed toward the opening of our 375-key dual-brand hotel development in Boulder as well as predevelopment work on several new major projects here in Denver.”