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Clarion makes $146.3M investment in downtown Boulder

The building at 1050 Walnut is one of three downtown Boulder office buildings that sold for $146.3 million. The buyer also is acquiring multifamily assets in Boulder.

Clarion Partners landed a three-building office portfolio in downtown Boulder for $146.3 million, or $621.72 per square foot.

The deal included two of the largest office buildings downtown, 1050 Walnut and Canyon Center, along with 1900 15th St. The portfolio totals 235,316 sf.

“Downtown Boulder is such a unique market. For someone to come in and get a big, critical mass like that in downtown Boulder is pretty rare,” said Jenny Knowlton, vice president with CBRE Capital Markets, Institutional Properties, in Denver.

Both 1050 Walnut and 1900 15th, a single-tenant building that Amazon occupies, were 100% leased at the time of the sale. Canyon Center, a 84,366-sf building at 1881 Ninth St., was approximately 88% leased.

Clarion paid $51.1 million for Canyon Center; $72.3 million for 1050 Walnut, which comprises 113,778 sf; and $22.9 million for 1900 15th, a 37,172-sf building.

JP Morgan, the seller, bought the portfolio from Blackstone two years ago for $101.25 million, or $467.02 per sf. The 15th Street building was vacant at the time, contributing to overall occupancy then of 77%.

Southwest Research Institute, a nonprofit research-and-development company, is the portfolio’s largest tenant with about 45,000 sf at 1050 Walnut. That building and Canyon Center, whose tenants include ABT Associates, were built in 1983 and 1994, respectively, while 1900 15th was constructed in 1994. All have been renovated and well-maintained by previous owners, said Knowlton.

There was “incredibly strong” interest in the portfolio from institutional investors, including some foreign capital, as well as high-net worth groups, she said.

“Boulder is Boulder. I think rents there are going to continue to rise,” said Knowlton.

Jenny Knowlton

“As tech firms continue to flood the state, I think Boulder is typically one of the top two locations that these firms out of the West Coast want to go. That market is going to continue to be more and more in demand.”

Boulder currently has a direct vacancy of 5.4% for office space, less than half of metro Denver’s office vacancy rate of 11.6%, according to CBRE research.

CBRE brokers Erik Abrahamson and Sarah-Joan Rotholz were awarded the leasing assignment for the Boulder portfolio and retained the property management assignment.

“This portfolio includes some of the highest-quality and most creative office space in Colorado, located in one of the country’s top tech markets. Boulder’s tech ecosystem is world-renowned, and downtown has seen an influx in recent years of tech firm growth,” said Abrahamsom. “These growing companies are looking for options like the Boulder office portfolio that combine Class A features with walkable amenities and access to highly educated tech talent.”

Clarion Partners is a New York based investment management company that invests in all real estate asset classes and owns numerous properties in the Denver area. It appears to be doubling down on the Boulder market, where it is also purchasing multifamily assets.

Featured in CREJ’s Jan. 15-Feb. 4, 2020, issue

Kris Oppermann Stern is publisher and editor of Building Dialogue, a Colorado Real Estate Journal publication, and editor of CREJ's construction, design, and engineering section, including news and bylined articles. Building Dialogue is a quarterly, four-color magazine that caters specifically to the AEC industry, including features on projects and people, as well as covering trends…