Dennis Carruth, the master-developer of Ken-Caryl Ranch, recently sold a retail center he developed in the master-planned community.
Sageo LLC, headed by Oliver and Ann McBryan of Boulder, paid $3.75 million for the 14,390-square-foot Sagewood III center at 10065-10125 W. San Juan Way, just off Kipling Street, near C-470.
The sales price equates to $260.60 per sf.
Carruth, through Sagewood III LLC, developed the center in 2006.
The two-building center was 100 percent occupied at the time of the sale.
The anchor tenant, Los Dos Portrillos II, a Mexican restaurant, occupies about half the center.
The center is shadow-anchored by retailers such as Albertson’s, PetSmart and Kohl’s.
The center was listed by Fuller Real Estate brokers John Becker and Mike Haley.
“It’s a very nice center,” Becker said.
“With its pitched roof, it has kind of a mountain chalet feel,” he said. “It feels like ti could be in Avon.”
Part of that might because Carruth, who first began developing Ken-Caryl in the 1970s, lives in Basalt, “although he is down here all of the time,” Becker said.
The Ken-Caryl area is a small, but vibrant submarket, he said.
Within a three-mile radius, there are 23,947 households with a median income of $89,388, Fuller’s research shows.
Some 22,691 vehicles pass the center daily.
“That whole southwest submarket might have 3 million sf of space and it is kind of isolated, so the retail really serves the people who live in that area,” Becker said.
He noted that a lot of engineers and other research and development professionals work at the nearby Lockheed Martin facility.
He said there was quite a bit of investor interest in Sagewood IIII.
“These $3 million to $5 million centers are very attractive to small, private investors, especially those in 1031 exchanges,” Becker said.
This marks the first retail purchase by the Boulder buyers, who primarily have invested in small industrial properties in the past, he said.
Centers such as this are too small for institutional investors, however.
“They are not big enough for the core-plus buyers,” Becker said.
This center might have sold for a lower cap rate, but some of the tenants were on short-term leases, including the anchor tenants.
“I don’t think they would have any trouble replacing it, if they decided to leave, but I don’t think they will,” Becker said. “It’s been a very successful Mexican restaurant that has been there since the beginning.”
The sale fits in with Carruth’s strategy, he said.
“Dennis is more of a merchant builder who develops properties, leases them and sells them,” Becker said.
Becker said he thinks investor’s appetite for these small centers will remain strong in the Ken-Caryl Ranch area and the overall Denver throughout 2016.
“We recently sold three other properties like this and they all had a lot of interest from buyers,” Becker said.
