An institutional investor paid $133.66 per square foot for a newly built, fully leased industrial building in Douglas County, which sold at a record low cap rate for the southeast industrial submarket.
Lincoln Advisory Group, on behalf of a public pension fund client, bought 14150 Grasslands Drive for $13.5 million. The 101,000-sf building, known as Highfield Building 5, is leased to Charter Communications, the second-largest cable company in the United States, and Gateway Classic Cars, the country’s leading classic and exotic car sales company.
Charter Communications is moving into 66,000 sf of the building. Gateway Classic Cars occupies 35,000 sf.
Both tenants are on new, long-term leases.
The opportunity to buy the building “attracted tremendous interest from both private and institutional capital,” said Jeremy Ballenger, senior vice president with CBRE Industrial & Logistics Services.
“Investors are drawn to Denver’s positive market dynamics, including job and population growth, as well as the outlook for the industrial sector in general,” he said. “When an investment opportunity like 14150 Grasslands Drive becomes available, there is broad-based interest.
“Investors also appreciated the great access and premium location that Highfield Business Park affords, as well as the high caliber of tenants and state-of-the art new construction features. Further, if you dig deeper into the population story, population growth in Denver’s southeast region is projected to exceed the greater metropolitan area from 2016 to 2020.”
Mark Dwyer of Lincoln Property Co., who represented Lincoln Advisory Group with Lincoln’s Scott Caldwell, said the new, state-of-the-art construction and location in “a great submarket” were particularly appealing to the buyer.
“They bought it as a core real estate investment for the pension fund,” he said.
While the cap rate wasn’t disclosed, Ballenger said industrial values are rising due to ongoing cap rate compression throughout the metro area.
“Heightened liquidity in the market brought on by new investors to the market is also contributing to rising values,” he said. “Denver’s southeast industrial market, which is the third largest in the metro area, continues to report solid market fundamentals, including a stable, low 6.4 percent vacancy rate, despite new construction.”
HighField Building 5 is the first of three industrial buildings that Confluent Development and Bradbury Properties teamed up to develop in HighField Business Park. It was completed this year.
“We’re thrilled with the successful sale of this high-quality industrial asset,” said Marshall Burton, president and CEO of Confluent Development. “The sale represents the strength of Highfield Business Park as an industrial hub primed for continued expansion. We’re pleased to continue growing our strong partnership with Bradbury Properties to support the need for high-quality industrial development within Denver’s growing market.”
Ballenger represented the seller, Highfield Building 5 LLC, with CBRE’s Tyler Carner and Jim Bolt.
HighField Business Park is a 100-acre park off E-470 and Peoria Street.
