Four Class A distribution buildings at Airways Business Center produced a feeding frenzy among investors before selling to a real estate investment trust for $48.27 million.
Records show EastGroup Properties paid $126.32 per square foot for Buildings 2, 4, 5 and 6, which account for 382,137 sf of space in Denver’s leading industrial submarket.
“I think it’s fair to say that this had as much activity as anything that Denver has seen during our careers – just incredible activity, and a great outcome,” said Jeremy Ballenger of CBRE’s Denver office. The buildings elicited interest from a broad range of investors, including foreign capital.
“We’re excited to expand our Denver portfolio with the addition of Airways Business Center. This acquisition was a great opportunity to acquire a critical mass of high-quality, multitenant buildings in Denver’s largest and top performing market,” said Ryan Collins, EastGroup Properties senior vice president.
Located at 2250 and 2460 Airport Blvd., and 2255 and 2256 N. Pagosa St. in Aurora, the buildings provide Class A industrial space for tenants from 14,000 to 100,000 sf.
“We’re not seeing buildings being built in Denver right now that are divisible to 15,000 to 50,000 square feet. It’s not cost-efficient to build space that is divisible in those size ranges,” said CBRE’s Todd Witty. “I think that’s one of the things that makes Airways really interesting because there’s not a lot of newer competing product in that size range on the I-70 corridor.”
Airways also offers both front-park, rear-load and cross-dock facilities, plus one of the buildings has a sizable outdoor storage yard. “So, between all those variables, it really hits right at what a distribution tenant wants in the market,” said Ballenger, who represented seller Principal Global Investors with CBRE’s Doug Viseur, Tyler Carner, Jessica Ostermick and Jim Bolt.
The newest of a half-dozen buildings at Airways Business Center, the buildings were developed by Principal Global and Trammell Crow Co. in 2007 and 2008, with Viseur and Witty handling leasing since that time.
The property is 100 percent occupied by 11 tenants, including Factory Motor Parts, Waxie Sanitary Supply and Ingersoll Rand. “It has performed incredibly well – and even better than the market for that whole history – so, I think that was a big selling point as we were marketing to investors,” said Ballenger.
According to CBRE, the airport industrial submarket has recorded 17 years of positive annual net absorption, and rental rates are at an all-time high.
The overall Denver industrial market just experienced its 36thstraight quarter of positive absorption, direct vacancy was 6 percent, lease rates averaged $8.21 per sf triple net, and investment sales accounted for more than 84 percent of the $351.8 million in sales volume in the first quarter.
“Denver continues to be a sought-after market for industrial investment with strong market fundamentals and economic growth attracting investors,” said Ballenger, who said the Airways deal was a prime example of the record level of interest in Denver.