A joule is a unit of energy.
It is pronounced like jewel.
The Joule also is an apartment tower in the Golden Triangle.
“It is the crown jewel of Denver,” said John Winslow, principal of Winslow Property Consultants.
The Joule, a 224-unit, 16-story building at 1000 Speer Blvd., certainly showed a lot of energy, carving out a record sales price per unit, in a crowded field of luxury apartment communities.
The Joule’s developer, the Lynd Co. of San Antonio, with its partner, the Snavely Group of Cleveland, recently sold it for $120 million.
The sale prices equates to $535,714 per unit and $501.61 per square foot.
Both are record prices in the Denver area, according to Winslow, who was not involved in the transaction, but closely tracks the local real estate market.
The buyer was Boston-based General Real Estate Investments, better known as GID.
An executive vice president of real estate acquisitions at GID, declined to comment on the sale.
An official from Lynd also did not return a call.
The price per unit and price per sf raised some eyebrows in the Denver area real estate community.
About 110 of the units, or 49 percent of them, have been leased so far, according to an onsite leasing representative.
“It’s a huge number,” said Pam Koster, a broker with Moran and Co.
“I think the amount it sold for gave a lot of people pause,” especially since it was still in lease-up, she said.
She said even the most expensive apartments in Boulder aren’t selling for that much per door. The price GID paid per unit probably will remain the high-water mark for quite some time, Koster and other brokers believe.
The sale apparently was a direct deal between Lynd and GID, according to Koster and other apartment brokers.
“I think if they had gone out to the market, they would have gotten quite a few offers for it,” Koster said.
Lynd might not have received quite so many offers as it would have last year, but there is no doubt a number of buyers would have competed for it.
“It seems like the number of offers have pulled back, but the ones who are still in the game are very qualified,” she said.
“What we have been seeing recently is fewer offers, but very high-quality offers for these type of core properties,” she added.
She said GID technically probably paid above the replacement cost, but that doesn’t mean it overpaid.
“When you pay over the replacement cost, you have to weigh that against potential increases in construction, labor and development costs and the risk you will take by building a new product,” Koster explained.
“And if you are building new, during the development period, you are receiving no cash for three years,” during the planning and construction, she noted.
“So you might pay a little more than the replacement cost, but on a risk-reward basis, it makes sense,” she said.
Other considerations: the quality and location of the Joule, she said.
“Without a doubt it has some of the nicest finishes, if not the nicest finishes, of any apartment building in Denver,” Koster said.
“And it has a great location in the Golden Triangle,” with its easy access to the nearby Cherry Creek trail, downtown and Cherry Creek, she noted.
Dan Woodward, a broker with CBRE, spoke with GID officials before they purchased Joule, although he did not represent them in the deal.
“I think GID had a need and were in an exchange, in Austin, I think, and this met their need,” for the 1031 exchange to defer capital gain taxes.
He said GID was willing to buy the Joule before the occupancy rate was stabilized.
“They were willing to buy the deal pre-stabilization because they were really comfortable with the area and they knew the general contractor,” Woodward said.
“One of the things they wanted was type 1 construction and many projects like that get a premium,” he said.
Type 1 construction is used to describe the fire code for metal and concrete buildings that are extremely fire resistant.
Woodward said it is certain that GID went into the transaction with its eyes wide open.
“In our market, is it not that much of a risk to buy a building before the rents are stabilized,” Woodward said.
“GID really know what its expenses will be and they know what their income will be, once it is leased up,” he explained.
“So they would be very comfortable with the lease-up. They would look at this long-term perspective,” he said.
The other thing to keep in mind is that while the sale price per unit is a record, the sales price is not.
“One hundred and twenty million is a big number, but it is a number that quite a few buyers can digest,” Woodward noted.
The Golden Triangle, home to a number of new apartment communities, is a hot area, he noted.
“The Golden Triangle already is a magnet for millennials, as well as people selling big, suburban homes and want to live in downtown, but don’t want the noise and congestion of living by Union Station. Union Station has its advantages and disadvantage,” Woodward said.
Residents of the Joule also enjoy unobstructed views of Denver’s skyline and the mountains, as well as easy access to anyplace in the metro area, he said.
“In my opinion, the Golden Triangle is really in its early stages of being discovered and is only going to get better,” he said.
In 2014, Woodward and fellow CBRE teammates David Potarf and Matt Barnett, handled a pre-arranged sale of the 265-unit Element 47 in Jefferson Park to GID from the Spanos Co.
In that deal, GID also bought the property before it was leased up, although the circumstances were different than with the Joule.
“GID very much buys high-quality properties,” Woodward said.
Monthly rents in the Joule range from $1,541 to $4,100, according to Apartment Insights, a database published by Cary Bruteig.
Rents average $2.72 per sf, with some units commanding as much as $3.55 psf, according to Apartment Insights.
Units range in size from 524 sf to 1,361 sf.
The Joule has all of the usual amenities found in modern apartment communities including a clubhouse, computer room, controlled entry, a heated swimming pool and a weight/exercise area.
With the Joule, it now owns 2,765 units in the Denver area, according to its website.
Other properties GID owns in the Denver area, according to its website, include:
• The Casey, a 187-unit property at 2100 Delgany St. in Denver;
• The Manhattan Tower and Lofts, with a total of 400 units at 1801 Bassett St. Denver;
• The 419-unit Windsor at Broadway Station, 1145 S. Broadway, Denver,
• The 652-unit Windsor at Meridian, 9875 Jefferson Parkway, in the Meridian International Business Center in Douglas County;
• The District, a 276-unit apartment community at 6300 E. Hampden Ave., Denver;
• The 342-unit Windsor at Meadow Hills at 4280 S. Cimarron Way in Aurora; and
• The 265-unit Element 47 by Windsor.
Winslow, meanwhile, sees a strong future for the Joule.
“This is one of those recession-proof buildings, as there will always be financially well-suited tenants for this building,” Winslow said.
And although Winslow is a self-described “country boy at heart,” he said no doubt that if he was hankering for city living, he knows where he would want to hang his cowboy hat.
“This would be my first choice,” Winslow said about the Joule.
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