Kaiser Permanente’s acquisition of 210,848 square feet of office space in Aurora was driven by cost savings and efficiencies, according to the company’s real estate manager.
Kaiser bought Waterpark II and III at 2350 and 2550 S. Parker Road for $25.32 million, according to public records. The health care provider operates in about 60 percent of the space in the Class A buildings, which sit next to Waterpark I, a 194,000-sf building Kaiser owns and occupies.
“We’ve gradually expanded into space in those two buildings, and when the opportunity came up to purchase, we sat back and looked at our long-term plans. It just made sense to move forward with the purchase rather than continue to lease,” said Jim Bergman, Kaiser Permanente real estate manager.
“We’d rather focus our funds on health care and health care facilities, so anytime we can save money through our real estate, especially our administrative real estate portfolio, we’re going to try to do that.”
In addition, “We’ve been trying to consolidate into one main campus for a long time,” said Bergman, citing efficiencies of having administrative functions in a single location.
The Waterpark buildings provide a campus setting with outdoor seating, walkways and water features. They were built in 1982 and 1984, and renovated in 2014. The buildings are Energy Star certified. Matrix Group Inc., which bought the buildings for $14 million in 2010, was the seller.
Waterpark II and III were 97.2 percent occupied at the time of the sale. Tenants include AT&T, Wells Fargo and BonaKemi USA, a floor care products company. BonaKemi leases two floors but doesn’t plan to renew its lease, which expires at the end of 2018.
Kaiser Permanente doesn’t currently have expansion plans for either Waterpark II or III, according to Bergman.
“The space that we currently have is all the space we really need for the next few years. It was more long term and looking at the financial piece of it,” he said. “’We’re always looking at cost savings and how we can bring down the cost of health care, and this is just a small way we can do that.”
Brad Cohen and Larry Thiel of Transwestern’s Denver Capital Markets team represented Matrix in the sale of Waterpark II and III.
“Several investors expressed interest in the properties, but Kaiser Permanente ultimately exercised its right of first offer to purchase,” said Cohen.
Matt Anderson, Bill Byrne and Jason Schmidt of JLL represented Kaiser Permanente.