A Chicago area company that seeks to fill a niche with each of its projects has $85 million worth of industrial deals in the pipeline in Denver.
Karis Capital is under construction on a 163,790-square-foot front-park, rear-load building with trailer parking for tenants as small as 40,000 square feet at 1910 N. Gun Club Road in Park 70 business park in Aurora. Karis will break ground July 1 on a 142,104-sf building at 13575 E. 37thAve., also in Aurora, that will include highly sought-after outside storage.
“We try to find a niche under the industrial real estate umbrella, and I think these two projects are great examples of that,” said Jake Finley, Karis Capital managing partner. “All of our projects have a little bit of a story to them.”
The two developments, and a third that hasn’t been announced, represent Karis’ entry into the Denver market, although Finley is a former resident. Karis came here on behalf of a client and dived in because, “The economic fundamentals of population growth is one of the most compelling stories that we can tell in industrial real estate,” Finley said. AEW, one of the world’s largest real estate investment managers, is its capital partner.
The 37thAvenue project, which has direct access to Interstates 225 and 70 with good visibility to I-225 and is within 15 miles of 67 percent of metro Denver’s population, nearly didn’t happen. “We looked at this a million different ways, and there were a million different site plans done in the past …. We just couldn’t make the numbers work based on traditional front-park, rear-load building,” Finley said.
Cushman & Wakefield Managing Director Matt Trone suggested a configuration that puts 3.6 acres of yard space on one end of the building and 2 acres on the other, and Finely said, “We’ve got massive interest. We’re responding to significant RFPs from great quality tenants at rents that we’re excited about.”
Matt Trone
“It’s really a culmination of a number of things that we’ve seen from tenants,” said Trone, adding the building – ideal for two tenants but divisible for up to four – also has “a lot more drive-in doors than you would typically see on new construction.” The 32-foot-clear building has 18 drive-in and 14 dock-high doors, plus 131 auto stalls.
With 1910 N. Gun Club Road, trailer parking is a lure.
“We’re seeing smaller-sized tenants requiring trailer parking more than ever in the past,” said Cushman & Wakefield Managing Director Steve Hager, who is marketing both projects with Trone and Drew McManus, also of Cushman & Wakefield. “We have seen those tenants that are 40,000 to 80,000 square feet now needing some kind of trailer parking, whereas in the past it was generally the 100,000-square-foot and larger tenants requiring additional trailer parking.
“This project gives you a higher-image building that can accommodate a higher office finish, is divisible for smaller tenants, plus it provides additional trailer parking,” he said.
“It’s not just a Denver trend,” said Finley. “It’s in every single market … We’re building in Chicago right now, right downtown, and because of trailer parking, interest is through the roof,” he said, adding some projects are seeing an additional $1 to $5 per sf in rents due to excess trailer and car parking. “It’s a huge value to these tenants.”
While most Class A industrial buildings along Denver’s eastern I-70 corridor are constructed by developers intending to hold them long term, 1910 N. Gun Club could be sold to a user – something else that makes it unique in the market, noted Hager.
The building is set to deliver in October, while 13575 E. 37thAve. will be completed by the end of the year. Ware Malcomb is the architect, and ARCO/Murray is the general contractor.
Both projects resulted from Karis “really listening to the active demand that we see out there,” Trone commented.
“It’s very refreshing to work with a developer that has different optics as they look at the market,” said Hager. “They want to understand what’s not being addressed in the marketplace and where there is an opportunity for them to come in and deliver their expertise to build a product that really is going to add value to these occupiers.”
“We’re really proud of the way they turned out,” Finley added. “We spent a lot of time on design, and I think that’s reflected in the feedback we’re getting from tenants.”
