Prices for Denver office buildings continue to escalate, with 1601 Wewatta trading at a record $742.16 per square foot.
Morgan Stanley’s Prime Property Fund paid $222 million for the 299,127-sf asset, which sits at the gateway to the bustling Union Station neighborhood.
A partnership of Hines, Denver-based Jordon Perlmutter & Co. and J.P. Morgan Asset Management developed and sold 1601 Wewatta. The building was completed in 2015 and was 97 percent leased at the time of sale.
The price per sf bests the $723 paid a year ago for 1401 Lawrence, according to CoStar Group.
Jordon Perlmutter & Co. Principal Jay Perlmutter said 1601 Wewatta represented “unbelievable execution” on the part of the development team, which included architect HOK.
“We were height-limited to 140 feet, so we had to come up with an iconic design. We accomplished that,” he said. The LEED Gold building features a solar glass wall that curves around a large outdoor plaza. There are 10-foot ceilings, balconies and 17,000 sf of ground-floor retail space.
Colorado Athletic Club has a 37,000-sf flagship facility that spans the entire second floor.
“It had a great tenant roster,” said Perlmutter. Law firm Hogan Lovells occupies more than 72,000 sf global accounting company Deloitte has over 60,000 sf, and Agility Recovery is a 36,000-sf tenant.
“Parking is at a premium down there, so we built 409 parking spaces four stories underground, and we knew that would be a big payback. Parking is a very valuable commodity,” said Perlmutter.
Plus, the building is a block from Union Station, so, “You can literally walk across the street and go to DIA.”
Investor interest in 1601 Wewatta and very strong, Perlmutter said. “There’s a lot of pent-up demand for institutional buyers to place their money in Denver because of the things that are going on in Denver right now,” he said.
“It’s an incredible, trophy, state-of-the-art property which checks a lot of boxes for people. But also, if you look at the big picture of Union Station, it’s the last major new construction office building that hasn’t traded yet,” said Jenny Knowlton of CBRE.
“One of the things that I think we on the brokerage side of it were really impressed with is it felt like it had probably the highest concentration of creative office build-out in these new construction buildings,” she said, noting a large portion of the building has open ceilings and “really cool, edgy build-out.”
“It was a really impressive building to tour investors through.”
While 1601 Wewatta was acquired with domestic capital, “I think downtown Denver in particular has seen a pretty strong wave of foreign investor interest. We definitely saw it on this one,” Knowlton commented.
The CBRE Capital Markets West team of Knowlton, Mike Winn, Tim Richey, Chad Flynn and Charley Will handled the sale.
“It was a record-setting deal that it was just fun to be part of,” said Perlmutter.
