SteelWave has entered a joint venture with the owner of an uptown office asset that is a prime candidate for repositioning.
The Capitol Center comprises a 133,400-square-foot multitenant office tower at 225 E. 16th Ave. that is 69 percent leased and a 22,857-sf building at 1600 Sherman St. leased to The Colorado Trust. SteelWave and New York-based Empire Square Group intend to modernize the buildings and lease up the vacant space, according to Mike Winn of CBRE Inc.
“That upper east side of downtown is on fire. The rents have just been moving up and up in that submarket,” said Winn.
Located a block north of the Colorado Capitol and two blocks east of Broadway, the Capitol Center provides tenants with access to downtown amenities in a less congested, low- to midrise setting. The largest of the two buildings is 12 stories.
“What we’re seeing is there is a strong demand from a large group of tenants that don’t want to be in high-rise buildings,” said Winn. Also, uptown rents are lower than those in the Denver Union Station and Lower Downtown areas.
According to Empire Square Group’s website, The Colorado Trust’s lease extends through 2028. That building is two stories. The Capitol Center also includes a 234-space parking structure.
The property was being marketed either for sale or as a joint venture opportunity, said Winn, who represented Empire Square Group with CBRE’s Tim Richey and Chad Flynn.
“We got a wide, diverse amount of activity, which to be quite frank, surprised us,” said Winn. “It’s an older property in a market location that some investors weren’t quite sure they understood,” he said. Once outside investors became acquainted with the vibrancy in the area, “People really started to understand it.”
The buildings were built in 1958.
Winn said SteelWave, which has a Denver office, is proficient at identifying well-located, good physical structures that present an opportunity to create value. “The value creation is the location, which is quickly emerging. Tenant demand in that area is very robust,” he said.
California-based SteelWave sources, develops, renovates, leases and manages real estate investments for institutional clients. Empire Square Group is a private equity company that invests in real estate and high-growth companies in the United States.
Neither SteelWave nor Empire Square Group could be reached for comment.