Two-property office asset sells for $12M

An investor purchased a two-property office asset in Littleton with plans to renovate and modernize the 40-year-old suburban buildings. 

Pantheon Viewpoint LLC purchased Viewpoint I & II, a 93,069-square-foot, two-building, Class B office campus at 7901-7921 Southpark Plaza, from seller IBC Denver VII LLC for $12 million. John Witt and Ben Swanson of Quiver Investments represented the buyer, while Riki Hashimoto and Dan Grooters of Newmark Knight Frank represented the seller. 

The sale was part of the buyer’s 1031 exchange. According to Witt, the buyer traded from an out-of-state asset it had owned for over 100 years in multigenerational ownership. With three other Colorado office properties, the buyer expanded its in-state presence with the purchase. 

Together, the properties were 72% occupied at the time of the sale, with tenants representing a wide range of industries, including engineering, health care and law. Witt said all of the tenants remained stable following the onset of COVID-19. 

While many investors were wary of purchasing office properties at the start of the pandemic, Witt said the buyer remained confident in the suburban office market and saw promise in the south Denver location, where there is a large tenant base and desirable surrounding housing and amenities. 

“The buyer is pretty bullish on the suburban office market in general. It believes the suburban market isn’t going to be as distressed post-COVID-19 as other sectors, such as urban office or retail, so it was really comfortable investing in this asset,” Witt said.  

“The buyer envisions suburban office having a resurgence in popularity, so it wants to reinvest in the infrastructure of the buildings, to tailor it to tenant comfortability and optimize the property’s efficiency,” Swanson added. “Instead of just doing the obvious cosmetic changes, the buyer is going to improve the HVAC system and the buildings’ structures.” 

According to Witt, the buyer plans to modernize the property’s internal HVAC system by making it more customizable suite by suite. The buyer believes this improvement will allow for tenants to have more control of their own space, a desirable property feature in a post-pandemic market. 

While COVID-19 didn’t phase the buyer’s optimism, it did pose challenges to closing the sale, Swanson said. Due to the pandemic, the IRS implemented an identification deadline extension but not a closing extension, which allowed the team more time to identify a property in the buyer’s exchange but then shrunk the closing process. However, in spite of juggling those deadlines, the team was able to close the sale of time. 

Swanson said the buyer anticipates attracting more tenants to the property following its capital improvements, though there is no set timeline in place for when those will be completed. The buyer will work with a separate private entity to manage and lease the property going forward.

Featured in the September 16-October 6, 2020, issue of CREJ