Inverness Business Park Office Building Investment 155 Inverness Drive West Englewood, Colorado 80112
CONFIDENTIAL OFFERING MEMORANDUM Confidentiality Agreement and Disclaimer
THIS IS A CONFIDENTIAL MEMORANDUM intended solely for your limited use to determine whether you wish to express an interest in 155 Inverness Drive West, Englewood, Colorado, as more particularly described herein (“Property”). This confidential memorandum contains brief, selected information pertaining to the business affairs of the Property’s owner (“Owner”) and has been prepared by Cushman & Wakefield primarily from information supplied by the Owner. Although representatives of the Owner have reviewed this confidential memorandum, it does not purport to be all-inclusive or contain all of the information that a potential investor may desire. Neither the Owner, nor any of its members, officers, directors, employees or agents, nor Cushman & Wakefield make any representation or warranty, expressed or implied, as to the accuracy or completeness of any of the information contained herein. Both Owner and Cushman & Wakefield disclaim any liability which may be based on such information, errors therein, or omissions therefrom. All financial data contained herein is unaudited. The projections and pro-forma information contained herein represent estimates based on assumptions considered reasonable under the circumstances. No representations or warranties, expressed or implied, are made that the actual results will conform to such projections. There is no representation as to environmental conditions of the property, or as to any other aspect of the property.
By your receipt of this confidential memorandum, you agree that this memorandum and the information contained herein are of a confidential nature and that you will hold and treat them in the strictest of confidence, and that you will not, directly or indirectly, disclose or permit anyone else to disclose this memorandum or any part of the contents in any fashion or manner detrimental to the interests of the Owner. Further, you agree not to discuss this memorandum with any other institution, potential investor or tenant without the express permission of Cushman & Wakefield and the Owner. Upon request, the recipient will promptly return this confidential memorandum and any other material received from the Owner or Cushman & Wakefield without retaining any copies thereof.
This confidential memorandum shall not be deemed an indication of the state of affairs of the Owner or constitute an indication that there has been no change in the business or affairs of the Owner since the date of preparation of this memorandum. Neither the Owner nor Cushman & Wakefield undertakes any obligation to provide additional information or to correct or update any of the information contained in this confidential memorandum.
2 n INVERNESS BUSINESS PARK | 155 INVERNESS DRIVE WEST, ENGLEWOOD Table of Contents
Executive Summary 5
Property Description 10
Floorplans 14
Potential Investment Outlook 17
Arapahoe County 18
Market Overview 20
MARKET ADVISORS 1401 Lawrence Street, Suite 1100 Stuart Thomas Sam White Denver, Colorado 80202 Senior Associate Associate phone +1 303 292 3700 Healthcare Practice Group Healthcare Practice Group +1 303 312 4230 +1 303 312 1911 fax +1 303 534 8270 [email protected] [email protected] cushmanwakefield.com
Offering Memorandum n 3 4 n INVERNESS BUSINESS PARK | 155 INVERNESS DRIVE WEST, ENGLEWOOD EXECUTIVE SUMMARY Executive Summary
Address The Opportunity 155 Inverness Drive West 155 Inverness currently serves as “This offering presents Englewood, Colorado 80112 a hybrid of professional office and an unrivaled opportunity basic clinical healthcare space, County which can be highly flexible for rarely presented to the Arapahoe County a variety of office occupants market” and uses. Positioned with prime Site Area frontage on I-25, immediate access 3.58 Acres to light rail, and the Centennial SALES PROCESS 155,927 Square Feet Airport, 155 Inverness has nearly unmatched accessibility and Price Zoning visibility. Built in 1995, the asset The property is being marketed MU has been the headquarters for one without an offering price. Mixed Use of Denver’s largest community mental health programs. The asset Offer Deadline Parking is in superb condition and offers an September 7, 2017 178 Surface Parking Spaces easy retrofit for prospective owner occupants. The offering has a Building Size tremendous opportunity for value 44,694 Square Feet add investment or redevelopment along Interstate 25 which is play. The unique floorplan offers commonly recognized as the least Occupancy dramatic corner suites, loading congested and most accessible Currently owner-occupied dock, and flexibility for a range interchange in all of Southeast of prospective tenants. Current Denver. Dry Creek Station is less Year Built asset size is 44,694 square feet than 100 yards to the West across 1995 distributed between three floors I-25, and the pedestrian bridge arcs with 178 free surface parking over the Southernmost edge of the Stories spaces. 155 Inverness is situated parcel, guiding every pedestrian Three (3) on 3.584 acres of unincorporated to within a few hundred feet of the land with highly flexible Mixed front door. Offer Deadline Use (MU) zoning. Zoning, to Thursday, September 7, 2017 be verified by buyer, allows for In summary, 155 Inverness offers maximum floorplate of 60,000 value for a multitude of buyer types. square feet and maximum height Current owner/occupant is highly of 48 feet. Arapahoe County flexible and may accommodate zoning department has indicated creative sale-leaseback and (to be verified by buyer) the vacate purchase opportunities. redevelopment potential of this The current asset, development parcel as close to 155,000 gross potential, tenant flexibility, and buildable feet. its value driven pricing enable the
155 Inverness is situated on one of success of any prospective owner. the best parcel locations in all of South Denver, as it lies less than 10 yards from the Dry Creek interchange
OfferingOffering MemorandumMemorandum n 5 n 5 Location Summary
SOUTH DENVER TECH CENTER I-25 FRONTAGE
155 Inverness is located in the City of Centennial and falls within what is commonly known as Denver’s Southeast Suburban submarket. The property is supported by immediate access to transportation, direct access to the I-25 and Dry Creek interchange, and minimum possible walking distance from Dry Creek Light Rail Station. Access allows a wide spectrum of employees, patients, and industrial transportation services to access the asset with minimal travel time. As part of the voter-approved FasTracks Program, the Southeast light rail line has been in place since 2016 and serves the greater Denver area. Nearby amenities include Centennial Promenade, Park Meadows shopping center, Hilton Denver Inverness hotel and golf club, and other entertainment and recreational services. Centennial Airport, the 3rd busiest executive airport in the nation, lies less than a half mile to the Southeast.
155 Inverness is central to a number of dense residential neighborhoods including Dry Creek, Highlands Ranch, Meridian, and Centennial. A large portion of the employee base for businesses lies in these immediate areas with over 33,000 households within 3 miles of the property and a population growth estimation of 9.85% over the next 5 years. 155 Inverness’ value is reliant upon its foundation of strong demographics, unparalleled location, owner flexibility, and development potential.
6 n INVERNESS BUSINESS PARK | 155 INVERNESS DRIVE WEST, ENGLEWOOD Offering Memorandum n 7 Downtown Denver
City of Centennial 100,377 Residents $100,352 Average Household Income
East Dry Creek Road / 36,628 VPD
South Yosemite Street / 19,140 VPD
8 n INVERNESS BUSINESS PARK | 155 INVERNESS DRIVE WEST, ENGLEWOOD PROPERTY DESCRIPTION
N
Denver Tech Center
INTERSTATE 25 206,451 VPD
East Dry Creek Road / 36,628 VPD
SUBJECT
Dry Creek Park n Ride 235 Spaces
OfferingOffering MemorandumMemorandum n 9 n 9 Property Description
PROPERTY DETAIL with 2x4 lay-in ceiling tiles The building features high data FLOORING storage complete with a small data Inverness Business Park A variety of flooring materials are center on the third floor witha raised 155 Inverness Drive West throughout the building from entry floor and stand along HVAC system. Englewood, Colorado 80112 area hard tile surfaces to carpet Additionally, the building is coded within the offices and hall ways with key card access on each floor for added security NET RENTABLE AREA 44,694 SF INTERIOR STAIRS There are two interior stairwells, MECHANICAL DETAIL which provide emergency egress YEAR BUILT HEATING 1995 from all three floors of the building. The stairs consist of steel pans with Primary heating is source is through poured concrete treads a central boiler system ASSESSOR’S PARCEL NUMBER 2075-34-1-07-005 CONFERENCE ROOMS COOLING There are several conference Primary cooling system is through a ZONING centralized chiller and cooling tower MU PUD, County rooms within each floor of the building system LAND AREA LIFE SAFETY 3.584 Acres TRAINING ROOMS The building is sprinklered with a wet 155,927 Square feet The second and third floor feature rooms large enough for “training” pipe system. The water control valve is located on the first floor within the ACCESS or “educational” purposes loading dock area Located at Dreek Creek and I-25 next to Light Rail stop. KITCHEN/BREAK ROOMS Each floor is complete with a ELEVATORS kitchen There are two elevators within the PARKING building each with a 2,500 LB, 15 178 Surface spaces person capacity 3.98 : 1,000 RESTROOMS There are a set of men’s and INTERIOR FINISH women’s restrooms on each floor STRUCTURAL of the building FOUNDATION WALLS Pre-cast concrete slab Interior walls consist primarily of LOADING DOCK painted drywall The building features a loading ADDITIONAL FLOORS dock and trailer turn-around on Pre-cast concrete and some steel PRIVATE OFFICES the South side of the building’s beam framing Currently a mixture of small to main floor. The loading dock large private offices along window area is complete with a 10x18 foot EXTERIOR WALLS line with side lights along interior door and the interior area has a Glass curtain with decorative dividers hall ways mechanical floor for shipping and/ or receiving purposes ROOF CEILINGS The roof is 5 years old, flat and is The ceilings are suspended systems SPECIALTY COMPONENTS covered with a ballasted (EPDM) membrane
10 n INVERNESS BUSINESS PARK | 155 INVERNESS DRIVE WEST, ENGLEWOOD PROPERTY DESCRIPTION Property Site
Offering Memorandum n 11 Light Rail Access / Pedestrian Bridge
Pedestrial Bridge Access
Pedestrial Bridge
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Access Through Bridge
View From Pedestrian Bridge
Offering Memorandum n 13 Floorplans
FIRST FLOOR
SECOND FLOOR
14 n INVERNESS BUSINESS PARK | 155 INVERNESS DRIVE WEST, ENGLEWOOD FLOORPLANS
THIRD FLOOR
Offering Memorandum n 15 16 n INVERNESS BUSINESS PARK | 155 INVERNESS DRIVE WEST, ENGLEWOOD POTENTIAL FINANCIAL OUTLOOK Potential Financial Outlook
Market Assumptions Future Base Rent Escalation General Parameters 3% Annually
Terms Project Period General Vacancy Ten (10) Years This analysis begins January 1, None Commencing January 1, 2018 2018 and projects future income on a fiscal year basis for 10 years. Rentable Building Area Downtime Period All dollar amounts used are 44,694 Square Feet Gross Downtime based on budgeted year 2017 Six (6) to Nine (9) Months budget expenses. Market leasing Market Rent assumptions escalate on a calendar Multi-Tenant Scenario Capital Expenditures year basis and operating expense 1st Floor: $15.00/SF Net reimbursements and inflation are 2nd Floor: $16.00/SF Net calculated on a calendar year basis. 3rd Floor: $17.00/SF Net Tenant Improvement Allowance Floor 1 $40.00/SF Floor 2 $25.00/SF Operating Expenses Single-Tenant Scenario Floor 3 $25.00/SF Operating Expenses excluding Full Building/Single Occupant property taxes, utilized in the cash $17.00/SF NNN Capital Improvements flow projection are based on the TBD owner’s 2017 budget. Variable Operating Expenses expses such as utilities and janitorial Two Percent (2%) Annually fluctuate based on occupancy. Real Estate Tax Growth Rate Three Percent (3%)
Light Rail Stop w/ Pedestrian Bridge
Offering Memorandum n 17 Arapahoe County
Introduction of high-tech workers in the nation and lower operating Arapahoe County, Colorado’s first county. It is the state’s costs compared to coastal cities. third-largest county with a population of more than 631,000 people. Arrow Electronics, a Fortune 500 company, relocated their headquarters to Arapahoe County in 2011. Ranking Arapahoe County covers 805 square miles and is a land within the top ten largest employers in the county, the of contrasts. The western part of the county is mostly electronic component wholesaler employees more than urban with residential, retail, office and industrial areas. 1,900 Coloradoans. The eastern portion is relatively rural. Littleton, the county seat, along with Aurora, Bennett, Bow Mar, Centennial, Comcast, the largest private employer in Arapahoe Cherry Hills Village, Foxfield and Sheridan make up the 13 County, continues to expand throughout Colorado with incorporated communities in Arapahoe County. the roll-out a new gigabit-speed internet service. It was recently granted one of the state’s largest performance- Thriving industry clusters include aviation, aerospace, based tax incentive packages from the Colorado communications/telecom, energy/cleantech, financial Economic Development Commission if it will create 1,200 services and insurance, healthcare/bioscience, IT/ additional jobs within the county. software, and professional services. Olympic Metals, a division of Reliance Steel & Aluminum Transportation Co., is building a new $8 million, state-of-the-art headquarters totaling 62,000 SF in Dove Valley Business Centennial Airport is the nation’s third-busiest and Park, Centennial. ranked 5th nationally general aviation airport. The airport serves Fortune 500 companies and corporate flyers. The U.S. Bank announced its expansion plan to hire 300 economic impact of Centennial Airport is nearly $1.39 new employees and move 400 additional employees to billion annually. its new, two-building campus located at the Inverness Business Park in Englewood. The Expressway 470 toll road runs along the eastern perimeter of the Metro Denver area and provides quick Innovation Pavilion, a business incubator for startups, access to Denver International Airport. includes a campus made up of a collaborative workspace for entrepreneurs and corporations, an event center, 21st South Interstate 25 Corridor provides access to business century library, STEM school, while providing access to a parks in Arapahoe County and connects the area to the team of advisors and network of members and corporate Denver Metro Area, in addition to other markets such as partners. Fort Collins and Colorado Springs.
Mikron Automation will expand its U.S. headquarters FasTracks Denver RTD’s light rail network, has completed again, located in Arapahoe County, adding 19,000 square six light rail routes to service Arapahoe County, supporting feet of industrial space at its existing facility, which is part mobility within the area and providing access to rapid of the Dove Valley Business Park. mass transportation to the hub in Downtown Denver. Five of those routes are currently undergoing expansion Buckley Air Force in Aurora contributed $900 million further south supported by a $92 million grant from the during 2016, just shy of its eight-year streak of $1 billion in Federal Transit Administration. economic impact. After completing a 200,000 SF facility to house an intelligence gathering facility, next-up in the Business Growth pipeline is a new dental clinic. With 11,000 employees, Six out of Colorado’s 10 Fortune 500 companies have Buckley is the city’s largest employer, which has attracted made Arapahoe County their home, boasting access to a and retained other companies such as Raytheon and skilled labor market with one of the highest concentrations Northrop Grumman.
18 n INVERNESS BUSINESS PARK | 155 INVERNESS DRIVE WEST, ENGLEWOOD Zillow Group made a successful $3.5 billion bid for Trulia lofts, flats, row houses and golf villas. Restaurants and in 2014, inheriting Trulia’s sales center in Centennial, which shops are located on Vallagio’s main street. then employed about 225. During 2016, Zillow ranked 14th among Centennial private-sector employers, not including Retail Development retailers, and their hiring push should bring the company Aspen Grove in Littleton is a premier open-air retail village close to the city’s top 10. with more than 50 stores and restaurants.
United Launch Alliance, an aerospace company providing Centennial Center opened in 2011. The 23-acre launch services to government and commercial customers, development is anchored by a 50,000 square foot completed its consolidation of 1,700 employees to a single state-of-the-art entertainment & bowling center headquarter campus in Centennial. The company leased located at the northwest corner of Arapahoe Road and 453,000 square feet in three buildings. Parker Road.
24/7 In Touch, a contact center, opened an office in Gardens on Havana in Aurora is a pedestrian-friendly, Greenwood Village and is anticipated to grow to 300 mixed-use outdoor retail center known for its summer new jobs. rose garden concert series.
Platt College has been expanding over the past few years, IKEA Centennial opened in fall 2011 at Interstate 25 and adding classroom space to accommodate its award- Dry Creek Road. The 415,000 square foot store employes winning nursing programs. Platt College chose to remain 400+ people and is the first IKEA store in the country to in Arapahoe County after a site search throughout the incorporate a geothermal heating and cooling system. metro area. IKEA Centennial is the second-largest store in the United States. Colorado Technical University chose to relocate and expand operating and classrooms to Arapahoe County, Southlands Lifestyle Center in Aurora is an outdoor which students can access with ease utilizing the adjacent center with a main street that covers four blocks and a light rail. community plaza surrounded by additional retails and restaurants. Real Estate Fitzsimmons Village’s in Aurora Phase I delivered The Streets at SouthGlen is a 78-acre center featuring a a 150,000 square foot office facility now known as mix of upscale retail, restaurants and entertainment as Fitzsimons 100 with 16,000 square feet of retail space, well as a public library and 200 apartment homes. a 153-room SpringHill Suites by Marriott and a FirstBank branch. More recently, the Hyatt Regency Aurora-Denver Town Center at Aurora features more than 125 speciality Conference Center was completed. In addition, there’s stores, entertainment venues and eateries. more than 20 acres available for further development of office, research, retail, and residential opportunities. Information Provided by Metro DenverEconomic The South Interstate 25 Corridor, from Belleview Avenue Development Corporation to County Line Road, is home to Arapahoe County’s major business parks including the Denver Tech Center, Greenwood Plaza, Panorama Park and Inverness Business Park.
Vallagio at Inverness is an award-winning transit-oriented development located at Interstate 25 and Dry Creek Road. Vallagio offers a selection of housing options including
Offering Memorandum n 19 MARKETBEAT MarketSES Denver, Overview Colorado SoutheastOffi ce Q2 2017 Office Market Overview
STATS ON THE GO Vacancy and Rental Rates The Southeast Suburban (SES) submarket experienced a 100 basis Economic Indicators point (BPS) increase in the second quarter of 2017 compared to the previous quarter, closing with a direct vacancy rate of 13.9%. This large 12-Month Q2 16 Q2 17 Forecast increase can be attributed to the deliveries of One Belleview Station Denver Employment 1.42 M 1.45 M and Granite Tower at Village Center. Although Granite Tower at Village Center was 100% leased upon completion, it negatively impacted the Denver Unemployment 3.1% 2.3% vacancy rate due to the spaces being technically vacant until CSG and U.S. Unemployment 4.9% 4.4% Charter Communications occupy in the second half of 2017. The direct availability rate, which is defi ned as, everything that is being marketed whether currently vacant or an anticipated vacancy, saw a minimal 20 Market Indicators (Overall, All Classes) BPS increase, ending the second quarter of 2017 at 16.8%. The average gross rental rate in the SES increased to $25.23 per square Q2 16 Q2 17 12-Month Forecast foot (PSF), representing a 10% increase year-over-year when rental Overall Vacancy 11.4% 15.1% rates were $22.91 PSF. The increase in the rental rate can again be Net Absorption -348,089 103,123 partially attributed to the delivery of One Belleview Station and Granite Place at Village Center Station, which set new highs for asking rates in Under Construction 596,616 1,337,742 the submarket. Due to these buildings delivering, Class A rental rates Average Asking Rent $23.29 $24.85 saw the largest increase, up 7.6% year-over-year, closing the quarter at $27.35 PSF. *Rental Rates refl ect gross asking $psf/year Leasing Activity Leasing activity slowed from the fi rst to the second quarter of 2017, at DIRECT RENTAL VS. VACANCY RATES just over 388,000 SF. Notable deals for the second quarter included Sierra Nevada’s 85,935 SF short-term renewal at Executive Center I, Air $30 16.0% Methods’ new 62,124 SF lease at Landmark Corporate Center and
14.0% CSG’s 39,780 SF lease at Granite Place at Village Center, which they $25 12.0% will occupy in the second half of 2017. Direct absorption bounced back $20 10.0% in the second quarter with +103,123 SF of positive absorption. The SES
$15 8.0% market is expected to continue to exhibit strong absorption throughout the remainder of 2017, as large users occupy already leased space. 6.0% $10 4.0% $5 Construction 2.0% As mentioned above, two buildings delivered in the SES market during $0 0.0% the second quarter of 2017 with One Belleview Station and Granite Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2017 Place at Village Center adding 597,290 SF of Class A offi ce product to the market. Both buildings have shown strong activity, further solidifying tenant’s pent up demand for new construction. Granite Place at Village Center is fully-leased to Charter Communications and CSG Systems, while One Belleview Station has a great deal of interest OVERALL LEASING ACTIVITY AND NET ABSORPTION from large corporate users. No new projects broke ground in the SES market this quarter, although 553,053 SF in build-to-suits and 804,689 SF in speculative developments are currently under construction, with 1,600 1,344.86 563,431 SF set to deliver in 2017 and the remaining set to deliver by the 1,400 1,200 end of 2018. 1,000 747.29 800 722.63 Outlook 600 526.26 388.25 Large users continue to scour the market, exploring expansion and/or 400 216.51 259.32 200 71.47 103.12 relocation options. With nine users in the market with requirements - over 100,000 SF, leasing activity should remain strong throughout the (200) remainder of the year. Absorption will trend positive, as the larger (400) Square Feet (Thousands) Feet Square -348.09 tenants that have signed leases start to occupy in the second half of (600) Q2 2013 Q2 2014 Q2 2015 Q2 2016 Q2 2017 2017. Rental rates will hold steady in the near-term, while vacancy will Leasing Activity Overall Absorpton trend down as users start to occupy. Overall, the SES market will remain an active and a competitive market through the latter half of 2017, further continuing its momentum that was seen in the second quarter of 2017.
cushmanwakefi eld.com | 1 20 n INVERNESS BUSINESS PARK | 155 INVERNESS DRIVE WEST, ENGLEWOOD INTERSTATE 25
Offering Memorandum n 21 Competitive Set: Leasing
1 2
Tuscany Village Center 9127 S. Jamaica 6312 S. Fiddlers Green Circle 9127 S. Jamaica Street Greenwood Village, Colorado 80111 Englewood, Colorado 80112
Building Size 259,118 SF Building Size 114,012 SF Year Built 1985 Year Built 2006 Occupancy 79% Occupancy 59% Availability 125,969 SF Availability 63,011 SF Asking Rent $15.00-$19.00/SF NNN Asking Rent $24.00/SF Full Service
3 4
4340 S. Monaco Landmark Corporate Center 4340 S. Monaco Street 5500 S. Quebec Street Denver, Colorado 80237 Englewood, Colorado 80111
Building Size 118,267 SF Total Project Size 215,000 SF Year Built 2001 Year Built 1983 Occupancy 100% Occupancy 55% Availability 118,267 SF Availability 96,810 SF Asking Rent $19.50/SF NNN Asking Rent $16.00-$18.00/SF NNN
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5 6
RE/MAX Plaza 6061 S. Willow 5075 S. Syracuse Street 6061 S. Willow Drive Denver, Colorado 80237 Englewood, Colorado 80111
Building Size 233,998 SF Building Size 136,592 SF Year Built 2007 Year Built 1980 Occupancy 100% Occupancy 100% Availability 43,460 SF Availability 61,201 SF Asking Rent $15.85 - $18.85/SF NNN Asking Rent $22.00 - $23.00/SF Full Service
3
5
4
Orchard Road 6
1
Arapahoe Road
INTERSTATE 25
Dry Creek Road SUBJECT
S. Parker Road
County Line Road
2 Offering Memorandum n 23 Competitive Set: Sold
1 2
PCC I Crescent VII 7630 S. Chester Street 8390 E. Crescent Parkway Englewood, Colorado 80112 Greenwood Village, Colorado 80111
Building Size 106,213 SF Building Size 135,332 SF Lot Size 236,705 SF Lot Size 150,613 SF Price PSF $242.26 Price PSF $221.86
3 4
Crescent V CoBank Center 8450 E. Crescent Parkway 6430 S. Fiddlers Green Circle Greenwood Village, Colorado 80111 Greenwood Village, Colorado 80111
Building Size 89,895 SF Building Size 274,287 SF Lot Size 193,058 SF Lot Size 183,823 SF Price PSF $234.72 Price PSF $413.67
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5 6
NO PHOTO AVAILABLE
Village Center Station I 86 Inverness PIace North 6380 S. Fiddlers Green Circle 86 Inverness PIace North Greenwood Village, Colorado 80111 Englewood, Colorado 80112
Building Size 233,958 SF Building Size 40,000 SF Lot Size 141,073 SF Lot Size 130,680 SF Price PSF $327.84 Price PSF $332.50
Belleview Avenue 2 3
Orchard Road
5 4
Arapahoe Road
INTERSTATE 25
SUBJECT Dry Creek Road
1 6
Offering Memorandum n 25 Competitive Set: Existing
1 2
Belleview Tower Crescent VII 7887 E. Belleview Avenue 8390 E. Crescent Parkway Englewood, Colorado 80111 Greenwood Village, Colorado 80111
Building Size 200,323 SF Building Size 135,332 SF Year Built 1981, Renov. 2011 Year Built 1996 Occupancy 98% Occupancy 89% Availability 8,609 SF Availability 14,439 SF Asking Rent $26.00 - $28.00/SF Asking Rent $28.00-$29.00/SF
3 4
One DTC DTC 5 5251 DTC Parkway 5555 DTC Parkway Greenwood Village, Colorado 80111 Greenwood Village, Colorado 80111
Building Size 240,852 SF Building Size 47,873 SF Year Built 1985 Year Built 1971, Renov. 2015 Occupancy 92% Occupancy 69% Availability 30,288 SF Availability 14,648 SF Asking Rent $28.00-$30.00/SF Asking Rent $30.00/SF
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5 6
5613 DTC Parkway Triad at Orchard Station South 5613 DTC Parkway 5680 Greenwood Plaza Boulevard Greenwood Village, Colorado 80111 Greenwood Village, Colorado 80111
Building Size 224,015 SF Building Size 136,195 SF Year Built 1981, Renov. 2009 Year Built 1972 Occupancy 82% Occupancy 93% Availability 40,120 SF Availability 48,573 SF Asking Rent $28.00-$30.00/SF Asking Rent $24.50-$26.00/SF
1 Belleview Avenue 2
3 4
5 6
Orchard Road
INTERSTATE 25 Arapahoe Road
SUBJECT County Line Road Offering Memorandum n 27 Competitive Set: New Construction
1 2
Belleview Station Build-to-Suit Lot H One Belleview Station (Almost completed) E. Belleview Avenue 7001 E. Belleview Avenue Denver, Colorado 80237 Denver, Colorado 80237
Proposed Building Size 340,000 SF Proposed Building Size 318,000 SF Availability 334,478 SF Availability 270,499 SF Asking Rent $24.00 - $25.00/SF NNN Asking Rent $24.00 - $25.00/SF NNN
3 4
Vista Tower I, Jones District 169 Inverness Drive West Dry Creek and I-25 169 Inverness Drive Denver, Colorado 80112 Englewood, Colorado 80112
Proposed Building Size 183,905 SF Proposed Building Size 115,859 SF Availability 183,905 SF Availability 115,859 SF Asking Rent $25.00 - $27.00/SF NNN Asking Rent $24.00 - $25.00/SF NNN
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1
2 Belleview Avenue
Orchard Road
INTERSTATE 25
Arapahoe Road
3 Dry Creek Road 4
SUBJECT
County Line Road
Offering Memorandum n 29 Notable Relocations & Expansions
Charter Communications absorbed 257,000 square feet at 6175 S Willow Drive, executed in March of 2017. The brand new 4 star office building is leased on a triple net basis, with base rates estimated to be in excess of $23 p/SF. Quick absorption and top market lease rate reflects market demand for I-25 frontage within Denver’s South market.
SquareTwo Financial absorbed a full 47,000 square foot floor at 6300 S Syracuse Way on a Full Service basis as of June 2017. Executed full-service rate is quoted at $27.50 p/SF with ~$10.50 p/SF in expenses, establishing a value driven $17 net rate. Weak location and age of the asset reflect in asking rates despite a recent remodel.
Traveler’s Insurance took three of four floors at the brand new INOVA Dry Creek office building, totaling 141,000 SF at an asking rate of $23 net. Situated a half mile East of Interstate 25, the master plan includes four more Class-A office buildings slated to be at the top of the market in both rate and quality.
The United States’ government has renewed 72,000 square feet at 6162 S Willow Drive, an established and recently renovated Denver Tech Center asset. Rate and term have not been disclosed, although old age and location set-back most likely drive rates lower than $20 net.
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Information Provided by Metro Denver Economic Development Corporation
Offering Memorandum n 31 Metro Denver Overview
Denver At A Glance How Denver Ranks Denver’s Top Industries
Metro Population BEST PLACE FOR BUSINESS #1 1. Healthcare & Wellness 3,075,701 & CAREER Source: Forbes, 2017 2. IT-Software Major Industries 3. Financial-Insurance Services Healthcare and Wellness, 4. Telecom Financial Services, Aerospace, #2 BEST PLACES TO LIVE Telecommunications, Source: U.S. News & World Report, 2017 5. Aerospace Technology 6. Investments # IN STATE FOR TECHNOLOGY Gross Metro Product 2 7. Cleantech & SCIENCE $178.2 B Source: Technology and Science Index, 2017 8. Aviation Median Household Income 9. Medical Devices $69,908 10. Beverage Production #3 BEST IN STATE FOR BUSINESS SOURCE: CNBC, 2017 Median Home Price 11. Pharma 12. Oil & Gas $386,000 #3 BEST ECONOMY SOURCE: BUSINESS INSIDER, 2017 SOURCE: METRO DENVER ECONOMIC Unemployment DEVELOPMENT CORPORATION, 2017 3% FITTEST CITY IN AMERICA #3 Source: American Fitness Index, 2017 Job Growth 3.3% (2016) BEST US CITY FOR TECH #3 Cost of Living STARTUPS 7.8% Above national average SOURCE: U.S. NEWS & WORLD REPORT, 2016 College Attainment 41.8%
Net Migration 36,894 (2016) DENVER Source: Forbes, 2017, U.S. Bureau of Labor BEST CITY IN Statistics, MetroDenver.org AMERICA
Source: Businessinsider.com, 2016
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We Y Denver!
DENVER IS LOVED Denver earned the #11 spot on Travel + Leisure’s annual reader’s choice survey of America’s Favorite Cities. Among other things, the survey cited Denver’s macho qualities: sports fans, athletic locals, beer and burgers. Trip Advisor named Denver a top city on its 2016 list of Awesome Downtown Districts commenting its unique blend of urban charm and industrial revival makes it a great destination for visitors, as old historic warehouses now host jazz bars, brewpubs, art galleries and restaurants. WalletHub named Denver among the country’s 2016 Best State Capitals based on a number of factors including quality of life, education and economic wellbeing.
DENVER IS ACCESSIBLE Denver International Airport (DEN) was ranked among the best airports in the world in 2016 according to a worldwide customer survey and was honored at the Skytrax World Airport Awards.
DENVER IS BIKE FRIENDLY Denver is a paradise for cyclists! The Mile High City boasts more than 85 miles of paved trails that connect to hundreds of additional miles of dirt trails offering mountain bike adventures. These trails also connect riders to dozens of notable attractions, including Cherry Creek Shopping District and Red Rocks Park & Amphitheatre.
DENVER IS A SPORTS CAPITAL If you’re a sports fan, The Mile High City is the place you want to be. Denver is one of only two cities (Philadelphia is the other) to have seven professional sports teams: NFL Denver Broncos; NBA Denver Nuggets; NHL Colorado Avalanche; MLB Colorado Rockies; MLS Colorado Rapids; MLL Colorado Outlaws; and NLL Colorado Mammoth. The Colorado Rockies have 11 Major League Baseball attendance records, while the Denver Broncos have sold out every game for more than 20 years and won the 2016 Super Bowl title. Denver also hosts one of the world’s largest rodeos - the National Western Stock Show & Rodeo. Denver was the only city to build three new sports stadiums in the 1990s: 50,000-seat Coors Field; 75,000-seat Sports Authority Field at Mile High and 20,000-seat Pepsi Center.
DENVER IS A CONVENTION CITY Denver was ranked in 2016 by Cvent study as one of the top 12 cities as a meeting and convention center destination. Denver landed in this spot for many reasons including its global accessibility, its affordability, has many major attractions, and offers plenty of outdoor adventures.
DENVER INTERNATIONAL AIRPORT Denver International Airport (DEN) was ranked among the best airports in the world in 2016 according to a worldwide customer survey and was honored at the Skytrax World Airport Awards. Denver International Airport is a major airline hub in the United States. Since the airport opened in 1995, it has consistently won awards. Source: Denver.org, 2017
Denver Parks & Rec Denver’s Brewing! Denver has one of the largest park systems in the The first building in Denver was a saloon, so country, and offers more than 200 traditional and it’s natural that Denver would become a great historic parks, many connected by bike paths that are beer town. Coors Brewery is the world’s largest. part of an 85-mile city network of paved, off-street Denver’s Great American Beer Festival is the bike trails. Denver also has 14,000 acres of parks in the largest in the nation, offering more than 6,700 nearby foothills of the Rocky Mountains, an immense different beers for tasting. The Wynkoop Brewing mountain park system that covers an area almost Company is one of the largest brewpubs in the the size of Manhattan. It took an Act of Congress to country. On an average day in metro Denver, create this “city” park system. Denver maintains parks more than 200 different beers are brewed and that are 60 miles from city limits and include famous can be enjoyed in 100 breweries, brew pubs and attractions like Red Rocks Amphitheatre, Buffalo Bill’s tap rooms. Grave on top of Lookout Mountain, Winter Park Ski Resort, a buffalo and elk herd and Summit Lake, the Source: Denver.org, 2017 highest city park in the nation. Source: Denver.org, 2017
Offering Memorandum n 33 MARKETBEAT U.S. Office U.S.Q2 2017 Office Market Analysis
U.S. OFFICE Economy The U.S. economic expansion turned eight years old in June, Employment Indicators and is showing no signs of slowing down. After a sluggish first quarter during which real gross domestic product (GDP) grew Q2 16 Q2 17 12-Month Forecast at a 1.4% annual rate, the U.S. economy gained momentum Total Nonfarm Employment 143.9M 146.2M during the second quarter of 2017. Current estimates suggest GDP growth doubled to an annual rate of approximately 3.0% Office-using Employment 30.1M 31.8M in the second quarter as consumer spending and business Unemployment 4.9% 4.4% investment accelerated from the first quarter’s slow pace. GDP data for the two quarters combined indicate that average Source: BLS economic growth remains in the 2.0% range, consistent with the average growth rate observed throughout this cycle. Market Indicators (Overall) This steady growth was also reflected in the labor markets. The 12-Month Q2 16 Q2 17 Forecast number job gains in office-using employment—the sum of Vacancy Rate 13.2% 13.3% employment in the financial services, information and professional and business services—remained steady in the Net Absorption 18.0M 15.6M second quarter of the year, as the economy added 162,000 Under Construction 101.3M 109.1M jobs in those sectors during the second quarter – very close to the 169,000 jobs added in the first quarter. Office-using Weighted Asking Rent (FS) $29.09 $30.35 employment has remained strong throughout the current expansion, growing faster than total employment. In fact, at the end of the Q2 2017, office-using employment accounted for a Net Absorption/Rent record high 21.8% of all nonfarm payroll jobs in the U.S.
4-QTR TRAILING AVERAGE Most of the leading indicators that correlate well with future job creation remain healthy. Job openings currently total over 21 $30.00 5.7 million, near record highs. Wage growth is accelerating and is broadening. Although unemployment is tightening—down to 4.4% as of June—the labor markets continue to prove that they still have runway. This bodes well for future office space 14 $28.00 demand. Market Overview This improved economic performance was reflected in the 7 $26.00 activity in the U.S. office sector. In the 87 markets tracked by Cushman & Wakefield, total absorption—the net change in occupied space—was 15.6 million square feet (msf) in the 0 $24.00 second quarter of 2017, more than double the absorption total 2012 2013 2014 2015 2016 2017 in the first quarter of the year and the highest level of absorption since the third quarter of 2016. Certain tech Net Absorption, MSF Asking Rent, $ PSF markets, which looked a bit sleepy in 2016, appear to be regaining some momentum. San Jose, Seattle and Boston all Overall Vacancy placed in the top 10 in terms of net absorption for Q2 2017. Other strong performers in the quarter include mostly Sunbelt markets: Dallas, Charlotte and Raleigh/Durham. But the 16% biggest story of the second quarter was not greater absorption, but new construction. In Q2 2017, 16.1 msf of new construction was completed—the largest amount since the second quarter of 2009. That brought total construction completions so far this year to 28.4 msf. These new Historical Average = 14.7% construction deliveries offset the higher absorption and, as a 14% result, the vacancy rate in the second quarter remained at 13.3%, identical with that registered in the first quarter.
That rate of 13.3% incorporates vacancy in a wide range of markets. Fairfield County, CT had the highest vacancy at 23.2% while Nashville, TN posted the lowest at 6.9%. As has been the case throughout most of the current expansion, the tightest 12% 2012 2013 2014 2015 2016 2017 markets continue to be those with a strong technology
Source: Cushman & Wakefield Research cushmanwakefield.com | 1
34 n INVERNESS BUSINESS PARK | 155 INVERNESS DRIVE WEST, ENGLEWOOD MARKET OVERVIEW MARKETBEAT U.S. Office Q2 2017
presence including Richmond, VA (7.2%), Charlotte, NC (7.5%), Midtown South, Manhattan (7.5%) and Seattle, WA New Supply (7.7%). After Fairfield County, markets with the highest COMPLETIONS REMAIN ABOVE LONG-TERM AVERAGE vacancy rates in the country include Dayton, OH (22.7%), Cincinnati, OH (21.4%), Northern VA (20.8%), and 18 Houston, TX (20.7%). 16 The amount of new office space under construction is 14 expected to continue to ramp up during 2017. Cushman & 12 Wakefield estimates that new deliveries of office space in Historic Average = 11.0 MSF 2017 will reach 71.8 MSF, which would represent the 10 largest amount of new space completed in the U.S. since MSF 8 2008. Cushman & Wakefield is currently tracking slightly 6 more than 109 MSF of new construction across the U.S.— equivalent to approximately 2.1% of the 5.2 billion square 4 feet of U.S. inventory. Much of this pipeline is 2 concentrated in cities that have experienced the 0 strongest job creation and absorption levels throughout 2012 2013 2014 2015 2016 2017 the cycle, including Dallas/Fort Worth, TX (6.2 MSF), San Francisco (5.1 MSF), Seattle, WA (5.0 MSF) and Denver, Source: Cushman & Wakefield Research CO (4.2 MSF). Markets with a significant amount of new construction relative to inventory include Brooklyn, NY (9.4%) Seattle, WA (7.9%), San Mateo County, CA (6.9%), Asking Rent by Market Nashville, TN (6.7%), San Francisco, CA (6.6%) and Austin, HIGHEST PRICED U.S. MARKETS TX (5.3%). With the exception of Seattle, all of these markets have experienced and increase in vacancy in the $80 past year. $77.61 $60 $70.16 Asking rents continue to increase steadily. In the second $69.68 quarter of 2017 the national weighted average asking rent National Average = $30.35 $58.83 $57.31 was at a cyclical high of $30.35 per square foot, a 0.9% $40 $53.85 increase from the first quarter and up 4.3% from a year PSF $ $41.57 $38.39 $38.20 $38.18 $37.31 $37.27 $36.71 ago. Asking rents in the Midwest region rose 6.1% from a $36.45 $35.16 $35.04 year ago, powered by Chicago which saw rents increase $20 by 6.8%. Across the nation, the largest rent increase from a year ago was in one of the country’s hottest office $0 markets, Oakland/East Bay, where average asking rents
jumped 16.1%. Other markets that have experienced Miami, FL Austin, TX Austin, Boston, MA strong asking rent growth in the second quarter include Seattle, WA San San Diego, CA NYC - Midtown NYC - Brooklyn Washington, DC Palm Beach, FL NYC - Downtown Los Angeles CBD (San Jose), CA San Francisco, CA Francisco, San Palm Beach, FL (+12.7%), Orange County, CA (12.5%), Los Angeles Metro Santa Clara County NYC - Midtown South
Boston, MA (12.4%) and Nashville, TN (9.9%). Most CA County, Mateo San markets continued to experience rent growth from Q2 2016 to Q2 2017 with 74 of the 87 markets tracked Source: Cushman & Wakefield Research registering increases and only 14 recording declines (rents in the remaining markets were unchanged). Vacancy by Market SELECT MARKETS IN THE U.S.
12% Outlook National Average 13.3% 10% 10.9% 10.7% 10.7% 10.5% 10.4% 10.4% 9.9% 9.9% 9.8%
• After a sluggish start, demand for office space is 10.0% 10.0% 8% picking back up. All signs point to healthy office- 8.9% 8.4% 8.4% 8.4% 8.2% 7.7%
using job creation going forward, which will keep 7.5% 7.5% 6% absorption levels solid. 6.9% • New supply has topped absorption for three 4% consecutive quarters and this trend will continue. 2% • Individual markets will continue to be driven by
their own supply demand dynamics, but it is likely TX Austin, Boston, MA Seattle, WA Orlando, FL San Jos CA Jos San Nashville, TN Charlotte, NC Pittsburgh, PA Midtown South Midtown that national trends will show rental growth rates NYC - Midtown Sacramento, CA – NYC - Downtown Inland Empire CA San Francisco, CA Francisco, San Orange County, CA
decelerate as the latest wave of supply comes Raleigh/Durham NC Oakland/East Oakland/East Bay CA NYC online. CA County, Mateo San Puget Sound - Eastside, WA San San NorthFrancisco Bay CA
Source: Cushman & Wakefield Research cushmanwakefield.com | 2
Offering Memorandum n 35 Inverness Business Park Office Building Investment 155 Inverness Drive West Englewood, Colorado 80112
CONFIDENTIAL OFFERING MEMORANDUM