Elati Street. Denver, CO OFFERING MEMORANDUM

Transcription

1 4230 Elati Street Denver, CO OFFERING MEMORANDUM

2

3 TABLE OF CONTENTS Executive Summary 02 Property Overview 03 Lease Details 04 Location & Market Overview 04

4 01 EXECUTIVE SUMMARY

5 Executive Summary Newmark Knight Frank, as exclusive agents for 4230 Elati Street, Denver, CO are pleased to offer a repurpose or full redevelopment opportunity just north of downtown Denver and LoHi, in the heart of Globeville Elati Street offers a 16,460 SF block & concrete building, on a 35,875 SF corner lot site one block from the 41st & Fox Street Light Rail stop. The property is prime for redevelopment or property repurpose because of its proximity to the 41st & Fox Light Rail stop and convenient bike access to downtown Denver and LoHi. The building, likely built in 1973, is a combination of block and twin-t construction, leaving much of the building clear span. Currently the property has 7 existing drive-in loading doors, as well as a large, fenced and paved yard. OFFERING SUMMARY Property Addresses: 4230 Elati Street, Denver, CO Building Square Footage: 16,460 SF, per county records (18,009 SF rentable square footage) Site Size: 0.82 acres (35,875 SF) Zoning: I-A (neighbors have been zoned up to C-RX-12) Date of Construction: Circa 1973 Sales Price: $3,500, Access to the site comes from the Park Avenue and Highway I-25 exit or directly from downtown Denver allowing excellent access to Sunnyside, LoHi, and RiNo, which are currently Denver s hottest markets. One block west of 4230 Elati is the 41st & Fox Light Rail stop, also known as the Goldline (G Line), which runs 11 miles west from Denver s Union Station out to Wheat Ridge, running through northwest Denver and Arvada. 5

6 02 PROPERTY OVERVIEW

7 PECOS ST Aerial View W 46TH AVE W 43RD AVE LIGHT RAIL STATION BROADWAY E 44TH AVE ELATI ST SHOSHONE ST W 38TH AVE LIPAN ST 6 W 36TH AVE LOWER HIGHLANDS GLOBEVILLE RD RIVER NORTH N 7

8 Property Overview Property Address: 4230 Elati Street, Denver, CO FLOOR PLANS County: Denver Building Square Footage: 16,460 SF, per county records (18,009 SF of rentable square footage) Acres: 0.82 acres (35,875 SF) Property Taxes: $23, (2016) Gas/Electric : Provider: Xcel, 400 amps, 3-phase power (to be verified) Water/Sewer: Public (Denver): 1 water line to building (commercial) Loading: Seven (7) Drive-In Doors, 10 T x 9 W Zoning: I-A (neighbors have been zoned up to C-RX-12) PROPERTY HIGHLIGHTS Excellent central location Walking distance to Light Rail stop Biking distance to downtown Denver Biking distance to 38th & LoHi amenities Corner Lot Regular shaped lot Large, fenced yard Expansive views of the city, RiNo and Front range Incredibly easy access to I-25 and I-70 Month to Month income in place 8

9 Property Overview SITE PLAN ELATI ST W 42ND AVE N 9

10 Property Photos 10

11 Property Photos Rooftop Terrace 11

12 Property Photos 12

13 Property Photos 13

14 Property Renderings 14

15 Property Renderings 15

16 Property Renderings 16

17 Property Renderings 17

18 03 LEASE DETAILS

19 Rent Roll 4230 Elati Street Renter Suite/Unit # Sq Ft* Current Monthly Rent Expire CMB** 200 1,900 12/31/2018 CMB** A & B 6,665 12/31/2018 CMB** Total 8,565 $4, Suite Conference Room Mike Hicks C 800 $ month-to-month Adams Artistic D,E & F 1,740 $1, month-to-month Lease expires Nov 2017 MN Painting Warehouse H & Parking 692 $ month-to-month Lease expired. New business name: Western Coatings Occu-Med $ month-to-month Lease expired Versa Freight 100 1,570 $1, month-to-month Rene Texture Parking 480 $ month/month LPC Construction $ month/month Lease expires Dec 2017 Hunter & Dieu 106 & $ month/month Lease expires Nov 2017 Total Sq Ft 15,333* Total Rents $9, * All Rentable square footage are estimates ** Note: CMB is owned by Seller entity and plan to vacate/terminate lease at Closing. 19

20 04 LOCATION & MARKET OVERVIEW

21 Location Overview GLOBEVILLE OVERVIEW The history of the Globeville neighborhood starts as far back as the late 1880 s when many Eastern Europeans moved to North Denver to work at the Globe Smelting & Refining Company, the railroad and packaging plants in the neighborhood. The area was platted in 1889 and incorporated as a town in Globeville was annexed into the City and County of Denver in The major landmark in the area is what Denver locals refer to as the mouse trap. The mouse trap is the junction between Interstate 70 (I-70) and Interstate 25 (I-25). The neighborhood s eastern boundary is the South Platte River, offering the area a very scenic biking path. Nowadays the area serves as one of Denver s hottest and most up-and-coming markets. It s just northwest of the River North (RiNo) district, which has become an international topic for real estate development. The Globeville area is about to begin its own transformation as well, from older, obsolete industrial into modern, residential, office, retail and lighter commercial uses. BROADWAY WASHINGTON ST 40TH & COLORADO RTD STOP S PLATTE RIVER RIVER RINO BLAKE & 38TH RTD STOP 40TH AVE N PARK AVE BRIGHTON BLVD DOWNING ST YORK ST RTD Light Rail A Line RTD Stop COLORADO BLVD

22 Market Trends 3Q 2017 Denver Industrial Market Trends # OF BUILDINGS TOTAL SF VACANT SF 3Q2017 VACANCY 3Q2016 VACANCY 3Q2017 ABSORPTION YTD ABSORPTION CENTRAL MARKET (TOTAL) ,154,938 1,485, % 5.54% 191, ,166 RENTAL RATES LOW RENTAL RATES HIGH RENTAL RATES MEDIAN Industrial Warehouse ,237,721 1,473, % 5.60% 159,586 83,248 $5.25 $10.50 $7.00 R&D / Flex ,217 11, % 3.59% 31,918 20,918 $7.50 $12.00 $8.50 3Q 2017 Denver Office Market Trends # OF BUILDINGS TOTAL SF VACANT SF 3Q2017 VACANCY 3Q2016 VACANCY 3Q2017 ABSORPTION YTD ABSORPTION RENTAL RATES LOW RENTAL RATES HIGH RENTAL RATES MEDIAN DOWNTOWN MARKET (TOTAL) ,814,345 4,260, % 15.57% 165, ,288 $33.62 Class A 53 18,739,269 2,912, % 16.74% 129, ,542 $34.00 $45.00 $39.00 Class B 55 7,056,286 1,049, % 13.22% -13,130-15,892 $24.00 $32.00 $30.30 Class C 36 2,018, , % 13.17% 48,325 54,638 $21.00 $26.00 $24.00 MIDTOWN MARKET (TOTAL) 68 5,683, , % 9.74% 5,541-44,418 $26.50 Class A 19 2,478, , % 10.55% 11,076-20,500 $31.00 $41.00 $36.63 Class B 24 2,110, , % 9.74% -3,882-32,521 $19.00 $30.00 $25.00 Class C 25 1,093,888 80, % 7.89% -1,653 8,603 $16.00 $24.00 $ Q 2017 Denver Retail Market Trends # OF BUILDINGS TOTAL SF VACANT SF 3Q2017 VACANCY 3Q2017 ABSORPTION YTD ABSORPTION MIDTOWN MARKET (TOTAL) 74 3,100, , % 12,770 97,301 RENTAL RATES LOW RENTAL RATES HIGH RENTAL RATES MEDIAN Small Strip 42 1,024,356 11, % 12,770 36,601 $20.00 $35.00 $28.00 Large Strip 4 744,900 6, % 0-1,000 $14.00 $37.00 $21.00 Sub-Regional 1 137, % 0 0 Super Regional % 0 0 Single-Tenant 27 1,194,435 99, % 0 61,700 22

23 Market Overview DENVER OVERVIEW 3Q2017 The third quarter of 2017 marked the Denver industrial market s twenty-third consecutive quarter of positive growth with net absorption of 1.7 million square feet, bringing year-to-date net absorption to 2.4 million square feet. Although this represented an increase from the third quarter net absorption of the previous year, the market returned to the previous trend of relying on new deliveries for absorption. Tenants occupying pre-leased space that delivered in the third quarter of 2017 accounted for 1.4 million square feet, slightly less than 80% of quarterly absorption. The delivery of three build-to-suits (BTS) along with moderate occupancy growth in second-generation buildings helped the overall vacancy rate drop to 4.9% from 5.2% in the prior quarter. Though vacancy dropped slightly, new deliveries that are not fully pre-leased still counter-balanced the limited amount of, and continued demand for, high-quality space. These two opposing forces are keeping rental rates stable at their current historic high. New construction was the driver behind the Industrial/Warehouse sector recording strong activity with absorption of 1.6 million square feet, accounting for nearly all of the total market absorption, with year-to-date absorption at 2.2 million square feet. It also propelled the East submarket to the strongest quarterly absorption at 1.3 million square feet, and the Central submarket to the second greatest quarterly absorption with 191,504 square feet. Five out of the seven submarkets recorded positive quarterly absorption, with four of them over 100,000 square feet. Even though the Southeast and Northwest submarkets had negative quarterly absorption, both still have positive year-to-date absorption. The Southwest is the only submarket to still have negative year-to-date absorption but experienced a turnaround in the third quarter, posting positive quarterly absorption for the first time after two quarters of negative. demand from the technology as well as food and drink sectors remains high, and these tenants are expected to continue to gobble up distribution space. The lowest median rental rates remain in the East submarket, at $5.50 NNN/SF for Industrial/Warehouse. The West submarket has the lowest vacancy rate for Industrial/ Warehouse and commands the highest median rental rate at $9.00 NNN/SF. The highest median asking rates for R&D/Flex space continue to be in the Southeast submarket, at $11.00 NNN/SF. All submarkets except the Northwest and Southwest have seen increases in median rental rates compared to the second quarter of 2016; none of have seen any decrease. Looking ahead, expect further positive absorption in the final quarter of 2017, although not as high as third quarter. Vacancy will also inch upward, as not all of the large buildings scheduled to deliver are entirely pre-leased. Vacancy will not exceed far over 5.0%, however, as the newly built space is expected to encounter strong tenant demand. Construction is likely to slow from its peak this year, not because of a lack of interest but because of a shortage of available land, continued high construction costs and the recent hurricanes pulling construction business south to exacerbate the current shortage of skilled labor. These will delay new projects from commencing until the supply pipeline and new deliveries ease. The projects currently under construction will still provide high-quality options for large tenants looking to expand in the market as well as to keep rental rates stable. However, the lower end of rental rates will begin to rise as owners feel out how much they can push rates for tenants who don t want new or high quality space. The constrained vacancy and high rental rates will keep sales activity strong for the foreseeable future. Rental rates remained mostly unchanged in the second quarter of 2017, where they plateaued after reaching record highs. The persistence of historically high rental rates despite the slow increase in vacancy since 2015 has been putting strain on some tenants, particularly tenants whose leases are about to come due, as they are facing drastically higher prices than when they had originally signed their leases. Along with an increased cost of doing business, a lack of qualified workers in construction and many retailers struggling with increased competition from online retail giants, some mid-sized tenants are choosing to close their businesses. The majority of the singletenant move-outs this quarter was concentrated in the 10,000 to 25,000-square-foot range and driven by businesses leaving the market, as opposed to relocating or shrinking. However, small and large-sized tenants are still plentiful in the market; 23

24 Market Overview OTHER THIRD QUARTER HIGHLIGHTS INCLUDE: TOTAL INDUSTRIAL MARKET BALANCE The Denver industrial market is continuing to expand following explosive inventory growth in Development is focused on both speculative construction and 6,000, % BTS projects. The continued interest from future tenants has kept developers confidence high despite the slight slowdown of pre-leasing. Eighteen additional 4,500, % buildings totaling 2.4 million square feet broke ground in the third quarter; all are scheduled to deliver over the course of ,000, % The delivery of new industrial space continued strong in the third quarter of Following fourteen buildings delivered in the second quarter of 2017, four buildings were completed in the third quarter for a total of 1.4 million square Square Feet 1,500, % feet. The new deliveries included the 1.0 million-square-foot Amazon Fulfillment Center that was occupied completely upon delivery. Two other build-to-suits were delivered and fully occupied. This puts the market on track to have a record 0 2.0% breaking year. The sales volume through the third quarter of 2017 totaled $490.6 million with 5.5 million square feet of space traded. Sales activity continued to be a sellers market, with high demand and limited options. The sales volume for 2016 totaled $656.3 million with 7.0 million square feet of space traded based on sales transactions valued over $3 million. The annual sales volumes for the past three years have surpassed the numbers posted at the previous peak in 2007, when sales volume exceeded $500 million. -1,500, Q17 Source: Newmark Grubb Knight Frank Research Supply Absorption Vacancy 0.0% The Denver industrial market is faring better than many other markets across the nation. The vacancy rate for the Denver market increased to 4.9% in the third quarter, still lower than the U.S. rate at 5.0%. 24

25 Market Overview CENTRAL SUBMARKET HIGHLIGHTS 3Q2017 The Central submarket posted the second highest quarterly absorption with 191,504 square feet. After negative absorption in the first quarter of 2017 and flat absorption in the second, the third quarter helped bring it to 104,166 square feet year-to-date. The vacancy rate dropped in the third quarter to 5.3% that was also down year-over-year from 5.5%. The Industrial/Warehouse sector contains nearly 97% of the total space in the Central submarket. 1,000, , ,000 CENTRAL INDUSTRIAL MARKET BALANCE 8.0% 7.0% 6.0% The Central submarket is expected to experience significant upheaval in the coming years. As industrial neighborhoods are redeveloped by developers looking to capitalize on settings that feel unique compared with traditional downtown office space, the industrial base of the Central market has slowly diminished. This quarter, Delgany Street began renovations to be converted into office space; all of the tenants vacated last quarter as their leases ran out without the option to renew. Six buildings have sold for redevelopment so far in 2017, following eighteen over the course of This is in addition to ten buildings that were demolished in 2013, three in 2014, followed by three more in 2015 along with one renovated to retail. The RiNo neighborhood, which contains nearly 5.5 million square feet of industrial product, is expected to be significantly converted or demolished for retail, office and multihousing buildings. The planned expansions of both I-70 and the National Western Complex have already begun to demolish current industrial space as well. With limited quality vacant space available, the displaced tenants of those buildings either have to move east, where the majority of the new construction is underway, or pay a premium to remain in the submarket. The submarket has often been heavily influenced by large single-building changes. After J&K Cabinet relocated to the East submarket in the first quarter and Amazon occupying 85,857 square feet at 480 East 55th Avenue in the second quarter was offset by all the tenants in Delgany Street vacating, the trend finally turned in the submarket s favor in the third quarter. Mattress Firm s 110,000-square-foot expansion at 5333 North Bannock Street helped push the absorption up without any large move-out to counter it. Deck building company Bison Innovative Products occupied the remaining 98,140 square feet at 701 Osage Street. The 330,000-square-foot warehouse is now fully occupied for the first time since Sears vacated the entire building in the third quarter of White Cap Construction and Ryder Logistics also occupy space in the building. Sqaure Feet 250, , , , Q17 Source: Newmark Knight Frank Research Supply Absorption Vacancy 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 25

26 Demographics 1 MILE RADIUS 3 MILE RADIUS 5 MILE RADIUS 2017 HOUSEHOLD SIZE Average Household Size HOUSEHOLD INCOME TREND 2017 Median Income $43,096 $55,513 $53, Median Income $46,712 $59,924 $56,910 Median Income Change 2000 to % 79.4% 46.9% Median Income Change 2010 to % 36.4% 23.8% Median Income Change 2017 to % 7.9% 7.0% HOUSING UNITS OVERVIEW 2017 HOME VALUE Median Home Value $235, $292, $253, Average Home Value $266, $338, $335, OCCUPANCY Total Households 4,593 71, ,542 Owner Occupied 41.7% 40.3% 46.2% Renter Occupied 58.3% 59.7% 53.8% 26

27 Traffic Counts Main Street Cross Street Count Year Cars Per Day Volume Type Miles from Subject Prop. 1 Fox Street West 44th Ave ,559 MPSI 0.2 miles northwest 2 Interstate 70 Interstate ,131 MPSI 0.5 miles north and east 3 Interstate 25 W. 44th Ave ,794 MPSI 0.5 miles east 4 Interstate 70 E. 46th Ave ,705 MPSI 1.9 miles northeast 5 Fox Street W. 39th Ave ,689 MPSI 0.5 miles south 6 Pecos Street W. 39th Ave ,470 MPSI 1.0 miles southwest 27

28 Daytime Employment Report 1 MILE RADIUS BUSINESSES EMPLOYEES BUSINESS EMPLOYMENT BY TYPE # OF BUSINESSES % OF BUSINESSES # OF EMPLOYEES % OF EMPLOYEES TOTAL BUSINESSES 1,002 11,540 Agriculture & Mining % 170 / 1.5% Construction % 1, % Manufacturing % 2, % Transportation % % Communication 7 0.7% % Utility 3 0.3% % Wholesale Trade % 1, % Retail Trade % 1, % Finance, Insurance, Real Estate % % Hotels & Lodging 6 0.6% % Automotive Services % % Motion Pictures & Amusements % % Health Services % % Legal Services 8 0.8% % Education Institutions & Libraries % % Other Services % 2, % Government 8 0.8% % Unclassified Establishments % % 28

29 29

30 4230 Elati Street INVESTMENT & LEASING ADVISORS Russell Gruber Managing Director Larimer Street, Suite 1700 Denver, CO Procuring broker shall only be entitled to a commission, calculated in accordance with the rates approved by our principal only if such procuring broker executes a brokerage agreement acceptable to us and our principal and the conditions as set forth in the brokerage agreement are fully and unconditionally satisfi ed. Although all information furnished regarding property for sale, rental, or fi nancing is from sources deemed reliable, such information has not been verifi ed and no express representation is made nor is any to be implied as to the accuracy thereof and it is submitted subject to errors, omissions, change of price, rental or other conditions, prior sale, lease or fi nancing, or withdrawal without notice and to any special conditions imposed by our principal. 2017, Newmark Grubb Knight Frank.