Inverness Flex Park Goes for $15.25 Million
By Jill Jamieson-Nichols
Colorado Real Estate Journal
A California company that pinpointed Denver among its target markets paid $15.25 million for a six-building flex project in Inverness Business Park.
Irvine-based RLA Real Estate, which hopes to own a half-million square feet of space in Denver by the end of the year, bought Inverness Business Center North in Englewood from the Etkin Johnson Group, a local owner. The 155,227-square-foot office/warehouse project is located at 96 and 106-114 Inverness Circle E.
"The price per square foot was attractive — we bought it for just under $100 per square foot," said RLA's Andy Lukei.
"The play with 96 Inverness is rent growth," he said, explaining average rents in the project are $7.25 per sf triple net, while market rents are $8.25 to $8.50.
Nissan has a 60,000-sf data center in the park; however, Inverness Business Center North caters primarily to smaller tenants, with units starting at 1,200 sf.
"This is ideally suited for smaller-size tenants, and that is so hard to replicate given the construction costs," said Frederick Ross Co. broker David Lee. The single-story buildings, which were built in the late 1990s and early 2000s, have 14-foot-clear ceiling height, and dock-high and drive-in loading.
"It just represents great flexibility in unit size and percentage of finish. It's a very desirable location, and it's been well-managed," Lee said.
"I like buying assets from Etkin Johnson. They're a great seller, easy to work with, and they run their assets like they are going to own them forever," Lukei commented.
Having Nissan as a tenant is a plus, as is the multitenant nature of the park, added multitenant Lukei's partner, Jason Golding. The development currently is more than 95 percent occupied, but multitenant properties typically experience rollover of 20 percent to 30 percent a year.
"The buyer is going to be able to, hopefully, realize rental rate growth in the coming months," commented Lee. Buildings in Inverness range from approximately 10,000 to 50,000 sf. Some of the larger tenants include South Seas Data, which occupies approximately 12,000 sf, and Primeflex Labels Inc., which has 8,500 sf.
RLA Real Estate is acquiring office, industrial and flex product with upside potential. Its target markets include places like Reno, Nev., a sizable Western distribution hub with a discount to replacement cost; San Antonio, Texas, where companies like Microsoft, Toyota and Wachovia are expanding; Denver, with the Fitzsimons redevelopment and a good employment base; as well as Atlanta, Raleigh-Durham, N.C., and others, said Golding.
The company has assembled a $30 million portfolio within the last six months.