Granite Properties Has Eyes On ‘One Of The Best Performing Markets’ In Denver
Granite Properties' $105M acquisition of First Avenue Plaza, one of the largest buildings in Denver’s Cherry Creek neighborhood, signals the buyer’s confidence in the submarket and in Denver offices as a whole.
“We’ve had our eye on the Cherry Creek market for years,” said Stephanie Lawrence, Granite's Denver senior managing director. “It’s one of the best performing markets in the Denver metro area.”
Granite purchased the two-building complex at 44 Cook St. and 55 Madison St. from local firm Ares Management, which recently acquired fellow Denver firm Black Creek Group. Black Creek acquired the buildings through a fund in 2014 for $75M. The new purchase represents a 40% premium over its price less than a decade ago.
Brokers from JLL’s Denver office marketed the property and arranged acquisition financing for Granite.
The premium is a result of property improvements, increased occupancy and overall resiliency of the Cherry Creek office market in the wake of the pandemic, Lawrence told Bisnow. The upscale neighborhood is known for its luxury shopping, boutique hotels and expensive apartment buildings that are rumored to house members of local professional sports teams.
The office market in Cherry Creek is small compared to downtown and the Denver Tech Center, which together house the large majority of metro Denver’s office buildings. But the area’s office buildings are performing well in spite of current market challenges.
First Avenue Plaza includes two buildings totaling 264K SF and connected by an outdoor plaza. The larger of the two, 55 Madison, is 94% leased, while 44 Cook is 88% leased. These occupancy figures were attractive to Granite, which is actively seeking well-located, high-quality product in Denver and other high-growth markets across the country, according to Lawrence.
“We are being selective on what we buy, and Cherry Creek is performing so well that it worked for us,” she said, adding that the company is optimistic about office as an asset class, as long as the properties can “enhance customer experience,” with the customer being the employees of building tenants.
The property sold for $397 per SF, well above the market average for office buildings of $231 per SF in the fourth quarter of 2021, according to market data from CBRE Group.
In addition to the Denver market, Granite has properties in Atlanta, Houston, Dallas and Southern California. Along with Confluent Development, the company developed Granite Place at Village Center, a nearly 300K SF office building in Greenwood Village, before selling it for $126M, setting a record per-square-foot price for suburban office of $423 per SF.
“Our appetite for additional office product is high,” Lawrence said. “We want to continue to grow in Denver.”
