Investing in commercial real estate takes more than quantitative due diligence. That’s why Origin’s acquisition team is spread over eight thriving markets. It’s critical to have associates with first-hand knowledge of each city’s commercial real estate market and its offerings. Our “boots on the ground” bring us well-researched, well-priced investment opportunities, even in sellers’ markets.
An example is our latest Denver acquisition. Cherry Creek Plaza is in Glendale, a special enclave in the popular Midtown submarket. Tom Briney, who has been with us more than six years, guided an off-market transaction that took 20 months to develop. Tom moved to Denver to head our office there, living in the booming city and participating in the local commercial real estate community.
Knowing the territory and developing relationships were essential to finding investment opportunities. Cherry Creek Regional Trail winds past the building and through Glendale, which is surrounded by the City of Denver, named one of the nation’s most promising cities for real estate investment by Forbes and the Urban Land Institute. As part of the Colorado Front Range Trail, it’s a magnet for Denver’s young professional workers. As an amenity, it’s a selling point for managers who know the Denver market.
We made an unsuccessful offer for Cherry Creek Plaza nearly two years ago at $100 per square foot, but the owner approached us about six months ago and said, “If you’re still wanting to honor that pricing, I’m looking to move forward.” Then came months of negotiating with the senior and mezzanine lender to recapitalize the property. In the end, private funding allowed us to craft a deal at an attractive price in a thriving submarket where the average occupancy rate is more than 90 percent.
This investment opportunity shows two things. First, our direct involvement in the local real estate community helps us identify well-located properties that we think we can improve through better management, new capital or better marketing. Second, our local knowledge helps us make disciplined decisions, getting strategic benefits from our investors’ private funding or walking away from a deal if the price isn’t right.
This is our second major acquisition in the Denver market within a year. Another off-market transaction allowed us to acquire Denver Corporate Center I, a quarter-mile from light-rail lines downtown, at a cost savings from similar properties in Denver Tech Center. In both cases, we cultivated relationships with owners that we were confident in and able to underwrite as minority partners. They agree with our approach to improve the property, and we’re able to supply private funding for renovations that both justify higher rents and raise property values.
We’ve grown very familiar with Denver over the last six years. Denver’s population has risen nearly 14 percent since 2010 and its momentum is building. Its young professional workforce is attracted to Denver’s natural beauty and vibrant downtown. The high-quality labor force attracts new business, which upends the traditional relationship between business and population growth.
Markets like Austin and Dallas in Texas, and Charlotte and Raleigh in North Carolina are as much lifestyle destinations as employment centers. With boots on the ground where we invest, including Denver and my hometown of Chicago, Origin understands not only the opportunities in these markets but also the risks and capital needs of our assets. Ultimately, it makes us successful in our plans to maximize their value to our investors.