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10/15/19
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BKM Capital Partners has acquired Crossroads Distribution Center, a 14-unit industrial asset consisting of three single-story distribution warehouse buildings totaling 150.2k sf in the Central East I-70/Montbello submarket of Denver, CO. The property, located at 3700 Havana St, fetched $14.75 mil ($98/sf).
Originally constructed in 1973, Crossroads Distribution Center is 90% leased to 12 tenants and features a mix of grade level, full-dock, and half-dock loading. The firm plans to rebrand the asset as Havana 37 Business Center and will invest approximately $1.2 mil in capital improvements to upgrade the roof, HVAC system, and parking lot.
Crossroads Distribution Center is strategically located off I-70, 25 minutes from Denver’s Downtown business district, offering easy access to the Denver airport, I-70, I-25, Downtown Denver, and Denver Tech Center. It was sold by KEW Realty, a private local seller, in an off-market transaction.
“This was a rare opportunity to acquire a well-occupied industrial business park, strategically located in the most desirable and one of the fastest-growing industrial submarkets of Denver,” says BKM Capital Partners Managing Director of Acquisitions, Brett Turner. “Vacancy in the Central East I-70/Montbello submarket is 2.4%, with no new deliveries scheduled that will compete in unit size to Crossroads Distribution Center, making this area and property ideal for our portfolio.”
The Central East I-70/Montbello submarket has seen average rent growth of greater than 8% for the last six years. Planned infrastructure improvements to this region over the next few years – including the Central 70 Project, which will reconstruct a 10-mile stretch of I-70 and add new express lanes to this major roadway – will serve to improve the submarket’s desirability among industrial tenants for years to come.
The property offers BKM a unique opportunity to purchase an asset in a path of growth, with minimal competition; while 53% of all new industrial construction in the Denver market is occurring in the Airport submarket in which the property is situated, this development is focused on large-scale big-box distribution, which will not compete directly with Crossroads Business Center, Turner notes.
Further master-planned developments in the region include the expansion of the Bioscience campus at Fitzsimons Army Medical Center, the Aerotropolis, and the Denver International Airport.
“This was an off-market transaction that resulted in a price agreement at a significant discount to replacement cost,” Turner explains. “The acquisition price of $98 per square foot is a 13% discount to recent transactions in this submarket and a 43% discount to the asking price for a nearby comparable property.”
BKM represented itself in the off-market acquisition. The seller, KEW Realty, also represented itself.
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