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1/30/24
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BKM Capital Partners has acquired West 6th Center, a 122.8k sf small-bay industrial building in Denver, for $10.75 mil ($87.50/sf). The facility is fully occupied by three companies.
BKM will invest $7 mil into a value-add repositioning plan to modernize the asset and bring it to its brand standards over its hold period. Plans include upgrades to the property’s roofs, parking lots, HVAC systems, paint scheme, landscaping, signage and storefronts, as well as capital for speculative tenant improvements. The firm intends to leverage the property’s 1.5-year weighted average lease terms to correct a 53% mark-to-market deficiency in rents.
Specifically, half of the capital investment will be used to demise and rehabilitate the 69.6k sf unit in the first six months of ownership. The space will be reconfigured from one large unit into four smaller ones, doubling the facility’s total number of industrial units to six and bringing the average unit size from 40.9k sf to 20.5k sf.
Built in 1995, the facility features units of 69.6k sf, 29.7k sf and 23.5k sf. It also offers 16- to 20-foot clear ceiling heights, a small office component, and 50k sf of secured yard space, a highly coveted feature in infill Denver. It is located at 1780 W. 6th Ave and features two oversized grade-level loading doors, 26 dock-high doors, and five mobile metal ramps to convert select dock-high doors to drive-in.
“We were approached with the possibility of acquiring West 6th Center while we were pursuing a nearby property, and quickly recognized this was an opportunity that we couldn’t pass up,” said Brett Turner, Senior Managing Director of Acquisitions and Dispositions at BKM. “We secured an irreplaceable Central Denver asset at a remarkable 63% discount to replacement cost and a basis we haven’t seen in this submarket since 2019.”
Situated at the southeast corner of the I-25 and Highway 6 interchange, West 6th Center is within proximity of Metro Denver’s key economic drivers, including the central business district, Broncos’ Mile High Stadium, Nuggets’ Ball Arena, and Rockies’ Coors Field.
BKM acquired the asset through a joint venture partnership with TerraCore Capital. BKM represented itself in the deal. Cushman & Wakefield’s Alec Rhodes, Aaron Valdez, and Raymond Trevisan negotiated on behalf of the seller.
“We believe that the improved West 6th Center will be positioned well to attract Central Denver’s leading industrial users,” commented Brian Malliet, BKM’s Chief Executive Officer. “Vacancy remains well below the national average and there are no industrial projects currently planned or underway in the submarket, which has already seen its industrial inventory shrink by 3% in recent years due to conversions. We expect these conditions will provide maximum leverage to the BKM team during our lease-up efforts.”
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