250 Columbine is a $100 million mixed-use development in Cherry Creek North.
Western Development Group developed 250 Columbine.
All of the retail is leased and all of the condos are sold at 250 Columbine.
All of the retail and restaurant space is leased.
The last luxury condo sold last week.
The anchor restaurant tenant, SOL Cocina, opens today.
The $100 million 250 Columbine, mixed-use development in the heart of Cherry Creek North, is firing on all cylinders.
Even the bankruptcy of one of its office tenants, Emerald Oil, isn’t causing the office portion of the Western Development Group development to lose steam.
Western Development has been working on 250 Columbine for more than six years, a process that included advocating for a major rezoning of the area.
It’s now in its final stretch at a time when arguably the luxury condo, retail and office markets have never been stronger.
“We would like to say we are geniuses and take credit for our great timing, but in real estate, a lot of it is luck,” Western Development partner David Steel said last Friday from the private company’s Cherry Creek North office.
Of course, a lot more than chance is involved in bringing just the right retail and restaurant mix to the 30,000 square feet of ground floor retail space.
“We turned down much more than we leased,” said Roy Kline, also a partner at Western Development.
“We could have had all of it leased up in six months,” he said.
Indeed, they turned down one high-profile restaurant that went to a nearby luxury apartment building. They think it is a great restaurant, but thought SOL Cocina, was a better fit for 250 Columbine.
SOL Cocina is the largest retail tenant, taking 6,300 square fee, or about 21 percent of all of the space.
SOL Cocina showcases “bold, modern interpretations” of traditional coastal Mexican cuisine. Fresh, sustainable ingredients are used to prepare meals.
People who attended a “soft opening” of it last week, uniformly raved about the restaurant.
The smallest retail tenant has about 1,400 square feet.
Tenants at 250 Columbine, in addition to SOL Cocina, include:
- Blue Island Oyster Bar;
- Gnat Jewelers;
- Peter Millar;
- Eddie Bauer;
- And Masters Gallery
Retail rents at 250 Columbine are in the $40 to $60 per square foot, among the highest in the metro area. Tenants also pay a percentage of sales, in addition to the base rent.
Meanwhile, the last of the 70 condos sold last week.
It is a penthouse unit with about 3,500 square feet of space that sold for about $3.6 million.
Condos have been selling, depending on the size or location, from about $500 to more than $1,000 per square foot.
As with the retail, they could have sold all of the condos much faster.
They sold them in phases, only putting a handful of them on the market at any one time. They were listed by Dawn Raymond of Kentwood Cherry Creek.
“They were flying off the shelf,” Kline said.
Steel said that when they sold the first units in the fall of 2014 at an event at the Denver Country Club, it was like an auction environment.
“People were trying to slip us money,” to get an advantage on buying prized units, especially those with western views, he said.
In addition to the location, the units benefitted from a lack of new supply hitting the market.
“It is so hard to build condos today because of construction defect issues,” Kline said.
Western Development was experienced with building high-end condos with its earlier NorthCreek Development.
At NorthCreek, many of the buyers did not live there full-time, as it might have been their third or fourth home.
While some buyers at 250 Columbine have bigger homes in the mountains and use their units when visiting Denver, a number of them also are using the condos as their primary residence.
“It’s always nice to have people living their full-time, because it creates a different atmosphere than owners who only are there a few times a year,” Steel said.
As far as the office, only about 20,000 square feet is still available.
They had leased 25,000 square feet to Denver-based Emerald Oil, which has since filed for Chapter 11 reorganization bankruptcy, because of problems in the oil patch.
Western Development has taken back one floor.
“It’s unfortunate, but what can you do? We are monitoring the situation closely,” Kline said.
He also noted that even in bankruptcy, Emerald continues to pay rent.
And although it is a Chapter 11, and not a Chapter 7 liquidation, Emerald is hoping that the entire company will be sold to another company.
If Emerald is sold, it’s possible the new owner will continue to lease at 250 Columbine, Steel noted.
As with the retail, the demand is strong for the remaining office space.
“Especially from financial institutions,” Steel said. “There just isn’t that much Class A space available in Cherry Creek and demand from financial institutions is very strong.”
One sign of the strength of 250 Columbine, is the number of groups who want to buy it.
“We get calls every week,” Steel said. “Institutional investors from the West Coast and New York, used to ignore tertiary markets like Denver. But they have so much money, and cap rates are so low, they want to put their money to work in places Denver.”
The capitalization rate is the rate of return on a real estate investment property based on its net operating income. So if a property has a NOI of $100,000 and sells for $1 million, it has a cap rate of 10 percent. The lower the cap rate, the more it is selling for.
“We look at the kind of rents being charged in Denver today and we can’t believe how high they are,” Steel said.
“If you are in San Francisco, Los Angeles or New York, Denver looks like a bargain.”
While they could sell both the office and the retail at 250 Columbine for a strong return, it’s not going to happen.
Western Development is a long-term owner.
“We will never sell,” Kline said.
What are they going to do for an encore, now that 250 Columbine is wrapping up?
“We’re looking at several other opportunities,” in Cherry Creek North and elsewhere, Steel said.
“But we’re not ready yet to talk about them,” Kline noted.
In other words: stay tuned.
Have a story idea or real estate tip? Contact John Rebchook at JRCHOOK@gmail.com. DenverRealEstateWatch.com is sponsored by 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.