HFF has arranged $220 million in financing for 1144 15th St., a 40-story, 673,852-square-foot, Class A+ office building in downtown Denver. On behalf of the borrowers, Hines and its equity partner, HFF secured a 17-year, fixed-rate permanent loan through a national life insurance company. HFF had also worked on behalf of Hines to arrange construction financing for the project through Wells Fargo Bank in 2015. The new permanent loan replaces that construction financing deal.
Completed just last year, the tower also includes 5,770 square feet of ground-level retail and 13 stories of parking totaling 858 spaces. The property was the first high-rise office development in Denver in more than 30 years. Major tenants include Gates Industrial Corp., Optiv Security Inc. and law firm Faegre Baker Daniels. The building is about 95 percent occupied, according to information provided to Commercial Property Executive by Yardi Matrix.
Chipotle Mexican Grill Inc. occupies about 126,000 square feet in the building, having consolidated 400 to 450 employees there from multiple locations in Denver. In May 2018, however, the company announced that it would be relocating its headquarters from Denver to Newport Beach, Calif., with some Denver-based functions moving instead to Columbus, Ohio.
The building’s location in the CBD’s Midtown West micro-market is convenient to the Convention Center Station light rail stop and the Free MallRide on the 16th Street Mall, providing access throughout downtown Denver. The property is also close to the Colorado Convention Center, the Denver Center for Performing Arts, Larimer Square and the 16th Street Pedestrian Mall.
The HFF debt placement team representing the borrower included Eric Tupler, senior managing director.
“Our partnership set out with a long-range view in developing and owning this asset,” Jay Despard, senior managing director for Hines in Colorado, said in a prepared statement. “The permanent financing we recently obtained is a testament to the building’s position in the marketplace and to the core nature of the finished product and tenant roster.”
Strong construction, steady absorption
Denver’s CBD Class A office market has an average vacancy of 12.6 percent, versus 11.6 percent in the prior quarter, according to a first-quarter report from Colliers International. Net absorption in the first quarter was only 235,000 square feet, against deliveries of 279,000 square feet, on an inventory of 26.1 million square feet.
Still, the Denver metro is enjoying substantial job creation—more than 42,000 from March 2018 to March 2019—and an unemployment rate of 3.3 percent, versus a national rate of 3.7 percent.
Another noteworthy project in downtown Denver is Continuum Partners’ A Block, which features a 55,000-square-foot office building and a 200-key Kimpton hotel at 16th and Wewatta streets, in the Denver Union Station redevelopment. HFF also placed both the construction and permanent loans on the A Block development.