Menashe Properties Inc. is keen on industrial, retail and office, and has just expanded its holdings in the latter sector with the acquisition of Stanford Place III, an approximately 370,000-square-foot property in Denver. The Portland-based family office acquired the Class A asset for approximately $50 million, according to Denver County property records.
“In this middle market, institutional-size range where I like to play, the $20 million to $100 million office assets, there are a lot of opportunities,” Jordan Menashe, CEO & principal, Menashe Properties Inc., told Commercial Property Executive. “We closed without financing and have already secured term financing for the property through an insurance company.”
It could be said that Menashe Properties acquired the asset below replacement cost. The 17-story office tower’s fee simple interest last changed hands in 2007, when SteelWave acquired the property for $73.1 million. Steelwave recapitalized the asset in 2016, selling a portion of the building to Angelo Gordon in a transaction valued at nearly $39.3 million.
Sited on nearly 7 acres at 4582 S. Ulster St. in the Denver Tech Center, Stanford Place III welcomed its first tenants in the mid-1980s and has maintained its luster over the years through renovations, the most recent of which took place in 2017. In addition to offering a key location near main thoroughfares and light rail, the building features a host of amenities, including a fitness center, an updated conference facility, a tenant lounge and a Starbucks and deli.
Embracing the upside
Today, Stanford Place III is home to a vast array of tenants, such as staffing agency Randstad, design firms, insurance companies and a handful of real estate companies, including Aimco and Apartment Income REIT Corp. The property is approximately 70 percent occupied, which places it firmly in the below-average range for the area, as the vacancy rate in metropolitan Denver was 20 percent in the second quarter of 2022, according to a report by CBRE. Menashe, however, couldn’t be happier.
“Seventy percent occupancy is music to my ears,” Menashe said. “I’m cash-flow driven, so this is my thesis: I want to be the best value—not the cheapest—I want to be, for what a tenant receives and what a tenant pays, the best value in the state, city, market or submarket that I’m in, anywhere. Period.”
For Stanford Place III’s new life under Menashe Properties’ ownership, with Robert Whittelsey and Abby Pattillo of Colliers aboard to spearhead marketing and leasing, the application of the “best value” gameplan may involve any number of strategies. “Tenants want to feel like they’re getting a good value,” Menashe added. “So, when I see 70 percent occupied, for me, that’s only upside. I’m going to improve the vacancies.”
Despite the Denver office market’s difficulty in regaining its pre-pandemic vacancy-rate stamina, there are tenants looking for space. Leasing activity was reassuring in the second quarter at 1 million square feet, marking the fifth consecutive quarter that deal volume met or exceeded 1 million square feet, per the CBRE report. Additionally, occupiers in Denver continue the flight to quality, eager to set up shop in a space with coveted amenities in an effort to lure employees back to the office.
With the closing of the Stanford Place III acquisition, Menashe Properties’ metropolitan Denver portfolio now totals approximately 1 million square feet.