BKM Capital Partners, an institutional fund manager with a niche focus on value-add, light industrial multi-tenant investments, has acquired Crossroads Distribution Center, a 14-unit industrial asset consisting of three single-story distribution warehouse buildings totaling 150,245 square feet in the Central East I-70/Montbello submarket of Denver, Colorado. BKM acquired the property from KEW Realty, a private local seller, in an off-market transaction for $14.75 million.
“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, Turner adds.
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.
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.
Turner points to BKM’s acquisition strategy of astutely identifying off-market opportunities in growth markets as instrumental in the firm’s successful acquisition of Crossroads Distribution Center.
“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.”
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 million in capital improvements to upgrade the roof, HVAC system, and parking lot, notes Turner.
“This acquisition allows us to expand our total market presence in Denver to 430,000 square feet,” Turner comments. “It also allows us to capitalize on our senior property manager’s direct experience with this asset, having managed the property for KEW for nine years.”
Crossroads Distribution Center is located at 3700 Havana Street in Denver, Colorado.
BKM represented itself in the off-market acquisition. The seller, KEW Realty, also represented itself.