350 terry street - Longmont Downtown Development Authority

350 Terry Street
longmont, CO
C o n f i d e n t i a l
I n v e s t m e n t
O f f e r i n g
M e m o r a n d u m
september 2013
Scott Garel
303.260.4331
[email protected]
Corey Linton
303.260.4314
[email protected]
Becky Callan Gamble
303.449.1420 x12
[email protected]
Hunter Barto
303.449.1420 x16
[email protected]
Dryden Dunsmore
303.449.1420 x19
[email protected]
350 Terry Street
longmont, CO
Executive Summary
Page 2
Property description
Page 6
Market Overview
Page 14
Financial Information
Page 25
Regional Overview
Page 28
Ta b le o f
Con t e n t s
Table of Contents
Executive Summary
Executive
S u mma ry
OFFERING SUMMARY
Newmark Grubb Knight Frank and Dean Callan & Company are pleased to present to
qualified investors, the opportunity to acquire the Longmont Daily Times-Call building,
comprising 50,341 square feet of office and warehouse space located at 350 Terry
Street (.627 acres) along with 111 parking spaces located at 345 Terry Street (.911
acres) in downtown Longmont, Colorado. An additional site, located at 323 & 327
Coffman Street (.273 acres) is also available for sale. Situated in one of the strongest
technology markets in the U.S., the Longmont submarket of Boulder County is anchored
in solid fundamentals and is currently absorbing vacant space. Due to the gentrification
of the downtown market with new multi-family projects, restaurants, hotels and other
retail amenities, the downtown Longmont submarket shows very real potential for
increasing rents. Should rents rise to a level that allows for new development, there
is support for maintaining higher rental rates due to supply constrained land and
entitlement challenges. 350 Terry Street represents a unique opportunity to acquire a
quality asset in a downtown location at well below replacement cost within a tightening,
supply-constrained, and highly desirable submarket.
Investment Highlights
•
Notable building in a downtown location that is a viable re-letting opportunity
for office or warehouse uses
•
Flexible CBD zoning
•
Significant Discount to Replacement Cost in a Supply-Constrained Submarket
•
A Highly Desirable Submarket Showing Strengthening Fundamentals
•
Located in One of the Strongest Tech Employment Markets in the U.S. with
Large Corporate Presence
This is a unique opportunity to acquire a quality asset well below replacement cost
within a tightening, supply-constrained, and highly desirable office submarket.
Notable building in a downtown location that is a viable re-letting opportunity for office or warehouse uses.
The Longmont Daily Times-Call has been at this location since 1964. The building
is located in the Historic West Side Neighborhood of Downtown Longmont within
walking distance to all of the amenities that Old Town has to offer. The building is in
close proximity to the commuter-easy, affordable, and amenity-rich communities of
Niwot, Louisville, Lafayette, and Broomfield. The Longmont submarket is a popular
location for businesses seeking to attract a young and educated workforce. Longmont
2
is a short 15 minute drive from Boulder along the Longmont-Boulder Diagonal (Hwy.
119) and has easy access to downtown Denver, the Denver International Airport, and
Interstate 25. Due to the influence of the University of Colorado-Boulder, the area
was originally characterized as a high-tech mecca but has since diversified to include
companies involved in communication, education, health, manufacturing, renewable
energy, outdoor goods, and natural foods.
As a sign of further diversification, Longmont is in the heart of the metro area’s “Beer
Triangle” featuring major brewers, Coors Brewery (Golden) and Anheuser-Busch InBev
(Ft. Collins) and over 6 dozen craft breweries between Denver, Boulder and Ft. Collins.
Longmont is also home to Oskar Blues and Lefthand Brewery Company.
The Boulder County market, comprising nearly 7.0 million square feet of office space
and 16.2 million square feet of Industrial/flex/R&D flex (both exclude owner-occupied
buildings), has shown strong fundamentals. In the 2nd quarter of 2013, vacancy in the
office market dropped from 10.05% to 9.84% with YTD absorption of nearly 105,000
square feet. Vacancy in the Industrial/flex/R&D market was flat at 10.58% and
increased minimally from 10.46% in the previous quarter. Median NNN effective rents
for office space remained stable at $13.50 per square foot and median Industrial/
flex/R&D rents were flat at $7.00/SF. There is good activity in the market and it is
expected that market rents will continue to rise for the next 12-24 months.
Most of the undeveloped land around Boulder County has been designated as Boulder
County Open Space, which will never be developed. The Counties of Boulder and
Broomfield have established prohibitive entitlement processes and strongly believe in
an anti-growth culture which keeps a tight control over new construction of commercial
buildings.
Flexible CBD zoning
The CBD zoning allows for a creative and adaptive re-use of the property including;
multi-family, medical, restaurant or service-oriented retailers. Flexible parking, minimal
setbacks and a 55’ height limit.
Significant Discount to Replacement Cost in a Supply-Constrained Market
Based on the property’s assumed starting rental rate of $10.50/SF, the property is
being valued at a historically low level of rental rates. This value is at a significant
discount to the estimated replacement cost of $150 to $200 per square foot. Since
the rent structure needed to justify new construction ranges from $18 to $20 per
square foot, the property has a significant rent advantage against the threat of new
construction in a difficult county to develop new product.
A Highly Desirable Submarket Showing Strengthening Fundamentals
The Boulder County market has been active in the past 18 months. The County has
absorbed approximately 125,000 square feet of office space and 175,000 square
Executive
S u mma ry
feet of R&D/flex space, illustrating dynamic leasing fundamentals. With significant
leasing activity, the Boulder County market should experience an increase in quoted
and achieved lease rates across the board.
impact include atomic clocks, X-ray standards for mammography, scanning tunneling
microscopy, pollution-control technology, and high-speed dental drills. NIST is located in
Boulder and employs approximately 400 local residents.
Located in One of the Strongest Tech Employment Markets in the U.S. with
Large Corporate Presence
The Boulder County market has become the epicenter for companies focused on
renewable and alternative energy sources. The University
Corporation for Atmospheric Research (UCAR) and The
Natonal Center for Atmospheric Research (NCAR) are located
in Boulder County and employ approximately 1,400 people.
UCAR promotes partnership in a collaborative community
dedicated to understanding the atmosphere—the air around
us—and the complex processes that make up the Earth
system, from the ocean floor to the Sun’s core. UCAR serves
as a hub for research, education, and public outreach for
the atmospheric and Earth system science community.
They manage the National Center for Atmospheric Research
and UCAR Community Programs on behalf of the National
Science Foundation and the university community. NCAR is a
federally funded research and development center devoted
to service, research and education in the atmospheric and
related sciences. NCAR’s mission is to understand the
behavior of the atmosphere and related physical, biological
and social systems; to support, enhance and extend the
capabilities of the university community and the broader
scientific community – nationally and internationally; and
to foster transfer of knowledge and technology for the
betterment of life on Earth. The National Science Foundation
is NCAR’s primary sponsor, with significant additional
support provided by other U.S. government agencies, other
national governments and the private sector.
The National Ecological Observatory Network (NEON) occupies approximately 102,000
RSF in Boulder and employs approximately 900. NEON will collect data across the
United States on the impacts of climate change, land use change and invasive species
on natural resources and biodiversity. NEON is a project of the U.S. National Science
Foundation, with many other U.S. agencies and NGOs
cooperating.
The National Institute of Standards and Technology (NIST)
is an agency of the U.S. Department of Commerce, which
was founded in 1901 as the nation’s first federal physical
science research laboratory. Over the years, the scientists
and technical staff at NIST have made solid contributions to
image processing, DNA diagnostic “chips,” smoke detectors,
and automated error-correcting software for machine tools.
Just a few of the other areas in which NIST has had major
4
NEON will create a new national observatory network to
collect ecological and climatic observations across the
continental United States, including Alaska, Hawaii and
Puerto Rico. The observatory network will be the first of
its kind designed to detect and enable forecasting of
ecological change at continental scales over multiple
decades.
IBM owns and occupies 2.0 million square feet of office
space in Boulder County. This site is a state-of-the-art
Business Continuity and Resiliency Services facility
helping companies ensure the continuity of their business
operations and assisting with regulatory compliance,
improved systems availability, data protection and the
integration of IT operational risk management strategies.
IBM employs approximately 3,400 people locally.
Array BioPharma Inc. occupies 220,000 square feet
in Boulder County and has 330 employees. Array
BioPharma is a biopharmaceutical company focused on
the discovery, development and commercialization of
targeted small molecule drugs to treat patients afflicted
with cancer and inflammatory diseases.
Amgen owns and occupies nearly 450,000 square feet
in Boulder County and employs approximately 935 local
employees. Amgen discovers, develops, manufactures,
and delivers innovative human therapeutics. A leader
in biotechnology since 1980, Amgen was one of the
first companies to realize the new science’s promise
by bringing safe, effective medicines from lab, to
350 Terry Street
longmont, CO
manufacturing plant, to patient. Amgen therapeutics have changed the practice of
medicine, helping millions of people around the world in the fight against cancer, kidney
disease, rheumatoid arthritis, bone disease, and other serious illnesses.
Longmont is also the corporate headquarters of DigitalGlobe, employing approximately
464 people at this location. DigitalGlobe collects massive amounts of satellite and aerial
imagery each day. This imagery is used to create quality products for sophisticated
photogrammetric processing or high quality viewing. All imagery is then stored in the
industry’s biggest geospatial library and then made available for search and retrieval
through DigitalGlobe’s online platform.
The National Renewable Energy Laboratory (NREL) is located in Golden and has
brought 12 renewable energy companies to the market in the past three years. NREL
provides an incubation program for renewable energy concepts and is projected to
produce 125 companies with over 2,500 employees over the next five years. The
Research Support Facility is NREL’s newest building on the campus and was completed
in June 2010. NREL also signed a contract in June for the design and construction
of the Energy Systems Integration Facility, an approximately 175,000 SF building to
house laboratories and office space for 200-250 researchers and support staff. This
will be the nation’s only facility that can conduct integrated megawatt-scale testing of
all components and strategies critical to deploying renewable energy and other energyefficiency technologies into the nation’s electric grid at utility scale.
Other companies active in the trade area include Oracle and Staples. In January, Oracle
completed the acquisition of Sun Microsystems and currently owns a seven building
campus which totals approximately 2.3 million square feet. In July 2009, Staples
acquired Corporate Express and announced the consolidation of their operations to the
Broomfield area in a 150,000 square foot facility.
5
Executive
S u mma ry
Located in Longmont, Colorado is the corporate headquarters of Intrado. For more
than 30 years, Intrado has pioneered improvements to the 9-1-1 network, helping to
enhance the quality of emergency response in the United States. Intrado has 800 local
employees with plans to hire an additional 70 people.
Property Description
P ROP ERT Y
DESCRIP T ION
site description
aerial
site plan
floorplans
6
350 Terry Street
longmont, CO
SITE DESCRIPTIOn
350 Terry Street is a Class B office and industrial/flex/R&D building comprising 50,341
square feet. Strategically located in the Historic West Side Neighborhood of “Old Town”
in Longmont, Colorado, the building has three (3) levels of office finish and one level of
350 Terry Street - .627 acres (building)
345 Terry Street - .911 acres (parking - 111 spaces)
Total Site Size
1.538 acres
County
Boulder, Colorado 80501
Submarket
Longmont Submarket
Access
350 Terry Street is easily accessed via major regional
highways and limited access highways. Located in
the heart of Downtown just two blocks from 4th and
Main Street, the site provides walking distance to Old
Town amenities and easy access to Highway 119 to
either Denver or Boulder.
Additional Parcel
323 & 327 Coffman Street - .273 acres - (parking 25 spaces)
7
P ROP ERT Y
DESCRIP T ION
Site Size
industrial/flex/R&D space with three loading doors. An additional site located at 323 &
327 Coffman Street is also available for sale.
P ROP ERT Y
DESCRIP T ION
aerial
SITE
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3rd
av e
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25►
350 Terry Street
longmont, CO
site plan
4th avenue
P ROP ERT Y
DESCRIP T ION
350 Terry Street
323 & 327 Coffman Street
3rd avenue
9
main street
coffman street
terry street
345 Terry Street
floorplans
P ROP ERT Y
DESCRIP T ION
Main Level - 25,034 SF
Warehouse - 14,496 SF
Office - 10,538 SF
10
350 Terry Street
longmont, CO
floorplans
2nd Level - 10,814 SF
P ROP ERT Y
DESCRIP T ION
11
floorplans
P ROP ERT Y
DESCRIP T ION
3rd Level - 14,493 SF
12
market overview
Longmont Market Overview
Competitive Properties set
• Office
• flex
• industrial
MARKET
OVERVIEW
SALES COMPS
14
350 Terry Street
longmont, CO
Market Overview
Longmont Market Overview
Longmont, Colorado, is a vibrant and diverse city in the highly-desirable northern frontrange area, just 37 miles north of Denver and 16 miles east of Boulder. An incorporated
city of the State of Colorado and located in both Boulder and Weld Counties, Longmont
is the second largest city in Boulder County, and according to the U.S. Census Bureau,
it is the 14th most populous municipality in the State of Colorado.
Longmont has a rich agricultural heritage, including sugar beet and vegetable farming,
and offers a diverse, educated workforce and a high quality of life. The city’s population
has grown steadily over the years; growing by an extraordinary 38% from 1990 to 2000
due to an influx of industry. In 2012, Longmont recorded over 87,800 residents, with
the greater Boulder County population measuring over 305,300. The Longmont Area
Comprehensive Plan (LACP) includes a projected population increase in the city to
reach an estimated 102,000 over the next 15-20 years.
alleyscape development project
15
Longmont’s front-range location, low cost of living, and active, educated population
ensure its status as a great place to live. It was named “Second Happiest City” this
year by the Vermont Complex System Center, and the Milken Institute ranked it 15th on
the annual Best-Performing Cities Index in January. Additionally, Longmont was twice
named in Money Magazine’s list of “Top 100 Best Places to Live,” in 2006 and 2008.
Money Magazine ranks small livable cities that have the best possible blend of good
jobs, low crime, quality schools, plenty of open space, reasonable home prices, and
various recreational activities. Longmont also received the prestigious “All American
City” award in 2006.
Downtown Longmont offers an authentic local vibe with historic charm, diverse
businesses and emerging improvements. An estimated $2,498,200 of public capital
improvements were made to the downtown area’s east-side Alleyscape Project in
2011 and 2012. The west-side Alleyscape Project is planned for 2014. New zoning
for downtown Longmont has been approved which will allow for mixed-use residential,
office and retail development; new multi-family developments, and the redevelopment
of Twin Peaks Mall, soon to be Village at the Peaks.
twin peaks mall (soon to be village at the peaks)
MARKET
OVERVIEW
In recent years the area has diversified and now offers manufacturing, aerospace,
high-technology and bio health industries. High-tech makes up about 27 percent of the
Longmont employment base, and according to the Software & Information Industry
Association, the Boulder-Longmont area has the highest concentration of software-
related jobs in the nation. Additionally, with the University of Colorado nearby, the local
work force is highly educated; according to the U.S. census, the Boulder-Longmont
area ranks first nationally in percentage of residents over age 25 with a four-year
college degree.
Competitive Properties Set: Office
436 Coffman Street
351 Coffman Street
825 Delaware Avenue
Total RSF
19,995
Current Vacancy
37.3%
Total RSF
Current Vacancy
21.5%
Total RSF
31,343
Current Vacancy
31.0%
Available Space
7,468
YOC
2001
Available Space
6,300
YOC
1960
Available Space
7,100
YOC
1980
Vacant Space
7,468
Quoted Rates
$12.00 NNN
Vacant Space
6,300
Quoted Rates
$15.00 FS
Vacant Space
7,100
Quoted Rates $10.00-$12.00 NNN
MARKET
OVERVIEW
29,258
2100 Main Street
1880 Industrial Circle
1707 North Main Street
Total RSF
14,400
Current Vacancy
59.6%
Total RSF
13,400
Current Vacancy
50.0%
Total RSF
30,610
Current Vacancy
17.3%
Available Space
8,587
YOC
1984
Available Space
6,700
YOC
2007
Available Space
5,308
YOC
1973
Vacant Space
8,587
Quoted Rates
$9.00-$9.50 NNN
Vacant Space
6,700
Quoted Rates
$14.00 NNN
Vacant Space
5,308
Quoted Rates
$17.00 MG
16
350 Terry Street
longmont, CO
Competitive Properties Set: Flex
1601 Dry Creek Drive
The Campus at Longmont (33 Buildings)
Diagonal Tech Center (2 Buildings)
Total RSF
1,121,295
Current Vacancy
28.2%
Total RSF
547,149
Current Vacancy
3.0%
Total RSF
123,682
Current Vacancy
Available Space
360,661
YOC
1979 - 1998
Available Space
16,696
YOC
1982
Available Space
84,516
YOC
68.3%
1999
Vacant Space
316,670
Quoted Rates
$4.00-$10.00 NNN
Vacant Space
16,696
Quoted Rates
$6.00 NNN
Vacant Space
84,516
Quoted Rates
$10.50-$11.50 NNN
MARKET
OVERVIEW
2600 Trade Centre Avenue
2000 Pike Road
Creekside Business Park (3 Buildings)
Total RSF
256,236
Current Vacancy
36.4%
Total RSF
25,000
Current Vacancy
0%
Total RSF
28,800
Current Vacancy
0%
Available Space
28,141
YOC
1999 & 2001
Available Space
25,000
YOC
1998
Available Space
28,800
YOC
1997
Vacant Space
13,961
Quoted Rates
$10.50-$11.50 NNN
Vacant Space
0
Quoted Rates
$8.75 NNN
Vacant Space
0
Quoted Rates
Negotiable
17
Competitive Properties Set: Industrial
20 North Bowen
1110 Boston Avenue
1025 Delaware Avenue
61,792
Current Vacancy
0%
Total RSF
11,680
Current Vacancy
0%
13,962
Current Vacancy
Available Space
11,680
YOC
1995
Available Space
61,792
YOC
1965
Available Space
13,962
YOC
100%
1982
Vacant Space
0
Quoted Rates
$9.00 MG
Vacant Space
0
Quoted Rates
$6.00-$7.00 NNN
Vacant Space
13,962
Quoted Rates
$6.00 NNN
MARKET
OVERVIEW
Total RSF
Total RSF
1810 Delaware Place
Total RSF
14,550
Current Vacancy
100%
Available Space
14,550
YOC
1994
Vacant Space
14,550
Quoted Rates
$5.00 NNN
18
455 Weaver Park Road
1285 South Fordham Street
Total RSF
73,383
Current Vacancy
31.3%
Total RSF
101,944
Current Vacancy
0%
Available Space
33,880
YOC
1977
Available Space
101,944
YOC
1994
Vacant Space
22,945
Quoted Rates
$4.25 - $4.95 NNN
Vacant Space
0
Quoted Rates
$4.95 NNN
350 Terry Street
longmont, CO
Sale Comparables: Office
Boulder County Sale Comparables
Sale Date
Property Address
Buyer (True) Company
Type
Year Built
Bldg SF
Sale Price
Price Per SF
B&H, LLC
Office
1997
10,164
$2,600,000
$255.80
Brickstone Partners/Forum Real
Estate
Office
1972
10,487
$1,001,928
$95.54
Walnut Offices LLC
Office
1975,
1996,
1997
49,876
$5,630,000
$112.88
Resnick Development
Office
1982
16,814
$2,785,000
$165.64
Ditzel Properties
Office
1982
16,000
$1,400,000
$87.50
First Nations Development Inst
Office
1985
10,744
$800,000
$74.46
TBW Inc.
Office
1984
15,157
$976,000
$64.27
1327 Spruce, LLC
Office
1998
11,950
$3,000,000
$251.05
1750 14th Street, Boulder
8/26/2013
2111 30th Street, Boulder
7/2/2013
2501, 2503 & 2505 Walnut Street,
Boulder (3 Buildings)
7/1/2013
777 29th Street, Boulder
7464 Arapahoe Street, Boulder
5/24/2013
2432 Main Street, Longmont
4/19/2013
2800 Arapahoe Avenue, Boulder
3/27/2013
1327 Spruce Street, Boulder
3/8/2013
19
MARKET
OVERVIEW
6/20/2013
Sale Comparables: Flex
Boulder County Sale Comparables
Sale Date
9/1/2013
Property Address
1500 Kansas Avenue, Longmont
(4 Buildings)
Buyer (True) Company
Type
Year Built
Bldg SF
Sale Price
Price Per SF
Cairn Stone Holdings
Mark Stonehocker
Flex
1985
57,600
$3,550,000
$61.63
Premier Members FCU
Flex
1982
53,122
$4,500,000
$84.71
Peregrine Ridge, LLC
Flex
1966
18,401
$3,200,000
$173.90
5735 Arapahoe LLC
Flex
1972
26,400
$925,000
$35.04
Green Light Associates LLC
Flex
2000
38,684
$1,925,000
$49.76
5495 North Arapahoe Avenue, Boulder
7/18/2013
2930 Pearl Street, Boulder
MARKET
OVERVIEW
7/3/2013
5735 Arapahoe Avenue, Boulder
3/8/2013
2021 Miller Drive, Longmont
2/7/2013
20
350 Terry Street
longmont, CO
Sale Comparables: Industrial
Boulder County Sale Comparables
Sale Date
Property Address
Buyer (True) Company
Type
Year Built
Bldg SF
Sale Price
Price Per SF
ArmadLee LLC
Industrial/
Warehouse
1993
10,048
$1,000,000
$99.52
Left Hand Brewing Company LTD
Industrial/
Warehouse
1963
10,935
$660,000
$60.36
West Meadow, LLC
Industrial
1969
100,000
$8,800,000
$88.00
Max Precision Aerospace, LLC
Industrial
Condo
1996
15,620
$1,249,600
$80.00
711 South Sunset Street, Longmont
6/4/2013
1245 Boston Avenue, Longmont
5/13/2013
3825 Walnut Street, Boulder
3/28/2013
2/8/2013
21
MARKET
OVERVIEW
1830 Boston Avenue, Unit A-E, Longmont
financial analysis
assumptions to proforma
income & expense analysis
FINANCIAL
ANALYSIS
investment evaluation
24
350 Terry Street
longmont, CO
Financial Analysis
ASSUMPTIONS FOR 350 TERRY STREET
General
Analysis Period:
1/1/2014 – 12/31/2023.
Property Size:
50,341 RSF (35,845 RSF of office and 14,496 RSF of industrial warehouse).
Inflation:
Inflation is calculated on a calendar year basis (all applicable assumptions below will inflate on 1/1/2015).
Revenue
Occupancy:
Property is assumed to be leased back by the seller for 6 months at operating expenses only. This is estimated at $3.32/SF. After this the property is
assumed to incur 6 months downtime before being released on 1/1/2015 to a single tenant as follows:
Space
RSF
Rate
Esc
Term
TI
LC
Office
35,845
$10.50
3%/Yr
10 Yrs
$25.00
6%/3%
Industrial
14,496
$ 5.00
3%/Yr
10 Yrs
$ 2.00
6%/3%
Both rates above are NNN. The leasing commissions are 6% of the net rent for the initial 5 years and 3% for the last 5 years.
Recoveries:
Operating expenses are recoverable via NNN leases.
General Vacancy:
A 5% general vacancy factor is applied starting when the above 10 year lease commences.
Operating Expenses:
Period
Leaseback
Downtime
New Tenant
Rate
$3.32/SF
$3.00/SF
$5.00/SF, increasing annually by 3%.
Capital Reserves:
$0.25/SF increasing annually at 3%.
Sale Price:
345 & 350 Terry Street: $3.2 Million
323 & 327 Coffman Street: $225,000
Other Outside Services:
$363.00
Supplies-Janitorial:
$9,232.00
Office Supplies:
$2,021.00
Repairs:
$33.00
Building Repairs:
$17,900.00
Electric:
$37,715.00
Water & Sewer:
$2,458.00
Natural Gas:
$9,120.00
Waste Disposal:
$1,344.00
Property Taxes:**
$87,031.00
Total:
$167,217.00
** All lots
25
$0.01/SF
$0.18/SF
$0.04/SF
$0.00/SF
$0.36/SF
$0.75/SF
$0.05/SF
$0.18/SF
$0.03/SF
$1.73/SF
$3.32/SF
FINANCIAL
ANALYSIS
Operating Expenses 2013 Estimate
Expenses/Capital Items
10-Year Cash Flow Income & Expense Analysis
350 terry Street
Pro forma CaSH fLow (total dollars)
January 1, 2014 - December 31, 2024
as is mo 1
year 1
year 2
year 3
year 4
year 5
year 6
year 7
year 8
year 9
year 10
year 11
annualized
Dec-2014
Dec-2015
Dec-2016
Dec-2017
Dec-2018
Dec-2019
Dec-2020
Dec-2021
Dec-2022
Dec-2023
Dec-2024
$167,136
167,136
$83,566
83,566
$448,853
448,853
$462,318
462,318
$476,188
476,188
$490,473
490,473
$505,188
505,188
$520,343
520,343
$535,953
535,953
$552,032
552,032
$568,592
568,592
$585,651
585,651
0
0
251,705
259,256
267,034
275,045
283,296
291,795
300,549
309,565
318,852
328,418
PoteNtiaL GroSS reveNue
General Vacancy
167,136
0
83,566
0
700,558
(35,028)
721,574
(36,079)
743,222
(37,161)
765,518
(38,276)
788,484
(39,424)
812,138
(40,607)
836,502
(41,825)
861,597
(43,080)
887,444
(44,372)
914,069
(45,703)
effeCtive GroSS reveNue
$167,136
$83,566
$665,530
$685,495
$706,061
$727,242
$749,060
$771,531
$794,677
$818,517
$843,072
$868,366
167,148
167,148
159,078
159,078
251,705
251,705
259,256
259,256
267,034
267,034
275,045
275,045
283,296
283,296
291,795
291,795
300,549
300,549
309,565
309,565
318,852
318,852
328,418
328,418
($75,512)
$413,825
$426,239
$439,027
$452,197
$465,764
$479,736
$494,128
$508,952
$524,220
$539,948
0
0
12,588
12,588
0
0
12,585
12,585
925,117
225,858
12,963
1,163,938
0
0
13,352
13,352
0
0
13,752
13,752
0
0
14,165
14,165
0
0
14,590
14,590
0
0
15,027
15,027
0
0
15,478
15,478
0
0
15,943
15,943
0
0
16,421
16,421
0
0
16,914
16,914
($12,600)
($88,097)
($750,113)
$412,887
$425,275
$438,032
$451,174
$464,709
$478,650
$493,009
$507,799
$523,034
$3.32
$3.32
50.0%
100.0%
$8.92
$13.92
100.0%
0.0%
For the Years ending
reveNueS
base rental revenue
totaL miNimum reNt
expense reimbursement revenue
oPeratiNG eXPeNSeS
Operating expenses
totaL oPeratiNG eXPeNSeS
Net oPeratiNG iNCome
LeaSiNG & CaPitaL CoStS
tenant Improvements
leasing Commissions
reserves
totaL LeaSiNG & CaPitaL CoStS
FINANCIAL
ANALYSIS
Net CaSH fLow
SuPPLemeNtaL Data
Property Size
min rent w/o recoveries Per occ Sf
min rent + recoveries Per occ Sf
occupancy (based on Sf drawing rent)
existing Lease rollover
Pro forma Noi as a % of yr 2 Pro forma Noi
26
© 2013, Newmark Grubb Knight Frank. All rights reserved.
($12)
50,341 rsF
$3.32
$3.32
100.0%
$9.18
$14.33
100.0%
0.0%
103.0%
$9.46
$14.76
100.0%
0.0%
106.1%
$9.74
$15.21
100.0%
0.0%
109.3%
$10.04
$15.66
100.0%
0.0%
112.6%
$10.34
$16.13
100.0%
0.0%
115.9%
$10.65
$16.62
100.0%
0.0%
119.4%
$10.97
$17.12
100.0%
0.0%
123.0%
$11.29
$17.63
100.0%
0.0%
126.7%
$11.63
$18.16
100.0%
0.0%
130.5%
350 Terry Street
longmont, CO
350 Terry Street - Investment Evaluation (start date of 1/1/2014)
350 terry Street - iNveStmeNt evaLuatioN (start date of 1/1/2014)
all Cash
Pricing
total $
$3,200,000
$/Sf
$63.57
Pricing
total $
$3,200,000
$/Sf
$63.57
Leveraged
refi Note -->
Pricing
total $
$3,200,000
$/Sf
$63.57
Pricing
total $
$3,200,000
$/Sf
$63.57
Capitalization rates
as is Cap
year 1
year 2
0.00%
-2.36%
12.93%
as is Cap with Caps adj for Cap ex & Base Cap
Gv @ 5%
-0.26%
year 1
-2.12%
base Cap rate
year 2
8.60%
8.50%
Loan $
Ltv
Start month
$3,164,544
65.00%
13
initial Ltv / terms on refinance Note
initial Ltv*
amort
rate
0.00%
30
5.50%
* all cash for 12 months.
Loan & equity information
Loan $
Loan fee $
equity $
$0
$0 $3,200,000
27
year 1
-2.35%
Cash on Cash returns
year 2
3 yr avg
5 yr avg
10 yr avg
9.46%
5.51%
7.25%
9.10%
Cash multiple
5 yr Hold 10 yr Hold
1.51
2.20
3 yr Hold
1.28
exit Cap
reversion Price /Sf
3 yr Hold 5 yr Hold 10 yr Hold
$102.60
$105.74
$119.18
internal rates of return (irr)
8.50%
8.75%
9.00%
3 yr Hold 5 yr Hold 10 yr Hold
9.98%
10.28%
10.99%
annual Price appreciation rate
3 yr Hold 5 yr Hold 10 yr Hold
5.68%
3.99%
3.20%
For appreciation include capital costs in basis through year 2
refi value for ltV purposes based on a capitalization rate of 8.50%.
year 1
-2.35%
3 yr Hold
1.20
Year 3
$685,495
$259,256
$426,239
$13,352
$412,887
$215,615
$197,272
Year 3
Cash on Cash returns
year 2
3 yr avg
5 yr avg
10 yr avg
16.35%
10.09%
13.19%
17.46%
equity multiple
5 yr Hold 10 yr Hold
1.36
1.87
Yr 1 psF
$1.66
$3.16
($1.50)
$0.25
($1.75)
$0.00
($1.75)
As is
exit Cap
reversion equity /Sf
3 yr Hold 5 yr Hold 10 yr Hold
$35.32
$40.22
$58.75
Summary of Net Cash
All Cash
Cash Flow
plus resale proceeds
equals Gross Cash
minus purchase price
equals Net Cash
% of Net Cash (Cash Flow / Appreciation)
leveraged
Cash Flow After debt Service
plus resale proceeds
Minus remaining loan balance
equals Gross Cash
minus Initial equity
equals Net Cash
% of Net Cash (CF / debt bal / Apprec)
internal rates of return (irr)
8.50%
8.75%
9.00%
3 yr Hold 5 yr Hold 10 yr Hold
13.82%
15.33%
16.86%
annual equity appreciation rate
3 yr Hold 5 yr Hold 10 yr Hold
-25.93%
-14.29%
-3.84%
3 yr Hold
($425,323)
5 yr Hold
10 yr Hold
$437,984
$2,833,325
$4,855,122
$5,003,636
$5,639,457
$4,429,799
$5,441,620
$8,472,782
$3,200,000
$3,200,000
$3,200,000
$1,229,799
$2,241,620
$5,272,782
-35% / 135%
20% / 80%
54% / 46%
3 yr Hold
5 yr Hold
10 yr Hold
$2,307,991
$2,740,067
$4,057,332
$4,855,122
$5,003,636
$5,639,457
$3,076,881
$2,979,049
$2,681,900
$4,086,232
$4,764,654
$7,014,889
$3,200,000
$3,200,000
$3,200,000
$886,232
$1,564,654
$3,814,889
175% / -190% / 115%106% / -70% / 64%
260% / -347% / 187%
FINANCIAL
ANALYSIS
3 year as is / Pro forma operating Cash flow Statement
As is
Year 1
Year 2
effective Gross revenue
$167,136
$83,566
$665,530
Operating expenses
$167,148
$159,078
$251,705
Net operating income
($12)
($75,512)
$413,825
Capital Costs (ti, lC, reserves, etc.)
$12,585 $1,163,938
Cash flow Before Debt Service
($88,097)
($750,113)
debt Service
$0
$215,615
Cash flow after Debt Service
($88,097)
($965,728)
refi proceeds
$3,164,544
Debt Service Coverage ratio
other info/assumptions
Size (rSF)
50,341
based on
Year 1
Year 2
loan Costs
1.00% NOI
resale Costs
6.00% Noi - ti & lC
rent structure
FS / NNN CFbdS
As is Occupancy
100.0% ti's & lC's equal to $2.00/SF/Yr.
As is rent
$3.32/SF (As is rent/SF based on occupied area)
Cash on cash returns and multiples include capital costs in basis through year 2
regional overview
Longmont Market Outlook
• Office
• Industrial
• Retail
Longmont Regional Overview
• Population & Demographics
• Education & Workforce
• Business Climate
• Area Industry
Boulder County Market Outlook
• Office
• Industrial
• Retail
Regional
Overview
Boulder County Regional Overview
• Economy
• Lifestyle
• Employment Base & Education
• Transportation
• Logistics
• Highways
• Regional Transit
Denver Metro Area Overview
• Population & Demographics
• Education & Workforce
• Business Climate
• Transit
• Communications Advantage
• Quality of Life
28
350 Terry Street
longmont, CO
Regional Overview
Like the other two markets, the Longmont retail market posted negative absorption in
the second quarter, with quarterly absorption of negative 16,061 square feet and yearto-date absorption at negative 15,772 square feet. Retail vacancy stands at 14.37
percent, up year-over-year from 13.80 percent.
REGIONAL MARKET OVERVIEW
Longmont Market Outlook
Office Market Outlook
There are 26 office properties in the Longmont submarket, comprised of 497,361
square feet of office space.
The Longmont office market ended the second quarter with negative 6,407 square
feet of absorption for the quarter, down from first quarter’s positive 13,279 square feet
of absorption bringing year-to-date absorption to 6,872 square feet.
Vacancy for the quarter was 15.85 percent, up from the previous quarter’s 14.56
percent but down from last year at 32.24 percent.
In the beginning of August 2012, Allen Ginsborg, the managing director and
principal of NewMark Merrill Mountain States, unveiled the preliminary plans for the
redevelopment of Twin Peaks Mall. Ginsborg announced plans to convert the Twin
Peaks shopping center into an outdoor mall. Although he declined to give an exact date
for demolishing the current structures, he said that NewMark Merrill was motivated to
move forward quickly. The development team has said it plans to spend $80 million
to $85 million in renovations. The project stalled after negotiations between NewMark
Merrill and Dillard’s, which owns its 94,000-square-foot location at the mall, fell apart.
Eminent domain proceedings began after more than a year of negotiating. Longmont
city officials, acting as the Longmont Urban Renewal Authority, won the right to force
Dillard’s to sell under eminent domain. Demolition and construction for the site is
scheduled to commence late 4th quarter 2013. The reopening is targeted for early
2015.
Longmont Industrial Market Outlook
There are 116 Industrial properties in the Longmont submarket, comprised of 1.8
million square feet of Industrial/Warehouse space and 3.8 million square feet of R&D/
Longmont Regional Overview
Flex space. The Longmont industrial market posted negative absorption in the second
Population & Demographics
quarter as well, with quarterly absorption of negative 5,290 square feet and year-toFrom 1990 to 2000, the City’s population grew by an extraordinary 38% with the influx
date absorption at 16,942 square feet. Overall, industrial vacancy stands at 19.61
of industry. According to the 2010 Census, there were 86,270 people living in the City
percent, down year-over-year from
20.35 percent, keeping with the
Boulder Office Market Balance
Boulder Industrial Market Balance
positive trends for the first half of
450,000
20.0%
600,000
20.0%
the year.
Longmont Retail Market Outlook
There are 39 major retail
properties in the Longmont
submarket, comprised of 3.8
million square feet of retail space.
29
18.0%
18.0%
500,000
300,000
16.0%
14.0%
12.0%
0
10.0%
-150,000
8.0%
14.0%
300,000
Square Feet
Square Feet
16.0%
400,000
150,000
12.0%
200,000
10.0%
8.0%
100,000
6.0%
6.0%
-300,000
0
4.0%
4.0%
-450,000
2.0%
-600,000
2006
2007
2008
2009
2010
2011
2012
2Q13
0.0%
-100,000
-200,000
2.0%
2006
Source: Newmark Grubb Knight Frank Research
Source: Newmark Grubb Knight Frank Research
Supply
Absorption
Vacancy
2007
2008
Supply
2009
2010
Absorption
2011
Vacancy
2012
2Q13
0.0%
Regional
Overv iew
There are currently four blocks
of R&D/Flex space between
20,000 and 50,000 square feet
and three blocks of more than
50,000 square feet available in
the Longmont submarket.
of Longmont as of April 1, 2010. The 2010 year-end population estimate, completed
by the City of Longmont’s Planning Division, placed the population at 87,461. Recent
research and analysis indicate the population as of December 31, 2011 was 87,850.
Based on these year-end estimates, the population of Longmont has increased by an
estimated 389 people or 0.44% since December 31, 2010. Given the current population
estimates, the City has reached approximately 78% of residential build out, and 43%
of its job capacity build out in commercial and industrial development. The Longmont
Area Comprehensive Plan (LACP) includes a projected population increase in the city to
reach an estimated 102,000 over the next 15-20 years.
Education & Workforce
Longmont’s location and lifestyle attract superior potential, well-educated employees.
Longmont has been recognized as a leader in advanced technology industries, as one
of the United States’ best places to live* and as Forbes Magazine’s highest educated
MSA in the United States. According to the U.S. census, the Boulder-Longmont area
ranks first nationally in percentage of residents over age 25 with a four-year college
degree.
Currently, Longmont has the highest percentage of its work force living in its hometown
than any other community in Boulder County. Longmont area firms access within a
30-minute commute a population base of 1,000,000 persons. This labor market area
produces more than 300,000 workers whose educational attainment level are among
the highest in the U.S.
Regional
Overview
Longmont is situated at the center of Colorado’s higher education basin. The University
of Colorado at Boulder is 20 minutes to the southwest. Colorado State University and
the University of Northern Colorado are less than a 60 minute drive to the north, while
the University of Colorado at Denver and the Colorado School of Mines are less than 30
minutes to the south. Over 100,000 students reside on these four campuses.
Business Climate
The City’s economic environment has not been impacted as badly by the national
recession as other areas of the nation due to its desirable location and a well-balanced,
diversified economic base. The City’s economy began recovery in 2010 with increases in
sales and use tax, building permit activity and primary jobs. Sales and use tax revenues
increased in 2010 over 2009. Residential building permit activity increased for the first
time in eight years, and commercial permit valuation more than doubled from the prior
year. Primary jobs increased by 3.1%.
The Longmont Area Economic Council’s (LAEC) 2010 Annual Report reveals a net
increase of 3.1%, or 336, primary jobs during 2010. Sixty-seven (67) of the 197 existing
30
primary employers (34%) expanded in 2010 while 10 new primary employers became
established in the Longmont area.
Area Industry
The Longmont area has 203 primary employers with more than 11,075 workers.
Longmont’s primary employers represent a mixture of industries. Data from the LAEC
report indicates that computer-related industries are the largest employers comprising
26% of the primary employees of the Longmont area. Other significant industry includes
software (9%); aerospace (9%); food processing (5%); biotech (5%); measurement
technology (2%); and plastic manufacturers (2%).
Sixty-two percent of Longmont area companies are headquartered in Longmont and
just over half of the primary employment (53%) is provided by advanced technology
350 Terry Street
longmont, CO
companies. Eighty-two percent of primary employers are conducting R&D. Of those
employers, 74% perform R&D services in the Longmont area, higher than the national
average and up from 66% in 2010. Thirty-seven percent of employers indicated that
their primary market was international 56% of employers were involved in exporting in
2011.
Boulder County Market Outlook
Office Market
Second quarter absorption was 14,728 square feet with year-to-date absorption of
104,758 square feet. Vacancy decreased from 13.2% in second quarter 2012 to 9.8%
this quarter. In 2013, the Boulder office market will experience moderate improvement
over 2012. Leasing activity is expected to be steady into the third quarter and slight
increases in rental rates are expected to begin in the last quarter of the year.
•
The East submarket recorded the largest positive absorption in the second quarter
at 8,452 square feet. The Longmont submarket experienced the largest occupancy
loss this quarter with absorption of negative 6,407 square feet.
•
At 9.8%, the vacancy rate for the Boulder office market is substantially lower than
the 16.5% office vacancy rate in the metropolitan Denver area.
•
The East and Longmont submarkets maintained the highest vacancy rates of the
Boulder submarkets with 19.7% and 15.9% respectively. The lowest second quarter
vacancy rates were in the Gunbarrel (3.9%) and Central (4.5%) submarkets.
•
Rental rates remained mostly stable since the first quarter 2013. Compared with
rates at the second quarter of 2012, median rental rates have increased over the
year in the Central, Downtown and South submarkets. Local brokers are reporting
that leasing activity is sluggish. However, landlords do not seem to be offering as
many concessions.
•
The Downtown submarket continues to command the highest rental rates among
the seven Boulder submarkets. The median rate for Downtown was $20.50 nnn/
sf in the first quarter. The lowest median rental rates remained in the Gunbarrel
area, at $9.00 nnn/sf.
•
No new supply was added to the Boulder office market in 2012 and no projects are
on the immediate horizon for 2013. However, new building projects are expected
to come online within the next two years, potentially adding a significant volume
of office space.
Other second quarter highlights include:
•
Rally Software Development Corp. signed a 89,000-square-foot lease for an
addition to its corporate headquarters at 3333 Walnut Street. Rally moved into
the 65,545-square-foot building in early 2011 and the addition would more than
double its size.
Industrial Market
Industrial activity in the Boulder market has been steady for the past year. In 2012,
the market posted its fifth consecutive year of growth with positive net absorption of
267,525 square feet. The industrial market started 2013 with moderate positive activity
but slowed in the second quarter, recording absorption of negative 19,948 square
feet, bringing year-to-date absorption to 20,172 square feet. Quarterly absorption was
negative 20,457 square feet in the Industrial/Warehouse sector and a flat 509 square
feet in the R&D/Flex sector.
•
The vacancy rate for industrial space continues to decline from the peak of nearly
17% in 2007. Although second quarter 2013 vacancy remained at 10.6% from
the first quarter of 2013, it was unchanged from 11.4% at second quarter last
year. The vacancy rate for the Industrial/Warehouse sector declined from 6.7% in
Regional
Overv iew
31
second quarter 2012 to 5.8% in second quarter 2013. Vacancy also decreased in
the R&D/Flex sector, dropping from 16.0% to 15.3% year-over-year.
having outgrown the space. It had purchased the 68,480-square-foot building at
650 South Taylor Avenue in the Colorado Tech Center in August 2012.
•
The industrial market is forecasted to remain on a slow recovery path as 2013 is
expected to continue with positive absorption.
•
The Central submarket realized the strongest second quarter activity with 12,930
square feet of absorption. The activity was concentrated in the R&D/Flex sector.
However, the submarket’s vacancy increased year-over-year to 4.4% from 4.2%.
•
Second quarter absorption was flat or negative in all but the Central submarket.
The Gunbarrel submarket had absorption of negative 29,077 square feet and both
the East and Longmont submarkets recorded flat absorption of negative 5,338
square feet and negative 5,290 square feet respectively this quarter.
Retail Market
The Boulder retail market continued to grow in 2012, after recording its first year of
positive absorption since 2008 in 2011. The second quarter experienced a drop in
activity with absorption of negative 27,316 square feet and year-to-date absorption
of negative 32,238 square feet. Vacancy rose slightly compared to the previous
quarter to 9.2% in the second quarter, up from 8.5% year-over-year. The Boulder MSA
was significantly impacted by the weak economic environment with higher vacancies
prompted by numerous store closures and
is slowly beginning to fill those spaces.
•
Second quarter vacancy in the Boulder industrial market stood at 10.6%. Although
the rate is fairly steady, it remains much higher than the 6.6% vacancy rate for the
metropolitan Denver area. The Longmont submarket continued to maintain the
highest vacancy at 19.6%, and the East submarket recorded the second highest
vacancy at 7.5%.
•
•
•
Second quarter asking rental rates remained mostly stable from the first quarter,
following rate declines in most submarkets during 2009. Although asking rates
have not changed drastically, there has been a slight increase over the course of
2012, hinting that rates may continue to climb as space becomes less available
and with little new construction on the horizon. Many local brokers are forecasting
leasing activity to increase in 2013 and expect rates to increase, albeit modestly,
at the end of the year.
The Central submarket recorded the
largest positive absorption this quarter
with absorption of 2,484 square
feet. Activity was flat or negative in
all of the Boulder submarkets, with
the Longmont submarket posting
the greatest loss in absorption with
negative 16,061 square feet in the
second quarter.
•
The largest transaction this quarter was the sale of the 10,000-square-foot
warehouse at 711 South Sunset Street in Longmont which traded for $1.0 million,
or $100/sf. ArmandLee LLC purchased the building from Goff Capital Partners in
June and plans to start a daycare business at the location.
Second quarter vacancy reached
nearly 9.2%, which is an increase yearover-year. It is higher than the current
metro Denver retail vacancy rate of
7.8% vacant.
•
The
Longmont
and
Downtown
submarkets, which combined occupy
nearly 76% of the total retail space in
Boulder County, continued to maintain
the highest vacancy rates at 14.4%
and 8.5%, respectively.
•
Overall, second quarter rental asking
rates remained stable in most
submarkets. However, rates are
beginning to slowly increase over
the long term, especially where new
construction is beginning. At the end of
Regional
Overview
Other second quarter highlights include:
•
•
EnerSys, a manufacturer of batteries for industrial applications, vacated 10,000
square feet at 2602 Clover Basin Drive. The small month-to-month lease on
space used for testing was the last of its remaining space after the company had
relocated most of its personnel and research to 29,000 square feet at 1751 South
Fordham last year.
Community Food Share relocated its operations from Boulder to Louisville during
the second year. The company vacated 22,160 square feet at 6363 Horizon Lane,
32
350 Terry Street
longmont, CO
2012, rate highs were up from 2011 rates in the Central, Downtown and South
submarkets.
•
Investment sales activity remains sluggish. The largest sale of the second quarter
occurred in beginning of June. The retail storefront at 1751 North Hover Road in
Longmont traded for $2.8 million, or $142/sf. The shopping center was sold by the
Pinetree Partnership.
Other second quarter highlights include:
•
•
•
Although Twenty Ninth Street was inspired to change strategy when it saw
encouraging results when it had previously converted other vacant second floor
retail spaces during 2012, it plans on maintaining its strong focus on retail. In
the second quarter, the women’s activewear store Lucy relocated into a slightly
larger space across 29th Street. The vacated space will be combined with the
space of recently closed Gymboree and The Territory stores to be remodeled for
the European clothing retailer H&M which plans to open an 18,000-square-foot
store in the fall. It will be its fifth store in Colorado. Coldwater Creek closed and
the space will be divided and remodeled. Madewell, a concept store of the J. Crew
catalog, plans to move into 3,187 square feet once remodeling is finished.
Walmart confirmed in January that it plans to open a Walmart Neighborhood
Market at 3303 30th Street in Diagonal Plaza. Construction has started on the
52,000-square-foot space, about a quarter of the size of a standard Supercenter.
It is a combination of the long-vacant Ross and PetSmart stores. The store is slated
to open later this year.
In October 2013, Trader Joe’s, the California-based specialty grocer, is expected
to open its first Colorado store in 14,000 square feet at the Twenty Ninth Street
Shopping Center at a former Applebee’s site. The Boulder site will be unique in the
sense that Trader Joe’s generally prefers to use existing retail shells or pad sites,
rather than building from the ground up. The first metro Denver store is expected
to open in the third quarter of 2013 at the southeast corner of Colorado Boulevard
and Eighth Avenue, with a possible third Colorado location to be announced later.
Boulder County Regional Overview
Economy
Boulder’s economy is showing signs of recovery and continues to outperform the state
and national economies in many areas. The strength and diversity of the local economy
is supported by the presence of the University of Colorado - a world-class research
university and the third-largest employer in the state - along with several federally
funded research laboratories, a well-educated workforce, and a high concentration of
high-tech companies. According to a report by the University of Colorado, inventions
by university researchers have led to the creation of 114 new companies in the last
two decades, including 85 operations in Colorado, and have attracted more than $5.6
billion in financing and $5.3 billion to the state’s economy in 2011.
The Boulder MSA continues to boast lower unemployment rates than the nation and the
State of Colorado. Boulder’s unemployment rate for June (based on preliminary figures)
was 6.1%, which is considerably lower than the 7.6% rate for the U.S. and 7.0% rate for
Colorado.
The Boulder MSA posted positive, average annual job growth through June of 3.8%. This
increase is in line with the past two years. 2011 was the first year to post positive growth
after two consecutive years of negative annual job growth, down 4.9% in 2009 and
0.3% in 2010. Seven of the ten non-farm employment sectors showed improvement
based on June 2012 and 2013 comparisons. The professional & business services and
trade, transportation & utilities sectors recorded the strongest job gains, up 4.8% and
Regional
Overv iew
33
3.9%, respectively. The financial activities and mining, logging & construction sectors
lost jobs.
The results of the University of Colorado’s Leeds Business Index shows a continuing
increase in the confidence of local Boulder business leaders have toward economic
growth. The third quarter 2013 reading of this forward-looking index stood at 60.5, up
from the second quarter 2013 score of 58.1 (a score of 50 is neutral). Expectations
for all of the measured categories, including the national economy and industry hiring
plans, were above the 50 mark on the index. While the expectations confidence for the
state of Colorado continued to be rated higher than the nation, the most significant
change for the quarter was the increased confidence in the national economy.
“The index is very strong – universally strong – a significant uptick in confidence,” said
economist Richard Wobbekind, executive director of the Business Research Division at
the Leeds School. “The previous second quarter index was solid, and we were saying,
‘This looks like good momentum and it’s going to continue.’ This index reading is even
stronger than we expected.”
Regional
Overview
The City of Boulder has received numerous positive accolades for its quality of life,
economic foundation and business environment. Ken Lund, executive director of the
Colorado Office of Economic Development and International Trade, said that there was
“no better example for the rest of the state than Boulder” and cited the city’s focus on
research and innovation as one of the key ways Colorado can improve its economic
performance. Boulder was ranked #4 on Kiplinger’s list for “10 best cities for the next
decade” and was praised as a “wealthy, intellectual hot spot where environmental and
scientific ideas blossom into businesses.” Boulder was also named as “America’s best
city for tech startups” in Bloomberg Businessweek report as well as one of “10 best
places to live in America” by RelocateAmerica. A survey of tech employers deemed
Boulder the nation’s third techiest city, and reported that the average tech-industry
worker in Boulder earned $93,600, which is 79% more than the metro Denver area’s
average private sector wage.
The announcement of a satellite U.S. Patent and Trademark Office in Denver could
further bolster the economy. Boulder County ranks 30th In the nation in the number
of patents granted from 2006 to 2010. In addition to cutting down the current average
of a three-year waiting period for patent approval, the Denver office could reduce travel
expenditures for local firms, increase education about the process and potentially result
in stronger patents from more one-on-one interviews. A study by researchers at the
University of Colorado estimated that the economic impact from a satellite patent office
in Denver would benefit the state economy as a whole by $439 million in the first five
years.
34
Lifestyle
Boulder is a community with high ethical standards, focused on preserving natural
open space, a clean and beautiful environment, and a reduction in pollution. In 1978
the Boulder Valley Comprehensive Plan was adopted, focusing on growth, development,
environmental protection, economic development, affordable housing, neighborhood
character and transportation.
The result of this plan is a supply
constraint with a limited number
of investment opportunities.
Rated the “#1 Sports Town in
America” by Outside Magazine,
Boulder offers countless yearround recreational activities.
Nestled along the foothills,
Boulder is centrally located and
offers quick access to Eldora
Ski Resort and Rocky Mountain
National Park. Downtown Denver
is just 35 minutes away and
Colorado’s world-renowned ski
resorts are a few hours away.
Boulder features more than 30
art galleries, 4 local museums,
400 restaurants featuring local,
regional and international foods,
and 32 movie & stage theaters
and many festivals, including the
Colorado Shakespeare Festival,
Colorado Music Festival and
Chautauqua Summer Festival.
University
Boulder
of
Colorado
at
The University of Colorado
(CU) continues to grow and
incubate high tech and biotech
companies and Boulder offers
a highly talented and educated
350 Terry Street
longmont, CO
workforce. To fuel economic growth, CU has developed a master plan for the school’s
east campus. The vision calls for a research park with life science.
Employment Base
Education
Colorado ranks as the second most educated state in the country with 39% of the adult
population having completed a bachelor’s degree or higher. In the northwest quadrant
of the Denver metropolitan area, including Boulder County, that number approaches,
if not surpasses, 50%. This is one of the highest percentages of high educational
achievement within any metropolitan area across the country.
Transportation
Airports
Rocky Mountain Metropolitan Airport
Owned and operated by Jefferson County, this airport is a corporate reliever for Denver
International Airport. The airport is open 24-hours a day and provides a 9,000-foot
runway, customs and full support services. The airport is also home to such corporate
aviation facilities for Ball Corporation, Level 3 Communications, Quizno’s, and Leprino
Foods.
Denver International Airport
Logistics
Commercial air shipping is available from a number of carriers at Denver International
Airport (DIA). Commercial cargo carriers include FedEx, UPS, DHL, and Airborne,
although nearly half of DIA’s air cargo is handled by passenger carriers. There are
approximately 50 freight forwarders and customs brokers that serve the Boulder area.
Freight rail service is available through two major transcontinental railways and more
than one dozen motor freight carriers maintain facilities in Boulder.
Highways and Major Arterial Access
Bounded by major regional highways and limited access highways, the properties are
easily accessible from all major points in the Denver and Boulder metro areas. The
asset has convenient access to the U.S. 36 (Denver-Boulder Turnpike). The Northwest
Parkway connecting at U.S. 36 (near FlatIron Crossing) and 96th Street to I-25 and
E-470 at approximately 158th provides residents and businesses with easy 20-30
minute access to the Denver International Airport (DIA).
Regional Transit/Commuter Rail
In addition to being easily accessed via highways and major arterials, the property is
easily accessible by an expanding mass transit system. The Northwest Rail, part of the
FasTracks project, is a planned 41-mile high-capacity, fixed-guideway transit corridor
with Longmont being the northern terminus of the Northwest Corridor from Denver,
Denver International Airport (DIA) is approximately a 45 minute drive from the asset.
It is the most important intermodal transfer point in the region, serving as a gateway
for air passenger traffic, air, and truck freight operations to national and international
markets and destinations. Situated on 34,000 acres or 53 square miles, DIA has four
north-south runways and two east-west runways. It has non-stop service to more than
120 cities, including London and Frankfurt.
35
Regional
Overv iew
DIA’s efficient airfield and its 39-acre cargo ramp make freight handling easy, the airfield’s
prime cargo asset is the absence of operational curfews. The airport’s dedicated cargo
carriers and integrators—FedEx, UPS, DHL, and Integrated Airline Services—are in three
buildings at the south side of the airfield. Nearby is the U.S. Postal Service and United
Airlines’ cargo facility. West of the airport’s freight operations is WorldPort at DIA. Two
50,000-square-foot buildings offer space for freight forwarders, customs brokers,
and other businesses that contribute to an efficient air cargo operation in Denver. A
portion of this area is a Foreign Trade Zone. Within 20 miles of the airport are 50 freight
forwarders and customs brokers.
passing through North Denver, Adams County, Westminster, Broomfield, Louisville, and
Boulder.
In the early 90s, the city reached out to the community for help in designing transit service
that worked for them. Their ideas and enthusiasm helped launch Boulder’s Community
Transit Network and gave birth to the Eco Pass program. Based on their input, the city
launched the HOP service in 1994 to connect major activity centers. Buses come every
10 minutes or less. The vehicles have big windows, seating that promotes conversation,
on-board music and branding with bold and distinctive graphics. The HOP’s ridership
exceeded projections within the first six weeks of service. The success of the HOP was
followed by the SKIP on Broadway, which transformed service along the city’s busiest
transit corridor and almost tripling ridership.
The JUMP, BOUND, STAMPEDE, DASH and BOLT followed, offering both local and regional
services.
Most transit services in Boulder are operated by RTD, the region’s transit agency, primarily
funded by a 0.6 cent regional sales tax. The HOP is operated by Special Transit, a local
non-profit, whose partnership on this innovation helped build the credibility to expand to
other services. The city partners with RTD and the university students to fund the HOP,
and subsidizes RTD services on the JUMP and BOUND to maintain high frequencies. The
University of Colorado and Boulder County also augment RTD’s local and regional services
to make transit a convenient and attractive option. As is the case across the country,
transit funding is a major challenge, with service cutbacks and rate hikes a current reality.
Regional
Overview
Denver Metropolitan Area Market Overview
The Denver metropolitan area consists of seven counties that comprise 56% of the state’s
total population, 62% of the state’s jobs and 58% of the state’s retail activity. With a
relatively low cost of living, the Denver metropolitan area attracts both large and small
companies from a vast array of industries. Industries include aerospace, biosciences,
software development, financial services and energy. “Our regional economy continues
to perform better than the rest of the country,” stated Tom Clark, executive vice president
for the Metro Denver Economic Development Corporation (Metro Denver EDC). Despite
a volatile stock market, and continued weakness in the housing sector, Colorado is
weathering the economic impacts better than its neighboring states, according to data
compiled by the Metro Denver EDC. Over the past two decades, the Denver metropolitan
area has successfully diversified its economy with industries like aerospace, bioscience,
and energy.
Population & Demographics
Denver is in a significant growth stage, with a steady population growth since the 1980s. In
the past decade alone, Metro Denver averaged approximately 2.5% in population growth
each year. Fueled by continued population growth, a cumulative estimated growth rate
36
of 26 percent by 2025 is expected. A large portion of Denver’s population growth is due
to in-migration of highly educated workers from other states; there is an estimated netmigration of 16,849 residents in 2013, bringing the population to 2.92 million. From 2002
to 2012, Denver’s population realized an average annual increase of 1.4%. According
to the Metro Denver Economic Development Council, the Denver metro population is
expected to increase to more than 3.2 million people by 2020.
Education And Workforce
Denver and the surrounding areas have over 14 higher educational institutions within
the city limits including: University of Denver, Colorado School of Mines, Metropolitan
State College, University of Colorado and Community College of Denver. Denver is the 4th
most literate city in the country according to a study released in December of 2007 by
Central Connecticut State University. Denver has been in the top 10 every year since the
study’s inception in 2003. In Denver, over 90% have achieved a high school diploma and
approximately 36% of Denverites
have earned a bachelors degree
or more advanced degree. Denver
continues to attract and produce
well-educated,
young,
urban
professionals.
Business Climate And Tax Information
Colorado businesses continue
to enjoy a favorable tax climate.
Denver ranks the third lowest for
combined total business taxes,
according to a Vertex tax study of
27 states. Colorado has one of
the lowest average tax burdens
in the US, with an average total
tax burden of 9.1% of income for
the average resident. The average
corporate income tax paid per
capita is only $68, the third lowest
among states levying a corporate
income tax.
Transit
Denver boasts one of the
most
comprehensive
public
350 Terry Street
longmont, CO
transportation systems in the country. Since 2000, Denver has expanded the major
metro freeways through the TREX project and opened a commuter light rail system. The
southeast light rail line travels parallel to I-25 from downtown Denver into the southern
part of the Denver metro area past the Tech Center, with a connection to a spur on
I-225. There are plans to expand the light rail system into the northern and western
corridors in the future. This system has made a significant difference in how Denver’s
workforce, visitors and suburban residents travel through the metro area. The hub for
this transit system is Union Station located in the heart of LoDo—the name locals have
given the Lower Downtown district of Denver. In the near future, Union Station will be
transformed into a transportation hub—serving the needs of residents, tourists and rail
commuters. The current transit system connects event locations including the Pepsi
Center and INVESCO at Mile High and the downtown Denver area to the southeast side
of the metro area.
Communications Advantage
Denver is the most efficient site for fiber optics transmission in all of North America
due to the one-bounce capabilities from a central location. The city’s geographic
location makes it possible to offer one-bounce satellite uplinks that provide real-time
connections to six continents in one business day.
and annual boat show.
Denver is also one of only two cities in America with eight professional sports teams.
Denver is also home to six professional sports venues. In the past year, Denver has
hosted the 2008 NCAA Men’s Basketball Tournament, the 2008 NCAA Frozen Four
Championship, the 2008 Big XII Track & Field Championships, and the 2009 U.S.
Curling Nationals. In March, Denver was host to Sportaccord 2009. The International
Sports Convention brings together members of the International Sports Federations;
the International Olympic Committee (IOC); National Olympic Committees, bidding
and host cities; event organizing committees; and businesses. This was the first time
Sportaccord was hosted in North America.
Denver has the nation’s largest city park system (850 miles of urban trails) and
is only minutes from the Rocky Mountains which provides its residents and tourists
recreational activities all year-round. Denverites enjoy skiing, riding bicycles, running,
hiking, camping, fishing and boating in the many reservoirs in the metro Denver area.
Quality of Life
In addition to economic stability and an easily accessible transit system, Denver offers
many options for recreation, sports and cultural activities. It offers world-class arts and
entertainment, including musicals and ballet to the many museums and historic sites
throughout the entire metropolitan area. Denver has 30 theaters and over 100 cinemas
including the newly renovated Denver Art Museum and the Colorado Ballet. Denver has
festivals throughout the year and the touring conventions such as the annual auto show
Regional
Overv iew
37
CONFIDENTIAL MEMORANDUM & DISCLAIMER
Newmark Grubb Knight Frank and Dean Callan & Company Inc. (“Agent”) have been
engaged as the exclusive agent for the sale of 350 Terry Street in Longmont, Colorado
(the “Property”), by the owner of the Property (“Seller”).
The Property is being offered for sale in an “as-is, where-is” condition and Seller and
Agent make no representations or warranties as to the accuracy of the information
contained in this Offering Memorandum. The enclosed materials include highly
confidential information and are being furnished solely for the purpose of review
by prospective purchasers of the interest described herein. Neither the enclosed
materials nor any information contained herein is to be used for any other purpose or
made available to any other person without the express written consent of the Seller.
Each recipient, as a prerequisite to receiving the enclosed, should be registered with
Newmark Grubb Knight Frank or Dean Callan & Company Inc. as a “Registered Potential
Investor” or as “Buyer’s Agent” for an identified “Registered Potential Investor.”
The enclosed materials are being provided solely to facilitate the Prospective Investor’s
own due diligence for which it shall be fully and solely responsible. The material
contained herein is based on information and sources deemed to be reliable, but no
representation or warranty, express or implied, is being made by Agent or Seller or any of
their respective representatives, affiliates, officers, employees, shareholders, partners
and directors, as to the accuracy or completeness of the information contained herein.
Summaries contained herein of any legal or other documents are not intended to be
comprehensive statements of the terms of such documents, but rather only outlines of
some of the principal provisions contained therein. Neither Agent nor Seller shall have
any liability whatsoever for the accuracy or completeness of the information contained
herein or any other written or oral communication or information transmitted or made
available or any action taken or decision made by the recipient with respect to the
Property. Interested parties are to make their own investigations, projections, and
conclusions without reliance upon the material contained herein.
Seller reserves the right, at its sole and absolute discretion, to withdraw the Property
from being marketed for sale at any time and for any reason. Seller and agent each
expressly reserves the right, at their sole and absolute discretion, to reject any and all
expressions of interest or offers regarding the Property and/or to terminate discussions
with any entity at any time, with or without notice. This offering is made subject to
omissions, correction of errors, change of price or other terms, prior to sale or withdrawal
from the market without notice. Agent is not authorized to make any representations or
agreements on behalf of Seller.
Seller shall have no legal commitment or obligation to any interested party reviewing
the enclosed materials, performing additional investigation and/or making an offer to
purchase the Property unless and until a binding written agreement for the purchase
of the Property has been fully executed, delivered, and approved by Seller and any
conditions to Seller’s obligations thereunder have been satisfied or waived.
By taking possession of and reviewing the information contained herein, the recipient
agrees that (a) the enclosed materials and their contents are of a highly confidential
nature and will be held and treated in the strictest confidence and shall be returned
to Agent or Seller promptly upon request; (b) the recipient shall not contact employees
or tenants of the Property directly or indirectly regarding any aspect of the enclosed
materials or the Property without the prior written approval of Agent or Seller; (c) the
recipient shall make no attempt to visit the Property and/or grounds without the prior
written approval of Agent or Seller; and (d) no portion of the enclosed materials may be
copied or otherwise reproduced without the prior written authorization of Seller or Agent
or as otherwise provided in the Confidentiality
Agreement executed and delivered by the
Prospective Investor(s) to Agent.
Seller shall be responsible for any commission
due to Agent in connection with a sale of the
Property. Each Prospective Investor shall be
responsible for any claims for commissions
by any other broker or agent in connection
with a sale of the Property if such claims arise
from acts of such Prospective Investor or its
Investor’s Broker. Any Investor’s Broker must
provide a registration signed by Prospective
Investor acknowledging said broker/agent’s
authority to act on its behalf.
Scott Garel
303.260.4331
[email protected]
Please note: All showings of the Property must
be arranged in advance with Newmark Grubb
Knight Frank or Dean Callan & Company Inc.
Becky Callan Gamble
303.449.1420 x12
[email protected]
If you have no interest in the Property at this
time, please return this Offering Memorandum
immediately to any of the contacts listed on this
page.
Hunter Barto
303.449.1420 x16
[email protected]
Corey Linton
303.260.4314
[email protected]
Dryden Dunsmore
303.449.1420 x19
[email protected]
Scott Garel
303.260.4331
[email protected]
Corey Linton
303.260.4314
[email protected]
Becky Callan Gamble
303.449.1420 x12
[email protected]
Hunter Barto
303.449.1420 x16
[email protected]
Dryden Dunsmore
303.449.1420 x19
[email protected]