Skip to content

Fosterscoachhousetavern

Consummate Home Connoisseurs

  • Real Estate
    • Garden
    • Home Design
  • Decoration Kitchen
  • Decoration Badroom
  • Decoration Living Room
  • Home Improvement
  • Toggle search form
  • 6 Steps to Getting a Wildflower Garden Growing Garden
  • 4 Couple’s bedroom wall decor ideas to brighten your room Decoration Badroom
  • Home & Design Awards 2022 Home Design
  • The $11 Amazon Pillow Covers That Instantly Upgrade Any Room Decoration Badroom
  • Bitcoin payments for real estate gain traction as crypto holders seek monetization Real Estate
  • Agatha Christie exhibition at the Isokon flats Decoration Kitchen
  • Tulsa Garden Railroad Club Hosting Backyard Tour; Recruiting Members Garden
  • Blight or a meadow? Bridgeport orders bulb company to mow garden Garden

How the sale of a piece of Flatiron Park could impact its future and Boulder’s real estate market

Posted on July 27, 2022 By admin

Editor’s note: An earlier version of this article misspelled Erik Abrahamson’s name.

Four months ago, the already-hot Boulder commercial real estate market saw what could be one of its most consequential deals yet, when BioMed Realty LLC purchased a 1-million-square-foot portfolio in the Flatiron Park business campus — located east of 55th Street between Arapahoe Avenue and Pearl Parkway — for $625 million.

That was the richest commercial real estate sale in Colorado history, $232 million more than the previous record. But the sale carries significance far greater than the sticker shock of the price, said Becky Callan Gamble, president of commercial brokerage Dean Callan & Co. BioMed is one of the largest life-sciences real estate firms in the country — it has nearly 15 million square feet in its portfolio — and it purchased the Flatiron Park portfolio with the intention to fill about 50% of it with lab space. It’s a sign that the biggest players in the life-sciences space want to be in the Boulder market, Gamble said, and it could be a massive boon to the industry.

“They are a very sophisticated landlord in the life-sciences market,” Gamble said. “What they bring is just a level of experience that we haven’t really seen in the life-sciences category. In the big picture, it’s great. They can attract different companies to come to Boulder from outside the area because of what they’re going to create. It’s nothing but good for all of Boulder.”

Becky Gamble, president of Dean Callan & Co., said BioMed Realty LLC's buy into the Boulder market is a boon for the city because the landlord brings a level of experience in the life-sciences real-estate category not previously seen locally. (Cliff Grassmick/Staff Photographer)
Becky Gamble, president of Dean Callan & Co., said BioMed Realty LLC’s buy into the Boulder market is a boon for the city because the landlord brings a level of experience in the life-sciences real-estate category not previously seen locally. (Cliff Grassmick/Staff Photographer)

Gamble is one of the leasing agents for Flatiron Park along with Dean Callan & Co.’s Beau Gamble and Hunter Bartow, as well as Erik Abrahamson of global real estate firm CBRE.

The Denver-Boulder market has the eighth-biggest life sciences market in the country, according to research by the international commercial real estate services company Jones Lang Lasalle Inc. That places the region on par with markets such as Los Angeles, Philadelphia and Seattle, but far behind the four largest: Boston, the San Francisco Bay area, San Diego and Raleigh-Durham, N.C.

However, as life-sciences markets all across the country have grown over the past several years, Boulder has begun to become somewhat of a sweet spot: It’s a desirable place to live and work, with a strong research university in the backyard, but commercial rent has not yet climbed to the astronomical levels seen in the biggest markets.

That’s led to an increase in demand for lab space in Boulder, as companies try to capitalize on those advantages. At the end of the first quarter of 2022, according to research by CBRE, Boulder had about 1.15 million square feet of life sciences real estate inventory with no vacancies. In short, it’s a landlord’s market.

“Right now, there is no supply on lab space,” said Tod Brainard, director, partner and chief investment officer at Boston-based real estate firm Tritower Financial Group LLC. “There’s no space available. Any tenant that wants lab space built, they have to go to an existing lab space landlord to have it done or leave Boulder altogether and pay for it themselves.”

Tritower has purchased the building at 2300 55th St., along with two structures on Sterling Drive that it’s converting into lab space and marketing together as Boulder Labs. When those conversions are complete, they’ll add about 100,000 square feet of life-sciences real estate to the market into a market that has virtually no supply.

By purchasing the Flatiron Park portfolio and converting it to 50% lab space, BioMed will be doing the same thing on a larger scale.

Jon Bergschneider, president of West Coast markets for BioMed, said the company had been waiting for an opportunity to establish a sizable presence in Boulder.

“Boulder itself has long been a market we watched with great interest and enthusiasm,” Bergscheinder said. “It has a lot of unique characteristics: the university, a thriving venture-capital community, an educated workforce, life sciences and tech coexisting. We see that in some of the more exciting markets. It wasn’t until Flatiron Park came to market that we saw the opportunity for growth in size and scale.”

BioMed had previously been in Boulder in a limited capacity — until 2018 it owned the pharmaceutical campus at 3200 Walnut St. then occupied by Array BioPharma Inc. — but the limited size of that campus inhibited its ability to expand its business model in the market, Bergschneider said. (Biomed sold that campus to Tritower for $52.3 million — before Pfizer acquired Array  — with Tritower selling it in January 2021 to Invesco Real Estate for $99 million.)

A construction project at 2400 Central Avenue is part of the $625 million sale in Flatiron Park business campus to BioMed Realty LLC. The building is being modified to suit a tenant. (Cliff Grassmick/Staff Photographer)
A construction project at 2400 Central Avenue is part of the $625 million sale in Flatiron Park business campus to BioMed Realty LLC. The building is being modified to suit a tenant. (Cliff Grassmick/Staff Photographer)

In the time between BioMed selling the Array/Pfizer campus and acquiring the Flatiron Park portfolio, “the industry as a whole changed,” Bergschneider said. “With the amount of investment in life sciences, we saw a rising tide in all of our key markets. Boulder was one that continued to receive strong positive funding. It continued to see increased demand and great market fundamentals.”

Now that BioMed has the Flatiron Park portfolio, it can begin the process of converting some of the existing office space there to lab space. Bergschneider said lab space makes up about 20% of the current square footage in the portfolio, and BioMed’s goal is to increase that to 50%. The remaining 50% of the portfolio will remain filled with tech and other tenants.

“We want to serve both life sciences and tech,” Bergschneider said. “We like to see a mix of those types of varying clients so we have a strong ecosystem.”

One of those tech tenants is likely to soon be Apple Inc., which is poised to take over nearly a quarter-million square feet of Flatiron Park.

For the buildings that will be redeveloped into life-sciences space, though, that will be the surest way to bring more life-sciences real estate to market given the city’s lack of vacant land.

“I think it’s no secret that Boulder is an infill community,” said Charles Ferro, development review manager in the city’s planning department. “From a policy perspective, there was a lot of intention around urban growth that precluded the city from sprawling. Most of the development we see in Boulder is redevelopment or adaptive reuse. As an infill community, finding raw ground is always challenging. That was a deliberate policy, but we are seeing a lot of adaptive reuse.”

For a landlord such as BioMed, that doesn’t necessarily present an obstacle.

“I don’t necessarily think that Boulder is limited by the lack of vacant land,” Bergschneider said. “We’ve got a lot of tremendous redevelopment in our portfolio. We just have to be selective in those redevelopments so you get a high-quality asset. We’ve seen big chunks of San Diego and San Francisco succeed with redevelopment. There’s more than enough room for it to grow, but it has to be thoughtful.”

Part of what made Flatiron Park such an attractive asset was that many of the buildings there “lend themselves to conversion,” Bergschneider said. Lab space requires more power and has greater HVAC and plumbing needs than traditional office or tech space. There has to be space above the ceiling to house all that. The building has to be sturdy enough to support that load. It may need service and loading docks. Not all buildings have those attributes.

“The downtown assets in Boulder that are over three stories, pretty much none of those would work for lab space,” Brainard said.

At Flatiron Park, BioMed plans to invest more than $200 million in converting buildings to lab space. With the lack of supply in the market, and investors putting that much money into improving the buildings, that puts landlords in a position where they can command higher rent prices.

The building at 5718 Central Avenue also was included in the $625 million BioMed Realty LLC purchase. The landlord is spending another $200 million converting a portion of its space to laboratory space. (Cliff Grassmick/Staff Photographer)
The building at 5718 Central Avenue also was included in the $625 million BioMed Realty LLC purchase. The landlord is spending another $200 million converting 50% of the purchased square-footage to laboratory space. (Cliff Grassmick/Staff Photographer)

In fact, lease agreements like this — where the landlord invests a lot of capital into improving the space for the tenant, then gets a high rental rate — are common in the bigger life-sciences markets. They’ve been rarer in Boulder, but investors like BioMed and Tritower are trying to change that.

Not only do those rental packages produce higher returns for the landlords, but they also often benefit the tenants who don’t have to invest their own money into buying real estate or into improving a building they don’t own.

“The dynamic you have now is that tenants can use their scarce capital to invest in a lab buildout and have lower base rent, or they can use that money to hire people,” Brainard said. “It’s better to use their capital on brainpower and let your landlord, who has a cheaper cost of capital, pay for the expensive lab tenant improvements. A lot of tenants are learning that lesson now, and their venture capital investors agree with us. The tradeoff is higher rents and that creates initial sticker shock, but it’s cheaper for tenants in the long run. We think it’s a better use of their capital. This is how it’s done in all the leading life sciences markets: Boston, San Diego and San Francisco.”

Said Bergschneider: “The mission-critical science that requires funding from venture capital, initial public offerings, whatever — all of that comes at a cost. What we are able to do is work with our clients, our tenants, and offer them the option for us to invest into the real estate, the reusable asset, while they focus their investment where the high return on investment is. That’s a message that is resonating well among executive teams and boards. In challenging economic times like we’re in right now, the value proposition we bring is pretty compelling.”

And given the lack of supply, these landlords with deep pockets will likely be able to wait until a tenant comes along who can pay the rent the market is saying they should get — and that could mean more prestigious life sciences companies coming to Boulder.

“We’re really excited about reentering the market,” Bergschneider said. “We’re here to help that market succeed and grow.”

Said Gamble: “These are big institutional buyers that have the commitment to the community, the commitment to the park and the commitment to the tenants that they are going to create something special. It’s great for all fronts.”

This building in Flatiron Park business campus in Boulder is being renovated to suit a client. (Cliff Grassmick/Staff Photographer)
This building in Flatiron Park business campus in Boulder is being renovated to suit a client. (Cliff Grassmick/Staff Photographer)
Real Estate Tags:Boulders, estate, Flatiron, Future, Impact, market, Park, piece, Real, sale

Post navigation

Previous Post: Why People Aren’t Spending As Much Time In Home Depot As They Once Did
Next Post: How to decorate kitchen counters: 10 ways to a functional and chic space

Related Posts

  • School’s Out At Hundreds Of Closing College Campuses, But Real Estate Is In Session Real Estate
  • Palm Beach Real Estate Is So Hot, at Least 22 Homes Sold for $40M-Plus Since Covid Real Estate
  • DFW Airport business park sells to real estate trust Real Estate
  • Why you should find your next home before selling a house Real Estate
  • A realtor explains what is going on in this bonkers real estate listing. Real Estate
  • Rocket announces discount real estate brokerage Real Estate

Recent Posts

  • Why you should order a wine cooler online
  • A robust example of small-space gardening is on Lakeside Garden Tour
  • School’s Out At Hundreds Of Closing College Campuses, But Real Estate Is In Session
  • 18 Cozy Living Room Decor Ideas and Designer Examples
  • Bear and Breakfast Prestige Guide
  • DIY whizz shares a cheap trick to make a stunning living room decoration with a 99p plate from Home Bargains
  • Home Design: Cheery Chateau – Tampa Magazine
  • Man Gives Chunk the Groundhog His Own Garden to Eat Crops

About Us

  • Contact Us
  • Advertise Here
  • Privacy Policy
  • Sitemap

Archives

  • August 2022
  • July 2022
  • September 2021
  • August 2021
  • July 2021

Categories

  • Decoration Badroom
  • Decoration Kitchen
  • Decoration Living Room
  • Garden
  • Home Design
  • Home Improvement
  • Real Estate

Amazon Architectural bedroom City Commercial Decor decorate Decorating Decoration design Dorm dream estate fall family Furniture Garden Gardens Home Homes house housing ideas Improvement interior Kitchen launches living Lowes market Money News Plant projects Real room Sales Show tips Top Tour trends Wall ways White

  • Partner links

  • Visit Now

    Travel
    • Lumber makers see comeback for do-it-yourself home improvement projects Home Improvement
    • Fascinating fasciation: Roanoke Island garden experiences rare phenomenon – The Coastland Times Garden
    • Home interior decor tips: Living room rug ideas to amp up your space Decoration Badroom
    • How to Plan Your Garden Like an Interior Decoration Kitchen
    • Couple Buys Abandoned House in Japan for $30K and Renovates It: Photos Decoration Kitchen
    • Turn old utensils in your kitchen to decor elements Decoration Kitchen
    • Six home improvement projects that provide great return on investment | Opinion Home Improvement
    • This week Bjarke Ingels launched a home design company Home Design

    Copyright © 2022 Fosterscoachhousetavern.

    Powered by PressBook News WordPress theme

    We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
    Cookie settingsACCEPT
    Privacy & Cookies Policy

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
    Non-necessary
    Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
    SAVE & ACCEPT