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Ten Eleven Pearl LLC, a local team led by Denver-based Nichols Partnership Inc., purchased the properties at 1048 Pearl St. and 1023 Walnut St. from Karlin Real Estate, a Los Angeles-based real estate investment and development group. The deal was announced Dec. 13.
Nichols Partnership’s president, Randy Nichols, said his company has had an eye on the property for several years, and even had it under contract before Karlin purchased it in 2010 for $9 million.
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“We think this is one of the best sites in Colorado. It’s downtown Boulder, where everybody wants to be,” Nichols said. “We’ve always had an interest in it, and we’ve kept in touch with Karlin.
Nichols said the project, which Karlin named Eleventh and Pearl, will be built “exactly” as Karlin planned. Karlin planned to demolish the existing buildings and a 175,000-square-foot mixed-use building with 125,000 square feet of Class A office and 50,000 square feet of retail and specialty-use space, according to a news release. The expected cost of the project is $80 million.
Eleventh and Pearl has been approved by the city after a site review process that resulted in three Planning Board meetings and revisions to the original design. The new owners plan to begin demolition and construction in the fourth quarter of 2013 and have the project complete by early or mid-2015.
Nichols declined to disclose the other investors, but he did say Boulder is well represented in the company.
“The majority of the equity is coming from Boulder-based organizations and investment firms,” Nichols said. “This is very much a Boulder project.”
Lynda Gibbons of Boulder-based Gibbons-White Inc. helped put together the deal and represented Karlin. She helped Karlin purchase the property in 2010 and was in charge of leasing the existing building and finding tenants for the future building. She will remain the broker, and Gibbons-White will manage the property.
The deal came together over several months, she said. In its early stages, a joint venture was a possibility, but that changed.
“It just came out in the end that it worked better for it not to be a joint venture,” Gibbons said.
The new owners are trying to find tenants and have received a lot of interest, Gibbons said. A few letters of intent have been signed with prospective tenants, she said, but it is too early to sign leases.
For the office space, the ownership group is open to having a single large tenant or having multiple tenants, Nichols said. It hopes to capitalize on the lack of space downtown and Boulder’s thriving startups.
“You have all these Boulder-based companies,” Nichols said. “They start, grow up and become real companies, and when they get large enough, they have to move on. … This is a way of capturing some of those great companies.”
Potential tenants for the retail space are a mix of local and national retailers, Gibbons said.
Shears Adkins Rockmore, a Denver-based architectural firm, and JVA, a Boulder-based engineering firm, will continue to provide design services.
Former owners Karlin Real Estate recently sold two other Boulder properties to local investors in a $5.1 million deal. The buildings were at 5450 Western Ave., a 25,432-square-foot building, and 1780 Conestoga St., a 24,898-square-foot building.
Karlin’s approach is to buy existing and often underperforming properties, significantly upgrade them and then sell for a profit, Gibbons said. In buying the former Daily Camera site, Karlin was taking advantage of an unusual opportunity, Gibbons said.
“They felt this was a great value-add play,” Gibbons said, “even though it didn’t fit in the normal scope of their company.”
Nichols said he kept his eye on the project expecting that Karlin would at some point want a partner or buyer once it completed the entitlement process.
Karlin’s vice president, Vicky Canto, wrote in an email that the company remains active in Colorado, looking for new deals.
“We are actively looking for investment opportunities in Colorado and look forward to continuing to invest in such a great market,” Canto wrote.