Top 10 commercial deals in 2006

Howie Mandel’s catchphrase from NBC’s popular game show could easily apply to the Boulder Valley real estate market in 2006.

There were plenty of deals throughout the year, particularly in the commercial sector.

Meanwhile in the local housing sector, some buyers were wondering whether their purchases with interest-only loans and adjustable-rate mortgages were really as much of a deal that they seemed to be several years ago.

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Appreciation rates continued to be steady around 4 percent to 5 percent, but some figures showed signs of weakness, such as the Office of Federal Housing Enterprise Oversight, which reported an annual change in of the Boulder-Longmont house price index of just 1.68 percent for the third quarter of 2006.

The number of existing home sales in Boulder and Broomfield counties was down 7.6 percent through November 2006, according to the latest numbers from the Boulder Area Realtors Association. And adding to increased inventories, foreclosures continued to rise in Boulder County – 624 through November – setting a pace to beat last year’s number by about 25 percent.

As always during the holiday season, the real estate market is pretty quiet, so it’s time for me to look back at 2006 and pick my top real estate stories and themes of the year. I’ll start with case No. 10, Howie…

10. We have a pulse: Two areas that had seemed to be left for dead got some much-needed new life from investors. The Lafayette Tech Center sold one-third of its vacant 23.6 acre property to a Western Slope developer for about $2.5 million. New owner Hans Brutsche said he plans to build about 140,000 to 220,000 square feet of class A office space on the property.

In Boulder, a Lake Forest, Ill. investor purchased three buildings on the University Hill District for a total of $6.26 million. New owner Green Courte Partners LLC said it plans to team up with Boulder-based The New Hill Co. to redevelop the Hill into mixed-use properties with underground parking.

9. Circle Capital slims portfolio: The company that topped my list in 2005 with its $142 million purchase of real estate in Longmont wasted little time in selling some of those properties. Circle Capital sold its 450,000-square-foot Seagate/Maxtor property in Longmont for about $60 million and its 78,000-square-foot Array Biopharma building for about $6.8 million. The sales amounted to about 26 percent of Circle Capital’s original two million square feet of property.

8. Array’s creative financing: Array’s deal with Circle Capital, mentioned above, turned out to be part of a two-building deal that netted the biopharmaceutical company $32 million on properties that it never owned.
The company secured options to buy its buildings in Boulder and Longmont, and then immediately sold those options to San Diego-based BioMed Realty Trust Inc. for a $32 million markup. BioMed did get the benefit of Array extending its leases to 2013, plus about $1.5 million extra a year in rent.

7. Raging event center: With a full house at the Rocky Mountain Rage’s hockey debut at the Broomfield Event Center, we couldn’t help but think that the owners have hit a gold mine on what used to be prairie-dog fields. The new 6,000-seat arena also is home to Colorado 14’ers basketball and numerous concerts and events. Now the question is, can Tim Wiens and John Frew also be successful with the surrounding housing and retail developments?

6. Religious real estate: It seemed as if God wanted to get in on the local real estate rush in 2006. Religious leaders with Trinity Lutheran Church in Boulder proposed building 28 residences on part of its property, and officials with Sacred Heart of Jesus Church in Boulder said they may sell their downtown property to fund a new church in eastern Boulder County.
Meanwhile LifeBridge Christian Church near Longmont and Rocky Mountain Christian Church in Niwot each proposed large-scale construction projects to expand their bases.

5. Apartment investments: As the housing market cooled, some real estate investors began shifting back to rental housing, which has been battered during the past few years. Stonegate Apartments, with 320 luxury units in Broomfield, sold for $41.7 million; Tantra Lakes, with 185 units in South Boulder, sold for $22.5 million; and Stonebridge Apartments, with 172 units in Longmont, sold for $18.5 million.

4. Density debate: Preliminary discussions on Boulder’s Transit Village Area Plan opened what’s sure to be a decade-long debate on residential density surrounding the future FasTracks station at 30th and Pearl streets. City officials say more density, particularly affordable housing, will be needed to support effective public transportation. Local architects and developers say the city will have to raise the 55-foot building height limit to achieve those goals.

3. Office space revival: Office space vacancy continued to steadily improve and ended the year below 20 percent across the Boulder Valley – down from highs of about 27 percent in 2004. The best improvements came in Downtown Boulder and in Interlocken where Vail Resorts leased 46,000 square feet to locate its new headquarters.
Talk and proposals of new office construction also increased in 2006, suggesting a continued turnaround.

2. The Twenty Ninth Street effect: October’s opening of Twenty Ninth Street was big news by itself, but the bigger news was the real estate action surrounding Boulder’s new retail district. As property owners and developers saw success at the mall, properties and redevelopment proposals began trading hands fast.
The owners of the Golden Buff Lodge across the street signed a preliminary deal to sell their property for a new mixed-use project. The 3.35-acre residential portion of Twenty Ninth Street went under contract in three weeks. Developer Stephen Tebo reported a flood of leases in his nearby properties. Several other surrounding properties sold for big profits. And the developers of The Peloton to announced plans for another 300-plus homes on the former industrial properties to the east of the new retail district.

1. Out-of-state invasion: With high real estate prices on the East and West Coasts, out-of-state real estate investors saw Colorado properties as the best deals to pounce on. Most of the real estate transactions mentioned above involved an out-of-state buyer.

New York-based FEIGA/Sandstone LP paid Circle Capital Partners LLC $60 million for the 450,000-square-foot Seagate/Maxtor building at 2452 Clover Basin Drive in Longmont.
Houston-based Hines Interests LP spent $47.8 million on the 461,000-square-foot Mountain View Corporate Center in Broomfield.

San Diego-based BioMed Realty Trust Inc. spent $45 million on Array Biopharma’s 150,000-square-foot headquarters at 3200 Walnut St in Boulder.

Chicago-based Equity Residential spent $41.7 million on Stonegate Apartments, the 350-unit complex near Interlocken in Broomfield.

And San Antonio-based Brass Real Estate Funds paid $29.9 million for the 255,370-square-foot Creekside Business Park in Longmont.

Contact David Clucas at 303-440-4950 or e-mail dclucas@bcbr.com