$150M Boulder office park deal a key piece in real estate portfolio sale

BOULDER — A deal finalized last month to sell a Boulder office park made up a major piece of a larger, multi-state commercial real estate portfolio transaction between Seattle-based real estate investment firm Unico Investment Group LLC and a Goldman Sachs-affiliated investment group.
Boulder’s 11-building, 485,000-square-foot Pearl East business park campus was bought by Broad Street Principal Investments LLC for $150 million, according to Boulder County public records. In total, Broad Street bought 1.8-million-square-foot of office space across 27 buildings in the greater Denver and Seattle metro areas for $710 million.

“I can tell you that this kind of deal doesn’t happen for us every day,” said Austin Kane, a Unico vice president and director of the company’s regional operations in Colorado and Texas.

“We were attracted to Pearl East because we feel that the natural life cycle of a lot of companies in Boulder is to start (in office space) downtown and grow,” Kane said. “But the problem is that once they accomplish that (growth), they often grow themselves out of space.”

Pearl East is a natural landing spot for those companies that have outgrown office space elsewhere in the Boulder area, he said.

“There are so few big lots” for offices in downtown Boulder and around the Pearl Street Mall area, Kane said. “I look at east Boulder as the next best thing.”

Boulder County public records show the Unico entity UPI/P7 Pearl East LLC, purchased the buildings for more than $85 million in January 2015 from W.W. Reynolds Cos. That transaction was part of a larger deal in which Unico bought up 1.5-million square feet of W.W. Reynolds’ office space in Boulder and Fort Collins.

The investment in Pearl East was a solid one for Unico.

“We feel we got great execution,” Kane said.

When Unico bought the business park in 2015, “the buildings weren’t terribly old, but they hadn’t had a lot of capital or creativity invested in them,” he said.

“What we tried to do was to show Boulder tenants that with a little creativity and teamwork, we can actually help tenants create space that reflects their brand,” Kane said. “ … I think we were successful in getting that message out, and we’ve created a pretty cool grouping of office spaces as a result.”

Goldman Sachs commercial real estate investors “were attracted to Boulder because Boulder’s nature as a tech hub and as one of the centers of business in the Rocky Mountain region,” Kane said. “… I think they saw an opportunity to buy a stabilized office park that still has upside in terms of leasing the rest of the park up.”

Unico, which maintains a small equity position in Pearl East, will continue to manage the properties.

Pearl East is about 91 percent leased. Kane said the expectation is another 35,000 square feet will be leased this year.

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