The Lincoln Center complex, on Lincoln Street near the state Capitol building, comprises 20 floors of office space, eight floors of parking, ground-floor retail space and exterior surface parking. It was built in 1972 and renovated in 2000 and 2005.
The occupancy at the office building stands at about 70% since its largest tenant vacated the 18th and 19th floors last month, but the new owners expect occupancy to rebound soon because of the history of high occupancy at the project. SKB President Todd Gooding points out that the average occupancy of the building over the past 10 years has been above 90% and that the tenant that relocated was paying a rent 60% below market rates.
In addition, Gooding points out, some 45,000 sf of leasing is in process that was not included in SKB's pro forma. If the 45,000 sf were added in, the occupancy would reach 82%.
SKB plans to renovate the lobby and common areas on each floor during its hold period, which is estimated at six years. The new owner also plans improvements to the building exterior, roofing, HVAC and electrical systems. These improvements follow a $2 million minor renovation to the lobby and elevators that were completed recently.
Office vacancy in the Denver CBD is currently below 11%, "its lowest level since 2000," notes SKB chief executive Bob Scanlan. He points out that, following 1.1 million sf of net absorption in 2006, forecasters are expecting another 700,000 sf to 800,000 sf in 2007.
The adjacent development parcel that SKB acquired can support an additional 30,000 sf to 40,000 sf of development. Current zoning on the site allows for office, residential or hotel use, but there are no immediate plans to develop the site.
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