Xcel serves 1.3-million electricity customers and 1.2-million natural gas customers in Colorado. The company's lead broker for the transaction, Barry Dorfman of Staubach, tells GlobeSt.com that Xcel was drawn to 1800 Larimer in large part because Westfield is vying to have one of the first office buildings in the nation to achieve the US Green Building Council's highest certification level, known as LEED Platinum, for its core and shell.
"Xcel wanted to get most of their people under one roof to promote culture while also being environmental stewards," Dorfman says. "There were really nine options, eight of them being new construction, all of them Downtown," and most of them needing an anchor tenant like Xcel to take to the bank to get their construction financing.
Indeed, Westfield Development president Rich McClintock says Xcel's lease commitment is the reason the estimated $190-million development is moving forward despite economic conditions. The lease for 66% of the building makes the building 75% preleased, giving the lender, Wachovia, confidence that Westfield will be able to generate the cash flow to obtain permanent financing and take out its construction loan.
The developer and Fredrick Ross Co., the listing brokerage firm for the project, also have committed to leasing space in the project, as has Westfield Capital Partners, an investment firm whose partners include the presidents of both Frederick Ross Co. and Westfield Development. Other tenants include Apartment Realty Advisors and Citywide Banks.
Given the size and length of its commitment, Dorfman is believed to have negotiated a substantial discount to the $27 to $30-per sf asking rate (NNN) that was in place at the time they began negotiations. Dorfman declined to comment on the topic, citing confidentiality agreements. The asking rate for the remaining space in the building is now $34 per sf.
Dorfman, president and founding principal of the Staubach Co.'s Front Range Division, which includes Denver, was assisted in representing Xcel by Bruce Dodge, EVP and principal of the Front Range Division, and Matt Anderson, a VP in Staubach's Denver office.
Xcel will be bringing together at 1800 Larimer operations currently housed in two different buildings. The lease on Xcel's current regional headquarters at 1225 17th St. in Denver expires in July 2011, the year it expects to occupy 1800 Larimer. The company also owns a facility at 550 15th St. that it reportedly plans to sell. Xcel has about 3,900 employees throughout Colorado, about one-third of which will work at 1800 Larimer.
Westfield Development is working on one other big project in Denver called Lincoln Station, a $700-million mixed-use, transit-oriented town center development at the end of the new southeast light rail line. The development includes 500,000 sf of office, 1,500 to 2,000 residential units and 50,000 sf of retail space.
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