Cherry Creek’s newest office building has sold, but it lost its planned anchor tenant along the way.
Denver-based Gart Properties said Thursday that it has purchased 240 St. Paul St., a six-story, 76,000-square-foot office building that was completed last August by Matt Joblon’s BMC Investments.
The parties declined to disclose the sale price, and public records that would disclose it had not been recorded as of press time.
Gart also said that Equinox, the high-end gym chain, will no longer be moving into the building. The location was supposed to be the first in Colorado for the company.
Attempts to reach Equinox for comment were unsuccessful. But Joblon said it was a mutual decision between his firm and Equinox to terminate the company’s lease, and that the company still plans to come to Cherry Creek eventually.
Joblon noted that Equinox, like most gym companies, “had lots of challenges during COVID.” Even once the building was completed, the company wasn’t in any rush to actually start building out a gym on its two full floors.
“They wanted more time to build out their space, and we said, ‘Look, that doesn’t really work for us on this project,” Joblon said.
Joblon said he hadn’t been planning to sell 240 St. Paul this quickly, figuring he’d hold it for at least a few years.
But Joblon noted that, for years, he had been in talks with the Gart family — whose regional sporting goods retail chain merged with Sports Authority in the early 2000s — about purchasing 299 Milwaukee St., an older office building on a large corner lot that was ripe for redevelopment.
The Garts were willing to make a deal, but their company offices were in the 299 Milwaukee building and they didn’t want to sell without a plan to relocate to another high-class office space in Cherry Creek, Joblon said.
Joblon said that, when he realized that Equinox wouldn’t be moving into 240 St. Paul anytime soon, he approached the company and offered to terminate the gym chain’s lease and find them another space in Cherry Creek down the road.
“We have a really good relationship with them,” he said of Equinox.
The gym chain agreed, Joblon said. And the space that freed up at 240 St. Paul then made the building alluring to the Garts, because they could buy it and move their company offices in.
So, at the end of March, Joblon’s BMC Investments paid the Garts $30.8 million for 299 Milwaukee and two adjacent smaller buildings. Joblon plans to build a 156-unit apartment building with Boston-based Rockpoint on the site.
And on Thursday, Gart Properties purchased 240 St. Paul St.
“The only reason why the 299 Milwaukee deal happened was because we were able to offer them this building to 1031 into,” Joblon said, referring to a real estate investment tool that allows owners to defer capital gains taxes stemming from a sale.
Gart Properties said in a Thursday statement that the company plans to convert the second and third floors of the building, which had been set aside for Equinox, into office space. The company will move its offices into a portion of the second floor. And Forum Investment Group, already a tenant, has agreed to expand its presence and take the entire third floor.
That leaves just 8,200 square feet of office space on one of the Equinox floors available, along with 5,000 square feet of ground-floor retail space. Other tenants at the building include Parachute, First Western Financial and Polestar, an electric car company that operates a showroom in the building.
Gart also plans to add an outdoor patio on the south side of the second floor and additional windows to the building, according to the company.
“This is Colorado’s premier office and retail market with limited supply due to its relatively small footprint,” Gart Properties Vice President Evan Gart said in a statement. “We are thrilled to call this space our new home and continue our Cherry Creek residency for years to come.”
Joblon, meanwhile, said that he’s working with Equinox to incorporate a gym into a future development he does in the neighborhood. He said the exact project is still undetermined, and the company won’t be part of the seven-story office building he’s currently constructing at 255 Fillmore St.
“They’re committed to being in Cherry Creek,” he said of Equinox.