The owner of Cherry Creek’s Clayton Lane development has tapped Matt Joblon’s BMC Investments and a L.A. firm to redevelop a portion of the property, most notably its former Sears store.
Atlanta-based Invesco announced its selection of BMC and Prism Places this week, in the process unveiling a new vision for a high-profile property that’s been eyed for redevelopment for years.
BusinessDen reported in January that Invesco had solicited proposals from developers.
The deal pertains to the megablock formed by University Boulevard and Clayton Lane between 1st and 2nd Avenues, with the exception of the Whole Foods building and the parking lot in front of it. Whole Foods has a long-term lease and will continue operating.
There are four primary structures on the remainder of the block: a parking garage along 2nd Avenue, a condominium building at the corner of 2nd and Clayton, the Crate & Barrel building at the corner of 1st and Clayton and the former Sears building along 1st Avenue.
The Sears building is more than 150,000 square feet and has been unused since the store closed in 2015 — a notable vacancy in an otherwise booming, affluent neighborhood.
BMC CEO Matt Joblon told BusinessDen Monday that his firm and Prism plan to demolish the former Sears and construct an apartment building with ground-floor retail and at least 430 residential units.
Beyond that, plans remain somewhat in flux, but a new facade is planned for the parking garage building and changes will come to existing retail space in it and the condo building. Larger units will be divided into smaller ones more in demand by restaurants and boutiques.
BMC and Prism haven’t previously worked together, but Joblon said he’s been a personal friend of Prism President Stenn Parton for years. Prism is also planning to redevelop Foothills mall in Fort Collins with Denver-based McWhinney.
Joblon, meanwhile, is Cherry Creek’s most prolific developer, with projects including the Halcyon and Moxy hotels and the Financial House office building.
Clayton Lane was purchased in 2016 by Clayton Lane Investors LLC, which was originally a joint venture between Invesco and a company called OliverMcMillan. Shortly after the purchase, OliverMcMillan said on its website that Clayton Lane’s former Sears would “be demolished to make way for a pedestrian-friendly street that runs throughout, connecting the various uses and retailers.” Later that year, OliverMcMillan displayed renderings at a national real estate conference showing a new Whole Foods erected on what is currently the store’s parking lot.
In 2017, the partnership submitted redevelopment plans to the city, proposing to replace the Whole Foods, parking garage and former Sears with six buildings atop a network of underground parking. But no physical work ever began, and in 2018 OliverMcMillan was acquired by New York-based Brookfield. The companies said little publicly about the fate of Clayton Lane.
Joblon said Invesco later bought Brookfield out of the Clayton Lane ownership group, a fact that hasn’t previously been reported.
Joblon said Invesco hired a Newmark broker to solicit proposals for Clayton Lane from a dozen or so of the nation’s largest developers. BMC does not qualify for such a list, but Joblon said his firm was invited to apply “because of our track record and business relationships in Cherry Creek.” It didn’t hurt that his brother, Andrew Joblon of Turnbridge Equities, worked with Invesco on the successful Music Lane project in Austin, Texas.
In crafting his pitch for the future of Clayton Lane, Joblon said he started with the bad news.
Whole Foods wouldn’t agree to move, he said. The parking garage had to stay because some of the spaces were leased to the grocer, and because condo residents accessed the parking under their building through it. The city likely wouldn’t rezone the property. It probably wouldn’t even grant a significant variance.
“We led with all the constraints,” Joblon said. “And we created a plan that was absolutely as-of-right, so we didn’t need anything from anybody.”
In other words, while BMC and Prism’s proposal will need to go through the typical city review process, the firms won’t need to ask for special treatment.
“We’ve got a clear path of getting this done,” Joblon said.
Joblon said he also advised against building office space where the Sears building is, even though he’s developed multiple office buildings in Cherry Creek North that have been leased before they even broke ground.
Joblon noted those buildings have often been around 75,000 square feet, while the size of the Sears site means that an office building there would be much larger — maybe 350,000 to 500,000 square feet, with huge floorplates. That means it would need to be built spec.
“You typically cannot pre-lease large floorplate office like that,” he said.
Joblon also noted that Cherry Creek West, East West Partners’ planned redevelopment of the western half of the Cherry Creek Shopping Center — which is across the street from Clayton Lane — is already slated to include office space.
Joblon thinks acknowledging the constraints worked, and that some competing firms likely made pitches that included demoing the Whole Foods and parking garage, despite the fact that the grocer has given no indication it would be willing to terminate its lease.
Ten percent of apartments planned for the site will be restricted to those making up to 60 percent of the area median income, to comply with new regulations Denver put in place last summer. Additionally, two retail units are to be designated “affordable retail,” set aside for minority-owned businesses.
“The beauty of thoughtful development is the positive impact on the community – creating a place where people want to spend time together,” Prism’s Parton said in a statement.
Despite not needing major city approvals, Joblon said he’s already been reaching out to neighbors in an effort to get widespread backing for the project.
“We’re kind of acting like it is a rezoning, even though it’s not, because it’s such a critical site for Cherry Creek,” he said.
Tryba Architects, which designed Clayton Lane originally, is leading the planning process. Michael Hsu Office of Architecture is overseeing retail design. PCL Construction has been selected as general contractor. Construction at Clayton Lane is expected to begin in mid-2024 and take two years.