Distressed office space has bled into RiNo — and newer product.
The owner of Industry Denver at 3001 Brighton Blvd. defaulted on the office building’s loans last month when it failed to pay them off upon maturity.
That’s according to a lawsuit filed Tuesday by the building’s lenders, two affiliates of New York-based American International Group, or AIG.
AIG collectively loaned nearly $32 million secured by the property in October 2016, and said it is owed $28.67 million. The firm asked the court to appoint a receiver to manage the building, a common request for distressed properties.
Denver District Court Judge Sarah Block Wallace agreed to the request Wednesday afternoon, appointing Trigild IVL LLC and its managing partner Ian Lagowitz to the role.
Industry Denver broke ground in 2013, and the first phase was completed the next year, making it one of the earlier projects to transform the Brighton Boulevard corridor. The two-story structure is about 150,000 square feet, according to marketing materials from when the building was put up for sale in the spring. It is a mix of adaptive reuse and new construction.
Industry Denver was among the first major office buildings in RiNo and a pioneer in the region’s coworking scene. Now, it becomes the newest local office building and the first in RiNo to enter into receivership.
The property is majority owned by New York-based Clarion Partners, which took control as part of a 2015 recapitalization. The founders of Industry, part of parent company Q Factor, retained a partial ownership stake, The Denver Post reported at the time. The deal was structured in such a way that the property’s valuation at the time wasn’t made public.
Clarion Partners did not respond to a request for comment Wednesday.
Transwestern recently took over management of the property from Q Factor, according to Q Factor co-founder Jason Winkler.
“I think the asset is caught in the same perfect storm as a lot of real estate assets right now,” he said.
According to the AIG lawsuit, the two loans issued in October 2016 matured on Nov. 1 of this year, meaning they needed to be paid off in full by that date.
Office landlords typically secure a new loan when one is maturing, or sell the building to get the needed funds. In some cases, particularly recently, they reach a deal with their lender to extend the current loan, as Brookfield recently did at 1801 California St.
But securing a loan for an office property has gotten much harder in the wake of increased interest rates and reduced demand for office space.
Industry Denver’s owners tried to sell the building, hiring CBRE earlier this year to market it. At the time, the structure was 59 percent leased.
Around lunchtime Wednesday, the building was largely devoid of people, and one tenant estimated it is about two-thirds vacant. Tenants include CorePower Yoga, which said earlier this year it hoped to sublease part or all of its headquarters there.
Q Factor is undergoing a fair deal of change. Former Downtown Denver Partnership head Tami Door, who became CEO of Q Factor in late 2021, said Wednesday she left the company over the summer. And Building Salt Lake, a real estate news website for Utah’s capital region, reported in October that Q Factor subsidiary Makers Line was shuttering, along with sister companies Forge, a metal manufacturer, and Titus, a concrete firm.
Winkler told BusinessDen that Industry facilities are under construction in Bozeman, Montana, and Detroit and that the vast majority of Makers Line’s work had been on non-Industry projects for third parties.
Industry Denver is one of two Industry office buildings in RiNo. The other is Industry RiNo Station at 3827 Lafayette St., which was completed in late 2017. JLL recently took over management of that property from Q Factor, Winkler said.
The Wells Fargo Center and Expansive coworking building at 1801 Broadway are other Denver buildings currently managed by a receiver.
BusinessDen staffer Matt Geiger contributed reporting.
Read more (newly updated): Troubled towers: Breaking down Denver’s distressed office properties