Denver Apartment Sale Breaks Price Per Square Foot Record

3206 Osage St, a 20-unit apartment building in the Lower Highlands neighborhood of Denver, has sold for $7.1 million and a record-setting $707 per square foot.

Barton Thompson & Josh Newell of the Newell Team at Pinnacle Real Estate Advisors, LLC facilitated both sides of the transaction, the seller The Situs Group, and the buyer, a multifamily investor who self-manages.

The Situs Group sold 3206 Osage St after completing a full renovation of the building, which they purchased out of bankruptcy through the Newell Team in 2018. Prior to the sale, they negotiated a 7-year master lease with hospitality startup Sonder USA, which plans to operate the property as a hotel. “Situs’ repositioning of this asset was thoughtful and well-executed. It’s a huge win for those guys as well as the buyer, who now owns a trophy asset in the Lower Highlands,” commented Josh Newell.

According to Pinnacle, master leased apartment buildings provide similar benefits to single tenant retail property by allowing investors to receive income with limited expenses and management. The Sonder lease generates significantly higher income than if the 20-unit property were leased as market rate apartments. This alliance is what drove value above any price ever seen before for an apartment building in Denver.

The sale, executed at $707 per square foot, is the highest price per square foot in Denver history for an apartment building between 5 and 200 units, breaking the previous record of $590 per square foot in June 2019 for 4390 Tennyson Street.

Firstbank provided the financing for the deal. “We could not have done the deal without the creative thinking of Kellen Dick, senior vice president at Firstbank,” said Thompson. “As an apartment building with a master lease, this was a new type of asset class with almost no precedents. It required a lot of collaboration between his team and ours to see the deal through.”

“We sold his two older apartment properties here in Denver just a couple of months ago. His goal was to retire and stop working, but he also did not want to pay taxes and was not comfortable buying NNN retail product in this economy. His investment at 3206 Osage St solved his concerns and he is looking forward to enjoying the increased cash flow” said Barton Thompson.


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