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Toma West buys 90 percent-leased 633 17th St. building

Norwegian firm encounters no funding obstacles

John Rebchook, Rocky Mountain News

Published October 2, 2007 at midnight

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A Norwegian company with an appetite for downtown Denver office buildings added another one to its growing portfolio, bucking a trend of sales failing because of financing woes.

The price Toma West paid Friday for 633 17th St. was not disclosed, but records indicate it sold for about $115 million.

This is thought to be the first high-rise sale downtown since the crisis in the capital markets began last month.

The real estate industry is buzzing about the World Trade Center buildings in downtown, as well as the Mountain View building along the U.S. 36 corridor, not closing because the financing fell apart.

Together, those two deals would have approached $300 million. Both the World Trade Center and Mountain View are expected to sell later, when the financial markets recover, brokers say.

The 32-story building at 633 17th St., formerly known as First Interstate North, was built in 1973 and is about 90 percent leased.

"It is a very stable building," said Mary Sullivan, who sold it on behalf of Triple Net with fellow CB Richard Ellis team members Tim Swan and Ron Urgitus.

The company owns several other buildings downtown, including the nearby United Western Bank building at 17th and California streets, Sullivan said.

Sullivan said the state and the federal government lease about 42 percent of the 633 17th St. building.

"The market has done a complete 180-degree turn," Sullivan said. "Until recently, buyers actually paid a premium for empty space," with the idea that the building would become more valuable as the space was leased.

But because of the turmoil in the markets, which started with the meltdown in the residential subprime market and quickly spread to the healthy commercial market, buildings with high, stable occupancies, such as those at 633 17th St., are the most sought after, Sullivan said.

"I call it mortgage flu," said David Morrison, a broker with Grubb & Ellis.

"It's a sickness that you have for a few days and then you recover," Morrison said. "Denver's market is still very robust, so it will weather this. The problem is some of these lenders don't even know how many bad loans they are holding, so they have to figure that out."

Sullivan said Toma West, which also acquired the five-story Plaza Garage parking lot and a surface parking lot with 633 17th St., also showed interest in the building because it sits on a light-rail line.

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