Corporate Office Properties Trust: new power player in Pikes Peak

Four years ago the Corporate Office Properties Trust, a Columbia, Md.-based real estate investment trust with a portfolio of more than $3 billion in commercial real estate, didn't own one acre of property in the Pikes Peak region.

Fast forward to January 2008 COPT, now with $4 billion in assets, has acquired more than $230 million in Colorado Springs commercial real estate. Its target: newer Class A suburban office buildings, undeveloped land suitable for office campus development, property management and design-build opportunities.

Last fall COPT was also named the master developer for the 272- acre Colorado Springs Airport Business Park, an $800 million venture scheduled for completion during the next 10 to 20 years.

Prior to 2005, the company had focused solely on core markets near the Baltimore-Washington, D.C. area and in the defense- friendly San Antonio, Texas, market.

Even the company's CEO admits that Colorado Springs unexpectedly appeared on the company's radar.

Buying spree leads to "critical mass"

"If SCITOR, a national tenant with us elsewhere, hadn't brought the opportunity to our attention, we might not have discovered Colorado Springs," he said, referring to the company's first $10 million, 64-acre land parcel and building acquisition near East Platte Avenue and North Powers Boulevard in March 2005.

"This was something new for us," he said, adding that the corporation approaches new markets very carefully.

Former Grubb & Ellis Quantum Commercial broker George Swintz worked on that first Patriot Park transaction and was subsequently named the firm's vice president for asset management and leasing.

A few months later in October, the company acquired 136,000 square feet of office space at Science Park I & II near the north entrance to Patriot Park for $18 million and the 67,500-square-foot Newport Centre One building at 1670 N. Newport Road for $9 million.

COPT then purchased a 50-percent interest with Nor'Wood Development owner David Jenkins in a 132-acre land parcel south of Interquest Parkway near Interstate 25 for $9.2 million. Since then, the company purchased full control of the prime tract for $25 million.

By January 2006, COPT had added two single-story Hybrid I and Hybrid II buildings containing 113,000 square feet at 9950 and 9960 Federal Drive to its portfolio. The same month it also bought the 60,000-square-foot Intel facility at 9965 Federal Drive and announced plans to make over the building.

"We actually achieved the critical mass we were hoping to reach much earlier than we expected," Griffin said.

The REIT now owned 190 acres of land and five Class A buildings mostly occupied by national tenants who preferred to lease rather than own or manage local real estate.

In Colorado Springs, COPT tenants included Lockheed Martin, the Government Services Administration, BAE Systems, Northrop Grumman, Boeing, Inc. and Integral Systems to name a few -- most drawn to the area by valuable government and defense work conferred by contracting offices at Peterson Air Force Base, Schriever Air Force Base or by the Department of the Army at Fort Carson.

"Many of the companies we've already worked with are part of COPT's top 20 tenant list," he said. "Our strategy is to leverage strong relationships it has in the Baltimore-Washington, D.C.-area with its tenants and to parlay those into Pikes Peak region transactions," Swintz said at that time.

It has also sought out design-build and land-acquisition opportunities for companies like SI International.

In July 2006, for example, COPT purchased a 12.7-acre tract of land adjacent to SI International's existing building for $2.25 million, agreeing not only to manage the construction process but to lease and handle property management for the 60,000-square-foot facility.

Spec office buildings support growth

In 2007, the corporation also surprised some in the economic development community by breaking ground on the first speculative Class A office building in the Pikes Peak region in more than seven years.

The impact of the national REIT's "critical mass" so far seems to have inspired cooperation from local officials.

"They're a true partner with us," said Economic Development Corporation president Mike Kazmierski, adding that COPT is one of the organization's major investors.

"By having such a strong partner in a construction mode, a company could come to town and move in quickly if necessary. Timing is everything in our business. Nationally the numbers reflect that. Almost half of all decisions to relocate are based on availability of buildings," he said.

Kazmierski stressed by having such a strong partner in a construction mode, a company could come to town and move in quickly if necessary.

Patriot Park VI broke ground in spring 2007 and by the end of the year had announced that ITT Systems Division would lease 75,000 square feet of space in the new 104,000-square-foot mid-rise spec Class A office building. It was only the second structure in El Paso County to qualify as a Leadership in Energy and Environmental Design- certified facility.