Broker: Boogie’s Building will need to be torn down
With the Boogie’s Building now under new ownership, the question is what’s next for the prominent downtown Aspen structure.
So far, New York-based Thor High Street Advisors has been quiet about publicizing any plans it may have for the building it acquired for $27.5 million in May. The company hasn’t responded to messages seeking comment about its intentions for the building. And Chris Bendon, director of community development, said Tuesday the new owner hasn’t introduced any building-permit applications to the city.
The building’s upstairs diner has been closed since the ski season ended, but the downstairs clothing store remains open. Leonard “Boogie” Weinglass, who owned the building and its retail store, said the new owner might allow him to keep the clothier open through 2016, but nothing is definitive at this point.
Commercial broker Lex Tarumianz, at a real estate forum last week at the Limelight Hotel, said the 12,499-square-foot building is a candidate for a tear-down.
“The building needs to be, and I believe is going to be, torn down,” he said Thursday at the Aspen Snowmass Residential Commercial Real Estate Update.
Thor has been a player in some high-profile deals. The company’s website notes it was pegged by Disney Co. as its retail broker for the Disney Springs project in Florida; published reports show it brokering high-end leases and buying retail buildings in such markets as London, Manhattan, Montreal and San Francisco.
Constructed in 1988, the Boogie’s Building sits on 6,250 square feet of land at the corner of East Cooper Avenue and Hunter Street. Thor’s purchase equated to $4,400 per square foot of land. The $27.5 million purchase price, $500,000 in closing costs and transfer taxes, plus $6 million to build a new structure in its place, would total $34 million, Tarumianz said.
By Tarumianz’s estimations, Thor would need to charge a rate of $175 per square foot on the 12,000 square feet of leasable space.
“That would bring your net operating income to $2.1 million — that gives you a 6.2 percent return,” he said.
Tarumianz theorized that with a current 4 percent capitalization rate — which is the ratio of net operating income to property value — on the redeveloped building, “maybe they make $52.5 million.”
“If you ask why (Thor) would pay ($27.5 million) for it, they would tell you it’s worth it,” he said.
The property also comes with the rights to build a third-story penthouse, which City Council approved in July 2013.
Retail and lodges
Tarumianz also forecasted a wave of new stores in the downtown core over the next year to 18 months, with the most desirable spots leasing at $200 to $225 per square foot, with the low end getting $100. He also sees a “hospitality wave” with the redevelopment of Sky Hotel and other projects. If developer Mark Hunt’s Base2 lodge proposal for Main Street goes to an election, Tarumianz said he expects it to pass.
“If Base2 goes to a vote, it will get approved,” he said.
Aspen Skiing Co. Chief Operating Officer David Perry, who also spoke at the meeting, said Aspen has lost 20 percent of its hot-bed base in the past two decades due to the erosion of the small lodges in town.
The June Rocky Mountain Lodging Report, commissioned by the Colorado Hotel and Lodging Association, showed Aspen had the highest occupancy rate that month among resort towns in the state, logging 64.5 percent. For the first six months of this year, Aspen’s occupancy rate is 64.2 percent — also tops among state resort towns — compared with 62.4 percent for the same period last year, the report shows.
Aspen’s public sentiment about building new lodging, Perry argued, typically becomes a debate about growth.
“Really, it’s about replacing and renewing the bed base that used to exist,” he said, imploring residents to “rally as a community to get these things built.”
Perry noted he found it “quite incredible” that petitioners who want to bring Base2 to an election are protesting the construction of a 37-unit lodge.
“That’s all there is,” he said. “But if you stop and think about the last 20-plus years, 2,000 pillows have been lost. It’s been gradual.”
A number of opponents of the Base2 lodge have said they aren’t against it because of its design or structure, but because City Council gave it numerous concessions June 2, nearly a month after voters passed Referendum 1, a Home Rule Charter amendment that no longer gives the council power to approve land-use applications seeking variances on height, mass, parking, affordable housing and view planes. With Referendum 1 in the books, developers now seeking such land-use concessions are required to take their projects to a municipal election for approval.
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What’s the Big Deal runs Mondays and is based on the prior week’s most expensive property transaction recorded in the Pitkin County Clerk & Recorder’s Office.