ASPEN—The building currently housing the Gap sold on Thursday for $13.25 million to Chicago real estate developer Mark Hunt, one of the partners in the Hotel Jerome who also bought the Mill Street Mall building that now houses the Above the Salt restaurant.
If a redevelopment proposal receives final approval in December, Hunt plans to demolish the one-story, 11,000-square-foot building at Galena and Hopkins, and replace it with a structure containing five street-level retail spaces and a second-story restaurant with a large outdoor deck. Unlike most of the dozen or so applications submitted this spring before a two-story height limit went into effect in Aspen, Hunt’s plan does not include a residential component.
“I actually think it’s really exciting that somebody has the vision to create a building without trying to force the economics with a penthouse,” said Karen Setterfield, a local commercial broker who assisted on the Gap building deal. “Somebody was creative enough to figure out how to afford to build the building, and it’s only one-and-a-half levels, with no penthouse.”
Public records show that Colorado Cable Company of Little Rock, Arkansas sold the building to 204 S. Galena Street LLC, of which Hunt is the sole manager. Jerald Barnett, principal of Colorado Cable Company, had been the sole owner of the building since he built it in 1992.
Public records also show that Hunt’s company has taken out a $20.6 million construction loan on the property.
Lorrie Winnerman, who represented Hunt in the transaction, said the deal and plans for the property have been in the works for a year. For the past several months, the city’s Historic Preservation Commission has been reviewing the redevelopment proposal. It by and large approved the new building this summer, and is reconvening for a final meeting in early December to go over details such as materials and lighting. The application is not required to go through Aspen City Council because it is essentially a replacement of the building and does not trigger any major exceptions, according to a city staffer.
If all goes well, the developers plan to file for a building permit immediately after city approval and will start construction this spring, said Winnerman.
The new building will cover most of the 9,000-square-foot lot it sits on, which currently includes a small parking lot on the Hopkins side. All five street-level retail spaces will have 20-foot wide storefronts and will extend back into the current parking lot area, said Winnerman, who added that tenants have already been found for the spaces. The second-story restaurant will command views of Aspen Mountain.
“It’s spectacular,” said Winnerman of the new building, noting that it’s gained easy approval from the city so far. “That’s a pat on the back to the development.”
“I’m thrilled because I like to see these old buildings be replaced responsibly,” she added. “Sometimes I walk by buildings and I’m kind of embarrassed.”
Setterfield, who is working with the Gap on finding a new space in town, noted that the building is in the most desirable two blocks of downtown Aspen.
“I get more demand from retailers to be on Galena Street [from Hopkins to Cooper] than any other street,” said Setterfield, who added that other high-demand areas are the downtown blocks surrounding Cooper Avenue and Mill Street.
The Gap building is clearly worth much more to Hunt than the Pitkin County assessor’s value, which is $8.85 million (based on the valuation period that ended in mid-2010). Even at its current value, however, it is one of the top 25 most valuable commercial properties in Aspen.
Mark Hunt is one of three investors in an LLC that quietly acquired the Hotel Jerome in December 2009 after a complex series of business and legal deals. Jerome Ventures LLC won a bid in August 2009 to acquire the loan on the historic hotel from Lehman Brothers, then began foreclosure proceedings against LCP Elysian Aspen, which apparently owed $36.3 million on the property. The entities waged a brief legal battle over the loan, but eventually Elysian deeded the property to Jerome Ventures in lieu of foreclosure.
Through another LLC, Hunt became the owner of the Mill Street mall property that sits across Hyman Avenue from the Wheeler Opera House. The main building on the property (which also includes the Popcorn Wagon) briefly housed Junk, a failed restaurant venture for which Hunt paid nearly $38,000 worth of state taxes to prevent its assets from going to auction. But while Hunt has been quoted in news reports as the property owner, its official owner is 305-7 Mill Street LLC, whose trustee is Donald R. Wilson.
Wilson is another partner in the Hotel Jerome, along with Hunt and Fred Latsko, another Chicago real estate investor. The three have made numerous headlines in Chicago for various deals, together and separately. Hunt, through his firm M Development, reportedly bought and sought to redevelopment a number of properties on Chicago’s famed Gold Coast during the height of the real estate boom. Ironically, some of M Development’s projects stalled after the real estate bust—about the same time his team acquired the Jerome due to circumstances of the economic downturn—triggering foreclosures and lawsuits.
The Gap building is one of three downtown buildings that have pending land-use applications and were either on the market or sold recently. (The city was hit with a flurry of redevelopment applications this spring prior to a law going into effect that limits new buildings to 28 feet in height; most of the proposals include third-floor penthouses.)
A two-story building at 602 E. Hyman, on the corner of Hopkins, which used to house the Chaffin Light Real Estate offices, sold in June for $6.7 million. It is seeking city approval to replace the building with a three-story mixed-use building including a third-story penthouse. A second redevelopment application is being considered for the Bidwell, or Mountain Plaza, building on Cooper and Galena. That application, which begins HPC review in December, does not seek a third-story residential component. The Bidwell building is expected to change hands in November.
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