Despite the contracting economy, the owners of downtown Denver’s venerable Larimer Square have been quietly beefing up their real estate portfolio, adding commercial and multi-family properties to their holdings.
Jeff Hermanson and Joe Vostrejs of Larimer Associates are scouting underserved neighborhoods for properties to redevelop for restaurant and retail use. They recently hired veteran retail broker Pat McHenry — whose previous work includes high-profile roles at Catellus, Trammell Crow Co. and CB Richard Ellis — to focus on the initiative.
“We all really believe the next year or two is going to present really strong buying opportunities,” said Vostrejs, the company’s chief operating officer. “If you understand the psychographic — not the demographic — of a neighborhood, you can do very well.”
While most people associate Hermanson and Vostrejs solely with Larimer Square, a popular local and tourist destination, the two are involved in much more than that. They own apartment buildings with more than 600 units in Colorado — including Cricket Townhomes and Falcon Run — and New Mexico and California, as well as an array of commercial real estate in Denver, Crested Butte and California. They also have partnerships with a number of popular Denver restaurants, including Rioja, Bistro Vendome, Corridor 44 and Billy’s Inn.
“It’s really about acquiring the real estate,” Vostrejs said. “Restaurants are part of an overall strategy of creating places.”
Larimer Associates is a newly formed company that combines the operations of Larimer Square Management Corp., the Larimer Group, Hermanson Inc. and a number of other partnerships. The company primarily invests its own money but does have equity investors in Larimer Square.
Hermanson owned a number of restaurants on Larimer Square in the 1980s. He bought Larimer Square in 1993 from California-based Hahn Co., which bought it from Dana Crawford in 1983.
Larimer Square, named for Gen. William H. Larimer Jr., is Denver’s oldest and most historic block. Its brick storefronts housed Denver’s first bank, bookstore and dry-goods store.
Building the square
The once-bustling block fell into disrepair and was set to be demolished when preservationist Crawford saved it in 1963, later bringing in national tenants Williams Sonoma, Ann Taylor, Talbots and Laura Ashley. One of Crawford’s original tenants, Gusterman’s Silversmiths, is still doing business on Larimer Square.
“That’s really what stabilized Larimer Square,” Crawford said. “(Larimer Associates) keeps bringing it more and more up to date. They built parking, and they have a good balance of tenants. I know they like to get more emphasis on locals.
“We put a lot of emphasis on the fact that it was Denver’s most historic block. They’ve done a lot of stuff that’s really improved it. Architecture on the east side of street is much better than when we had it. I’m thrilled with what’s happened.”
Hermanson closed restaurants Cadillac Ranch, Josephina’s and Tommy Tsunami’s between 1999 and 2004 to shift Larimer Square in a new direction toward chef-driven restaurants. Larimer Associates owns all the buildings on the 1400 block of Larimer Street, the same span that is designated as Denver Historic District No. 1.
Larimer Associates also transitioned out the national retailers in favor of one-of-a-kind retail, such as women’s clothing boutique Mariel, shoe store Scarpaletto and kitschy Western-themed Crybaby Ranch.
Hermanson and Vostrejs didn’t start with the hip downtown shopping district from which their company gets its name. Their first retail redevelopment project was an old furniture store at the southeast corner of West 32nd Avenue and Lowell Boulevard, which is now the Shops at Highlands Square, where a Heidi’s Deli is located. That project 12 years ago kicked off the redevelopment of the now-popular shopping and restaurant district.
Teaming up with chefs
Part of Larimer Associates’ strategy involves partnering with chefs and operators to establish successful restaurants in the properties they own. Larimer Associates partner Rod Wagner manages such restaurant projects.
“There are a whole bunch of talented people who would like to own their own restaurants but don’t have the (financial) ability to pull it off,” Vostrejs said. “If we find the right piece of real estate, we can acquire it because we already have the tenant through a partnership.”
Larimer Associates is teaming up with chef Sean Kelly to open LoHi Steak Bar at West 32nd Avenue and Tejon Street in Denver’s Lower Highland neighborhood. Larimer Associates is gutting everything but the kitchen at the old North Star, as well as redoing the exterior. The real estate is worth about $1 million, and the business is another $500,000.
They’ll also provide human resources, accounting and marketing services, enabling Kelly to focus on what he does best: cooking.
“Everyone props up the chef and says they’re an owner, but they really don’t have any flesh in the game,” Kelly said. “What ends up happening is if it’s not a smash hit and not a great relationship, we’re fairly free to walk away. This is not like that. You’re a real partner, you put real dollars in and you have a real working relationship that’s very collaborative.”
Larimer Associates also is working with architect Jim Hartman to develop a restaurant district around the historic Hangar 2 at the former Lowry Air Force Base.
The plan calls for preserving the historic hangar for use as a self-storage facility. Four new buildings totaling roughly 25,000 square feet would be built on the south and west sides of the hangar.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
