In a strategic move away from escalating rental costs, Justin Borus, CEO of Ibex Investors, opted to purchase an office space in Denver’s Cherry Creek North instead of renewing a lease that would have exceeded $100 per square foot annually.
Last month, Borus finalized the acquisition of a 6,300-square-foot building located at 101 S. Madison St. for $3.75 million, translating to about $599 per square foot.
Borus, who manages venture capital and stock funds, estimated that the new property would reduce their occupancy costs by more than half, even when considering the expenses associated with a mortgage, maintenance, and property taxes.
The new building is conveniently located only a mile away from Ibex’s previous office at 260 Josephine St., which the firm has occupied since 2019.
Over the years, Borus has noted a shift in Cherry Creek North’s appeal, citing its rising costs, increased congestion, and extensive construction as detracting from the original convenience the area offered.
“Cherry Creek North became less attractive,” he stated. “It’s more expensive, more crowded, way too much construction — the convenience that we were originally kind of paying for had gone away.”
Founded in 2012, Ibex has consistently operated its American office in the Cherry Creek neighborhood, with its primary focus on investing in Israeli companies.
In addition to the recent real estate purchase, the firm is also launching a new fund that will match the size of its latest $113 million closing.
This acquisition marks Ibex’s first foray into real estate investment.
Borus mentioned, “The only other real estate transaction I’ve ever done is buy my house.”
However, the Madison Street building is a work in progress and is currently in a core-and-shell state, requiring furnishing and additional fixtures before it can be fully operational.
Borus anticipates that the build-out will require an investment of around $1 million, with plans for his team of 20 to relocate by this time next year.
The property was sold by Michael Horton, who had previously purchased it for $3.1 million in 2022 and invested an additional $1.4 million in improvements.
Horton, a former oil and gas executive turned real estate investor, endeavored to modernize the 50-year-old building but encountered significant challenges along the way.
“The market moved on me,” Horton admitted. “Ended up losing a million bucks on it.”
The issues primarily stemmed from the discovery of a large quantity of asbestos within the structure, alongside uncertainty regarding the evolving preferences of potential tenants.
Horton, who has lived in Denver for two decades and amassed significant wealth from previous business ventures totaling $8 billion, is currently managing a dual-faceted real estate portfolio focused on building and remodeling luxury homes as well as acquiring RV and mobile home parks.
Despite his ambitious renovations including additional windows, enhanced landscaping, and exterior finishing, Horton found himself unable to complete the project or shift his mobile home business, Good Living Communities, into the new building due to challenging market conditions.
“It was just a bad read,” he reflected on his experience with the project. “Ibex, at their basis, and then with having buildable plans, I think they’ll do quite well as long as they don’t overspend, which it’s easy to do when it’s your own office and your own project.”
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