Construction of a new market hall in south Denver to be anchored by Tony’s Meats and Market is moving forward despite a real estate partner’s indictment last year on securities fraud charges, people involved with the project say.
Real estate magnate Gary Dragul stands accused of nine counts of securities fraud in relation to an alleged scheme state officials say he perpetrated over the years, defrauding investors in real estate companies he operated out of millions of dollars.
Among the Denver area properties managed by Dragul and his company GDA Real Estate Services — now being overseen by a court-appointed bankruptcy attorney — is the former Safeway store at 4950 E. Hampden Ave., part of the Happy Canyon Shopping Center at Happy Canyon Road and Hampden. The building has been tabbed as the future home of Happy Canyon Wine and Market, a multi-tenant blend of retailers and restaurants in the mode of trendy Denver spots like the Source and Milk Market.
Despite the state’s ongoing investigation into Dragul, and issues with a lender that froze work on the project in September, the market hall is going to be built, according to partners. Once work starts again next month, it is expected to open in June.
Dragul, who remains involved, views completing the project as “the right thing to do.”
“The opportunity here has really been to create something special and long-lasting and that remains the goal despite the troubles that we’ve had,” Dragul told The Denver Post on Tuesday. “The team has been outstanding and that includes the GDA team. I’m very proud of what is about to be accomplished there.”
Dragul, who is free on $300,000 bond, had previous issues with investors dating back to 2007 but is only facing charges related to conduct starting in 2013. Officials with the Colorado Division of Securities, which is heading up the case, declined to comment for this story because the investigation remains open.
Despite the state’s case against him, the market project still has strong support from future tenants, according to Dragul and Miranda Cherry, the leasing director for GDA. That includes Tony’s Meats and Market, which Cherry said recently increased their space commitment in the market from between 3,000 and 4,000 square feet to 5,000 square feet.
Tony’s is the headline tenant. The family owned butcher shop and specialty grocery chain has three locations today, all in the south metro area. It shut down its 15,000-square-foot space at 950 Broadway in Denver in December 2017, a move that coincided with the announcement it was coming to Happy Canyon. Its former Broadway space will soon open as a market hall of its own.
Although Tony’s representatives have not confirmed plans to grow the footprint at Happy Canyon, they did say the company remains committed to the project. The original announcement had the hall opening in the spring of 2018. Tony’s website lists an anticipated grand opening in fall 2018.
“We are still very excited to get the new market up and running in the next few months, so we’re all focused on working hard to make that happen,” Tony’s marketing manager Jessica Wolford said in an email earlier this month.
Other tenants expected to join Tony’s include a 20,000-square-foot liquor store, a breakfast restaurant and a micro location for Happy Canyon Flowers, already housed in the surrounding strip center. The surrounding center is doing well, according to Dragul and his team. Featuring traffic-drivers like a Starbucks, Corepower Yoga and Orangetheory Fitness, it is 100 percent leased, Cherry said, despite some empty spaces now in transition.
Wish Gifts is one of the newest stores there. It opened in October. Manager Kaitlin DiVenere said the market hall should “bring more people to the center to liven this area up.”
Neighborhood residents are also anticipating the opening. Abby Alt has lived in the surrounding Southmoore Park/University Hills neighborhood for 10 years. She acknowledged that “the whole neighborhood is talking about the guy who got in trouble,” adding that Dragul is also a residential landlord in the area, but that hasn’t dampened the appetite for a new place to get a nice meal and some fancy groceries.
“For us in this area, we like this shopping center,” Alt said. “There are no foodie places around here.”
District 4 City Councilwoman Kendra Black has previously dedicated space in her newsletter to the project. She too wants to see it done.
“They need to get it finished,” she said. “It’s been open to the weather for six months. It’s ugly, it’s hazardous and it’s not safe. It’s not benefitting anyone the way it is.”
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The question that remains is who will own the market going forward, and it is unlikely to be Dragul.
Dragul has maintained his innocence of the crimes alleged by state investigators, but his assets have already been frozen and are now in the hands of the court-appointed receiver, attorney Harvey Sender.
Denver property records show the building at 4950 E. Hampden was purchased by an LLC registered by GDA as part of $21.3 million deal in July. A report Sender filed in Denver District Court in November shows Dragul has just 9.4 percent of the equity in “Happy Canyon Market,” though he owns 100 percent of the surrounding shopping center.
With an estimated $113 million in mortgage debt attached to Dragul’s estate, it is unlikely he will maintain ownership in the future, according to Sender.
Dragul declined to comment on the July property sale. Sender confirmed there are other investors in the market project, the largest of which is from Israel.
“At this point, it’s a question of trying to determine how to maximize value, including value for the other equity investors,” Sender said of the market project. “It will probably be sold at some point. And it may be sold long before it is completed.”
