December 14, 2008

Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
December 14, 2008

Attached is our complete listing of all properties for sale in Colorado Springs, based on property type - office, industrial and condo. This is the most complete listing that we are aware of. It’s our goal to provide this information, updated weekly. We develop these lists by basic research and cross-checking data points from the PPCIE, local broker's individual web sites, The Turner Book and any other public information domain we can find.

You are receiving this information because, at some point, you asked or a friend referred your name to be included in our e-mail Insider’s List. If you no longer wish to receive this information, send an e-mail reply to me (tim@hoffleigh.com) and ask to be removed. Alternatively, if you know someone who could benefit from the receipt of this information, forward this e-mail to them, and suggest they contact us, so we can consider adding them to our exclusive list.

All Market Average Office Building Sale Price PSF = $111.13 (DOWN from $111.35, last week.)
We are currently tracking 106 office buildings for sale.
This is 1,163,079 square feet, which represents a total market value of $129,254,895.

All Market Average Industrial Building Sale Price PSF = $74.04 (DOWN from $74.54 last week.)
We are currently tracking 92 industrial buildings for sale.
This is 1,286,685 square feet, which represents a total market value of $95,268,606.

Somewhat interesting property for sale:

3645 Jeannine Drive: The activity on this property has heated up significantly because we’ve lowered the price - to $995,000! The new price is only $20.91 psf. This property had been listed at $1,650,000; we reduced to $1,100,000 and now we’re really seriously-in-the-game for only $20.91 per square foot. This property has a firm remodel budget of $415,000 ($8.72 psf), which includes a new roof, new parking lot, new HVAC and lipstick. When it’s all done & said, this all-in investment would be $20.91 + $8.72 = $29.63 psf. As you know, you can’t frame a building for that cost. This deal produces a newly constructed, multi-tenant building with tremendous lease-up & value-added opportunity. When completed, this project, leased-up should generate between $25,000 - $30,000 per month in gross rent. This is a case study where someone buys low, adds value and thereby increases his balance sheet and income.

In case you missed the description over the past few weeks, the building is a 47,596 sf mixed use facility with warehouse on the ground floor and many small offices littered across the top floor. It is located just south of Austin Bluffs, just west of Academy. The warehouse space should lease-up for $5.50 psf modified gross and the offices should lease-up for $9.00 psf modified gross. The presumption is that the Tenants will pay rent plus utilities, snow removal, janitorial and landscaping charges.

905 Motor City Drive: This is a very clean, former tire shop that sits atop Motor City Drive. The Seller’s are very interested in getting this property off their books, now! The original listing price was $375,000. The new price, for a quick sale is $260,000. The property is 2,952 square feet on a 9,700 square foot, fenced lot. There are 2 overhead doors, with 4 service bays. For an extra $5,000, the deal could include 2 auto lifts. Here’s the value added; buy into Motor City at today’s, currently depressed pricing; lease or use the property for 3 – 5 years and sell for a profit. And, yes, Mitch, there are auto shops still-standing who would rent this building. Or use it for your toys; or share it with a friend with toys like yours; or use it as a club-house. Your wife, most-likely, really would like some time away from you.

3116 Century Street: This is a very clean, multi-tenant investment property that is being sold as part of an estate-liquidation. A friend of mine has owned this property for over 20 years. It is extremely well maintained and well tenanted with class B warehouse users. The typical bay is 1,500 square feet and the typical rent is about $12.00 psf gross. Bob Hoff priced it, so I know it’s reasonably priced. As Bob always said, “the cow is only worth as much milk as it produces.” Its 13,000 square feet. The asking price is $830,000, which is only $63.85 psf, which is $10.19 less than the market average, for an above average property.

13570 Meadowgrass: This is our office condo project. True to market dynamics, and true to the advice I dish-out, as painful as it is, (which goes to show, I share your pain!) I have dropped-my-pants to get a sale. As a percentage, we have reduced our pricing by 20%. For office condos on the north end; with I-25 visibility and unbelievable views of the Air Force Academy & the Front Range, this is the ticket.

3707 Parkmoor Village Drive: This is a bank repo. They are now very interested in selling. The asking price is $60.00 per square foot. This is selling on a 10% cap rate. The physical plant is in good condition. If you are looking for cash flow, this would work. The tenants are B rated and on short term leases, but generally, with buildings of this class, once the tenant is in place, they stay in place.

5030 Boardwalk: This is an exceptional deal because of the financing. The Seller will carry the mortgage on soft terms. Also, this is a USER SALE. The property is a good example where there has been a diminution of value because of a waning trade area. The building is clean and should not need any modification. Typically, a user/purchaser would utilize 1 of the 4 rental units and lease-out the other 3. The building is 6,383 square feet and priced at $84.60 per square foot ($540,000). The Seller will carry financing. The Seller would guarantee that that vacant space would be leased for up to 12 months after a sale.


Want to know more? Contact me Tim@HoffLeigh.com
View 100’s of listings on our web site, www.HoffLeigh.com.
719-630-2277

Tim’s Market Notes:

“He’s standing alone at midnight in the dark on a snowy, wind swept glacier just north of Anchorage. It’s cold outside. In fact it’s the coldest day of the year. It’s December 22nd - the Winter Solstice. The day is short, the night is long, and the wind chill is bitter. His stomach is growling; his head is spinning with a sense of vertigo and he feels helpless and out of control.”

This is not the start of a Steven King novel, its how many people feel about their financial situation today. With asset values plummeting all around us, a friend told me that 401K was dropping $500 per day and another told me he’s “scared,” and in 20 years of business, he’s never felt that way. The end of the world? Not hardly. Hard times? Maybe.

. . . You know Dasher and Dancer and Prancer and Vixen, Comet and Cupid and Donner and Blitzen, but do you recall the most famous reindeer of them all? Rudolph the Red-Nosed Reindeer . . . you know him . . . he was the one with the very shiny nose . . . and if you ever saw it, you would even say it glows . . . “Olive, the other Reindeer used to laugh and call him names” . . .

I guess in light of the news this week, where The Federal Reserve says M-2 rose 13.8% over the past 3 months (by the way, that is a huge predictor of future inflation); where USA Today reports that it will take decades for home values to recover and where the Labor Department reports the loss of over 530,000 jobs in November; where real unemployment has risen to nearly 7%; and where the underemployed (part timers & people who quit looking for work) now exceeds 12.5%; where real life is when one of your friends confides that her husband was laid-off and she’s been cut-back; the fact that some Reindeer bitch (its OK to call her a bitch because, while it may be politically incorrect, it’s merely a term for female mammals) laughed and called Rudolph names is not a big deal.

It’s likely that Olive had reindeer-sleigh-pulling envy. And it’s likely that Blagojevich had Obama envy; And Marc Drier really had good promissory notes for sale and Bernard Maoff wasn’t really planning to pay his new investors with his old investor’s money. All investors are smart. All children are bright. All men strong and all women are beautiful. And the whole world’s not nuts now.

I think the whole Santa and his flying reindeer thing stared in 1823 with “A Visit from St. Nicholas” or was it is September, 2008 with Ben Bernanke & Henry Paulson and the $700 Billion flying dollar thing? Rudolph was penned by Robert May for Montgomery Ward’s in 1939 and was subsequently published for free distribution to kids. Bernanke & Paulson were published for free distribution to everyone but you. By the way, you know the story. Rudolph was Donner’s son. He was born with a glowing red nose which made him a social outcast among the other reindeer. People didn’t know if his nose was red or brown. However, one Christmas Eve it was too foggy for Santa and stock price be damned, he was about to cancel his delivery schedule. Then he noticed Rudolph; a star was born and as they say, the rest is history.

Other reindeer that didn’t make the short list. For example, “Donde Esta Santa Claus” was recorded by Augie Rios in 1958. His song speaks of 2 other reindeer in a verse that goes, “I hope he won’t forget to crack his castanet, and to his reindeer say, “On Pancho, on Vixen, on Pedro, on Blitzen, Ole, Ole, Ole!”

Fireball Dasher’s son, tried-out for the 8-deer dream-team. In an era before political correctness, he was 1st loser at that time when not everybody got 1st place. There once was consequence for action. Not everybody got a bail-out. Apparently, goes the story, Fireball was more interested in the other Does than lugging-around a fat old man and a large bag of soft goods. And there was Clarice, Comet’s daughter, who didn’t even try-out for the flying reindeer team. Soft, fat and lazy is all I can say. It’s all her fault, Shannon.

According to Ray Stevens, Clyde replaced Rudolph one year. There was Bruce and Marvin and Leon and Cletus, and George, Bill, Slick, Do-Right, Ace, Blackie and Queenie; and Prince, Spot and Rover. There is something in here about the anonymity of history.

Cheech & Chong mention Chuy, Tavo and Beto. Loretta Lynn sings about “Shadrack, the Black Reindeer” who helped Santa when Rudolph became old and slow. (I think Fisher DeBerry would have something to say about this.) Joe Diffee sang about “LeRoy, the Redneck Reindeer,” who is Rudolph’s cousin and whose claim to fame was his John Deer tractor hat.

There was a 1995 video special featuring Nico who was Prancer’s love child from a one-night stand with a regular reindeer. (I kid you not – who could make this stuff up!) There was Lighning, Annabelle, Blizzard and Robbie the Reindeer. Robbie was Rudolph’s son, who as well as having his father’s red nose, had a nose for geography. Chet was clumsy. There was a “South Park Christmas” which introduced an entirely new fleet of reindeer after Santa’s were killed when his sleigh was shot down while Santa’s tried to bring Christmas to our boys Iraq.

Rusty is Rudolph’s powerless, flightless and clumsy brother who was not fit to pull Santa’s sleigh. He does the best he can with his various handi-caps and assists from the air traffic control tower. What a guy. It must have been cold standing in his shadow.

Now, the Gazette reports today, “There is no good economic news.” Sales are down; tax collections are down; unemployment is up. El Paso County is out of money yet continues to employ more public affairs officers than productive health department officials. Area home prices plummeted in November. Damn, I think I’ll root around and look for that butter knife. It’s not the end of the earth as we know it. I watched the movie on Thursday. At the end, the Robot and the Spaceman come-out of the space ship merely to warn us to change our ways. Simplify, they say. Simplify we must.

One of my friends recently told me that he’s a new father. Another friend is expecting in January. I know life will go on and get better because of the simple demographics driven by our narcissistic desire for clones. As long as we have babies, there will be markets. The ship will right itself and we’ll remember this as a bad dream. We’re not in Alaska. It’s not December 22nd.

It sounds like the bad times are here. They’re not. However, we are in for an adjustment. No knee jerk action is necessary. But a look over the long-haul is.

When we determine that commercial property as we watch it is overpriced and finally get real, activity will increase. There are millions laying-on-the-sidelines looking for opportunity. When the average listing-sale-price for office buildings is $111.13 psf and the assessor says the average market value is only $67.13 psf, something’s not right. When the average listing-sale-price for industrial buildings is $73.99 and the assessor says the average market value is $43.00 psf, something’s not right.

Want real life examples? Consider an office building that was recently offered for sale for $985,000. The assessor says it’s worth $361,000. Consider a house on the West side, where the owner knew it was worth $550,000 but the assessor says it’s worth $440,000. Consider your building. What’s it really worth? Are you a buyer or a seller? There is a saying, “Get real and get it done.” Now there’s a novel idea to ponder on a cold, dark, wind swept afternoon in December.

Wants some good news? Spring will come to Colorado and its warm in Hawaii.

If you’d like to discuss reindeer or real estate, call me at 719-630-2277.

Want to know more? Contact me at Tim@HoffLeigh.com

Focus on Charity

What: The Salvation Army
When: 52,000 meals per year
Where: The New Hope Center
Why: People are cold & hungry and not able to care for themselves
How: Contact The Salvation Army and make a donation

Want to know more? Contact me at Tim@HoffLeigh.com

I hope you had a profitable week and next week is better!

Sincerely,

TJL
Tim Leigh
719-337-9551
Tim@HoffLeigh.com


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http://hoffleigh.com/OfficeInsider.aspx

To view our Industrial Matrix List please click below
http://hoffleigh.com/IndustrialInsider.aspx