November 17, 2008

Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
November 17, 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 = $110.25 (DOWN from $110.83, last week.)
There are currently 110 office buildings for sale.
This is 1,210,092 square feet, which represents a total market value of $133,414,895.

All Market Average Industrial Building Sale Price PSF = $74.52 (DOWN from $74.63 last week.)
There are currently 101 industrial buildings for sale. (This is 2 more than last week.)
This is 1,406,179 square feet, which represents a total market value of $104,793,925.

All Market Average NEW-CONSTRUCTION Office Condo Sale Price PSF = $178.64
There are currently 53 newly-constructed office condos for sale. (This is 3 new listings since last week.) This is 98,066 square feet, which represents a total market value of $17,518,858.
Interior build-out costs from shell-space range between $50 to $100 psf.
We anticipate 1 office condo closing this week. The office condo market seems to be picking up a bit of steam, however slowly.

All Market Average 2nd Generation Office Condo Sale Price PSF = $140.88
There are currently 96 2nd generation office condos for sale.
This is 114,431 square feet, which represents a total market value of $16,121,363
2nd generation office condos are defined as “office condos which have been previously occupied and therefore, are already built-out”. It is my opinion that now is an opportune time to purchase 2nd generation office condos because they can be purchased at very deep discounts from their newly constructed counter-parts and from their replacement costs.

New Office Buildings listed this week:

3919 Palmer Park Boulevard: This is a 2 story building located near the corner of Palmer Park and Academy just behind the Subway Sandwich Shop. Its major tenants are a shoe repair and an Asian massage parlor. Run out and make an offer on this at $396,000. The listing agent offers good terms (if you’re the seller). He wants one easy payment! I’m not feeling the love.

New Industrial Building listed this week:
905 Motor City Drive: This property intrigues me. It is one of our new listings. It sits atop of Motor City Drive. It has been used as the Southpointe Lincoln dealership’s tire store. The building is 2,952 square feet. The asking price is $375,000. It is perfect for a small auto related business or for your toys. The overhead doors are 12’ feet tall. Your motor home would fit.

Somewhat interesting property for sale:

3055 Austin Bluffs Parkway: This building is one that we’ve had listed for some time. The pricing strategy has just changed to “sell it now”. The property is very clean. It abuts the north side of Palmer Park. The lower level is leased on a long term basis. There is about 3,000 square foot for a buyer’s use. The building has a current assessor’s value of $622,687. The newly lowered asking price is $575,000. At 5,493 square feet, this is $104.68, which is less than the city-wide average sale price for office buildings. With the completion of the Austin Bluffs over-pass, access to I-25 is easy. If you are looking for a place to call home-sweet-home, I recommend looking at this.

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 a good 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.

3645 Jeannine Drive: This is the deal of the week, this week. We have decided to drop the price to reflect the current market. The property has been listed at $1,650,000 ($34.67 per square foot), which is the lowest cost per square foot listing in the market. Apparently the market still doesn’t like the pricing so we’re lowering the price to $1,100,000, cash. This property will take about $375,000 to remodel. When its’ done, the $1,475,000 “all-in” investment ($30.99 psf) is a newly remodeled building, (including a new roof, new parking lot, new HVAC, new windows, new paint & carpet), property, with multi-small-tenant leasing opportunities that should generate around $31,000 in gross MONTHLY income. This is a case study of a property where someone wants to buy low, add value and increase the balance sheet and income value.

In case you missed the description last week, the building is a 47,000 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 $6.00 psf modified gross and the offices should lease-up for $10 psf modified gross. The presumption is that the Tenants will pay rent plus utilities, snow removal, janitorial and landscaping charges.

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:

The hardest part of writing a weekly column is coming up with relevant topics of interest to the receiving audience. This is a column about commercial real estate in Colorado Springs; ergo the audience normally would like to know about “good deals” and trends in our market. To that end, I spent the weekend evaluating deals, and I confess they’re not many afoot. I have also spent the weekend thinking about the past week and meeting with clients who are feeling tremendous pressure & expressing it as fear about the future, anticipating slow sales mostly resulting from tightening credit options and general inaccessibility to capital. I had a friend tell me that if he’s not able to find a financial partner by June, he’ll be out of the game; another told me that he’s planning to lay-off nearly ½ of his 125 employees just after the holidays and another tell me that he’s already down-sized from 48 to 17. I introduced a client to one of my banker buddies who basically told him that his request for lending was hopeless given current market conditions. (On a positive note, we did find suitable alternative financing and as a note to self, there is money for commercial property looking for places to land.) I think about the world and the economy and wonder what the future holds in store. I read more than ever. I’m trying to wrap my arms around the chaos and understand the global systemic change that is occurring before our very eyes. I watched Secretary Paulson on CSpan the other night. Did you catch him? He looked nervous and his thoughts were incoherent. He instilled no confidence that he had the situation under control; that he has a clue. I wonder if the current administration is merely holding-on and hoping they can escape before the roof falls-in on them.

To gain some sense of our world situation, I have read and have been recommending “Revolutionary Wealth” by Alvin & Heidi Toffler as a basic primer. The Toffler’s are futurist whose claim to fame is “Future Shock”.

Toffler writes, “Yet even with all the reportage on business. . the biggest story of all, the historic transformation of wealth, was missed.” He says, “By now, even the dimmest observer recognizes that the US and numerous other countries are transitioning to brain-driven, knowledge economies and the past ½ century has merely been the prologue.” He says that the revolutionary change we are experiencing is an upheaval similar to, but more sweeping than the industrial revolution when thousands of seemingly unrelated changes came together to form a new economic system. We are witnessing the birth of a new system; a new way of doing business and a new way of life with totally new rules.

The world swirls. Toffler writes that “e-mails bombard us and E-Bay makes marketers of us all. We read about corporate scandal and about drugs that are belatedly pronounced too dangerous and yanked off the market. Robots go to Mars but computers, software, cell phones and networks constantly fail”. (We witnessed that first-hand last week when you received 15 copies of this column!). “Meanwhile street gangs from LA roam across Central America building quasi-armies; 13 year old aspiring terrorists depart France for the Middle East to learn their trade and Prince Harry dresses as a Nazi. To escape, we turn to reality TV, which is not real. And institutions that once lent coherence, order and stability to society (and our daily lives), schools, hospitals, families, courts, regulatory agencies, religious organizations, trade unions, flail about in chaos.”

He continues by saying that the combination of economic high-wire acts and institutional failures leaves individuals face-to-face with potentially devastating personal problems. They question if they’ll receive pensions they’ve worked their entire lives for. In fact, I was told that when Delta Air’s pensions were taken by Congress, they lost 80% of their value. Ugh! How’d you like to go from a pension of $500,000 to $100,000? By a government stroke of a pen? Ever thought about how you’d look in a blue vest? In self-defense, a United Airlines pilot I know is selling cars “on-the-side”. People now question whether they can afford gas (and I know we are experiencing a mild respite from sky-high prices) or healthcare. They agonize over the appalling condition of public education; worry about crime, drugs and an anything goes morality. And, at the end of the day, they worry about how all this change and chaos will affect their wallet or whether they’ll have a wallet. I know several millionaires and have heard about guys with financial statements that used to start with a “B” who are now looking for jobs. There is tremendous talent on the street. But, when they’re used to an “A” lifestyle, I wonder what you’d plug that talent into? What can or will these guys do?

The good news is that Toffler forecast that tomorrow’s economy will present significant business opportunities in fields like hyper-agriculture, neurostimulation, customized health care, nanoceuticals, bizarre new energy sources, streaming payment systems, smart transportation, new forms of education, programmable money, etc. and new, previously unidentified industries, such as a “synchronization industry” and a “loneliness” industry. The loneliness industry? I’ve been contemplating that and wonder how many people we know feel lonely, disconnected and out of control because of circumstances beyond them.

Toffler says new wealth systems don’t come along often and they don’t travel alone. He says that each carries with it a new way of life. Not just new business structures, but new family formats; new kinds of music & art; new foods; fashions and standards of physical beauty; new values; new attitudes toward religion and personal freedom; all which interact with and shape the emerging new wealth system.

He thinks America is spearheading this new civilization which is built around this revolutionary way of creating wealth. Nations and regions around the globe are rising or falling as they feel the impact. Today, millions of people around the world hate the US. Fanatics want to incinerate us. The reasons they give range from Middle East policies to bla, bla, bla. Yet even if peace reigned in the Middle East; if all the world’s terrorists turned pacifist and democracies flowered like weeds, the rest of the world would still view the USA with trepidation. This is because the new wealth system developing in the US is, by its very nature, threatening to the old embedded financial and political interests around the world.

“Because America’s emergent culture promotes greater individuality, it’s seen as a threat to community. Worse yet, because it has loosed some of the traditional sexual, moral, political, religious and lifestyle constraints placed on the individual during earlier economic eras, it’s seen as dangerously seducing the young into license and decadence”. As we lose a sense of the larger community we will gravitate to newly formed, more closely knit communities.

So where does this leave us today? Likely, this week we’ll see the DOW rise and fall 200 – 300 points, and when once we thought that that was the end of the world, it’s now considered part of the landscape. We’ll adjust and realize that there’s an economy, (there will always be an economy and business will continue to be done) albeit a new economy, and we’ll go to work, one step at a time and survive. Some will thrive.

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

Focus on Charitable Event

What: Red Kettle Breakfast
When: December 2nd, 7:00 AM
Where: Antler’s Hilton
Why: Fundraising Kick-Off for The Salvation Army
How: Show up and pay up@

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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