October 19, 2008

Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
October 19, 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 = $107.81 (DOWN from $110.58, last week.)
There are currently 139 office buildings for sale.
This is 1,503,642 square feet, which represents a total market value of $162,102,128.

All Market Average Industrial Building Sale Price PSF = $74.43 (NO Change from last week.)
There are currently 97 industrial buildings for sale.
This is 1,384,127square feet, which represents a total market value of $103,016,425.

All Market Average NEW-CONSTRUCTION Office Condo Sale Price PSF = $180.18
There are currently 50 newly-constructed office condos for sale. (There are no changes since last week.) This is 92,066 square feet, which represents a total market value of $16,588,858.
Interior build-out costs from shell-space range between $50 to $100 psf.
We have one office condo scheduled to close 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 = $143.71
There are currently 90 2nd generation office condos for sale.
This is 99,289 square feet, which represents a total market value of $14,269,030.
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.

Closed Sales
Currently, we have 43 buildings, sorted by office, retail or warehouse. Our list grows with input from our friends at Unified Title Insurance Company and information from our network of friends, like you. If you are aware of any closed transactions, let us know. We’ll add that data to our list for everyone’s benefit.

New Office Buildings listed this week:
None

New Industrial Building listed this week:
None

Somewhat interesting property for sale:

2808 West Colorado Avenue: This is a rehash from last week. I’m repeating it, because it is a good deal; I’ve shown it 3 times in the past week and think someone will make a firm offer this week. I you are looking for a no-brainer, and if you can stomach the fix-up and turn around time, this could be your deal. The occupancy costs are about $8.50 psf and it will rent for $12 psf when it’s done. The building is a 9,622 square foot, 2 story office building located just west of the Old Colorado City core. It is on 2 floors; there is an elevator up. There are 45 parking spaces. What makes this unique? The financing; with $50,000 down, the seller would carry a note on the following terms: 4.75% rate; 30 year amortization; 10 year balloon. For a user, this is a terrific property.

3645 Jeannine Drive: This is a 47,000 sf mixed use facility with warehouse on the ground floor and office littered across the top floor. The warehouse space should lease-up for $6.00 psf modified gross and the offices should lease-up for $10 - $12 psf modified gross. When it’s renovated and released, it should generate around $35,000 per month in cash flow. The asking price is $1,250,000 and the fix-up is going to be around $500,000. You will need financing.

2418 West Colorado Avenue: This is the Garman facility. We had an interesting showing for this property this week, as a charter school. At first blush, I thought that was a stupid idea, but then realized that it might make sense. The West Side Library is immediate behind the property; there is a city park immediately across the street. There is very ample parking and room for expansion. I guess there is truth to the idea that all the good ideas have not been taken. That was a creative, new idea. The property is still for sale. The asking price is $1,890,000.

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 all B rated; on short term leases, but generally, with buildings of this class, once the tenant is in place, they stay in place.

5030 Boardwalk: This property is a good example where there has been a loss of value because of a diminished trade area. The building is very clean and would be very well suited for a user. In fact, a user could utilize one of the 4 rental units and lease-out the other 3 units. The building is 6,383 square feet and priced at $84.60 per square foot ($540,000). The Seller will carry financing. This is an attractive financing package in the current lending environment.

2539 Weston Road: This is a small industrial warehouse condo. Its 1,500 square feet; located near the Broadmoor, with a 12 foot tall overhead door, it would be very well suited for your toys. The Seller moved to Denver and told us to unload it. It’s priced at $97,500 ($65 psf).

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

Tim’s Market Notes:

This past week was a roller-coaster. People have asked if the financial climate has impacted Colorado Springs and/or our business. Here is an example. I lost 1 sale that cost us $60,000 and a lease that cost us $20,000. We’re a good example of 1 small (non-plumbing business) company and I can attribute $80,000 in lost revenue because of the market and uncertainty. In the case of the sale, the buyer was uncertain about the election and the potential changes in health care and the possible loss of income because of medical reimbursements. In the case of the lease, the Tenant’s lender, a private lender, lost 28% of his portfolio over the past 2 weeks. I was told his was a 7 figure loss and therefore his funding was stopped.

Medical reimbursements are a big concern for most physician practices. I’ve discussed alternative business opportunities with several physicians over the past couple of months. One of my friends just returned from a family practice seminar where they told the guys to become estheticians. True to point, I have a physician client that is planning to go off-specialty and open a medical-spa. This person’s practice income is down over 40% for the year and the hope is that an alternative income source can replace the loss. Whoever said doctors “had it made” did not realize the inverted income pressure most docs face in light of government involvement in health care.

Now there is one interesting thing to watch over the next couple of weeks. I noticed that the McAfee Estate in Woodland Park is for sale again. I toured the property a year ago and determined that, in spite of its asking price, $20,000,000, it would be lucky to sell for $3,000,000. I missed on the low side. It closed for $3,200,000. It is now back-on-the-market with a minimum bid of $3,800,000.

The property is not that nice. It’s not a house. It would work very well for a wedding center or retreat center. When I previewed the property last year, McAfee himself gave me a private tour. In the course of the tour, he managed to slam his Mondo-big pickup truck backwards into a small “green” car causing more than nominal damage. All in all, I was fairly entertained. McAfee claimed that he’d turned-down a pre-emptive offer of $10,000,000. I told him he should have taken it. He went on to sell at auction for the discount. My guess is that this time around, the property will sell for $1,500,000 - $2,500,000. Like golf courses, where the 3rd owner is the guy that makes the money, this will likely be the case, in this case.

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


To view our Office Matrix List please click below
http://hoffleigh.com/OfficeInsider.aspx

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

To view our Office Condo Matrix please click below
http://hoffleigh.com/HLIOfficeCondos.aspx