October 5, 2008

Tim Leigh’s Friday Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
October 5, 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 = $110.49 (DOWN from $111.48, last week.)
There are currently 138 office buildings for sale.
This is 1,477,862 square feet, which represents a total market value of $163,289,795.

All Market Average Industrial Building Sale Price PSF = $73.71 (DOWN from $74.58 last week.)
There are currently 96 industrial buildings for sale.
This is 1,360,367 square feet, which represents a total market value of $100,266,425.

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 42 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:
310 East Cucharras Street: 2,178 square feet, $ 320,000; $146.92 per square foot.

New Industrial Building listed this week:
None Reported:

Other, somewhat interesting SOLD - LAND listings:

Property Address - Sale Date - Price - Price/SF - Acres - Days on Market

2749 Janitell Rd - 03/07 - $ 775,000 - $8.40 - 2.12 - 141
5565 Library Lane - 04/07 - $ 408,400 - $9.01 - 1.04 - 404
1975 Aerotech Dr - 05/07 - $ 757,312 - $5.50 - 3.16 - 228
7195 Templeton Gap Rd - 05/07 - $ 925,000 - $4.25 - 5.00 - 488
8870 N Union Blvd - 10/07 - $3,400,000 - $36.99 - 2.11 - 330
5055 N 30th St - 10/07 - $1,025,000 - $8.34 - 2.82 - 50
3585 Hartsel Dr - 12/07 - $ 625,000 - $10.10 - 1.42 - 376
00 W Fillmore St - 12/07 - $1,061,000 - $19.98 - 1.22 - 439
00 Nautilus Peak - 01/08 - $1,374,373 - $6.70 - 4.71 - 228
3770 E Uintah St - 03/08 - $ 440,000 - $3.54 - 2.85 - 309
690 W Garden Of Gods Rd - 04/08 - $1,095,000 - $14.79 - 1.7 - 73
11203 Rampart Hills - 05/08 - $2,175,000 - $9.98 - 5.01 - 85
00 Drennan Rd & Academy - 05/08 - $ 790,000 - $10.48 - 1.73 - 532
950 W Fillmore St - 05/08 - $ 788,700 - $9.48 - 1.91 - 564
7580 Ponca Rd - 07/08 - $ 485,000 - $2.31 - 4.81 - 528
*The average time for any land to sell in our market is well over a year.

6310 East Cucharras: This is a 2,178 office building for sale. The agent information says this is a Victorian building in close proximity to the Central Business District, just east of downtown. The photo of the building on the agent’s web site shows a house located on North Weber Street. So, who knows? The agent goes on to say, “the building consists of 2 floors with 3 offices, kitchen & bath on the main floor and 4 offices on the upper floor. Storage is available in the partial basement. The building has new plumbing & electrical; beautiful hardwood floors; fireplace & lots of light throughout.

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

Tim’s Market Notes:

The obvious news of note this past week is the financial crisis in New York City. One of my client’s, who is heavily invested in the stock market, and who is a director with a private investment banking company, wanted to know if there were any good single family homes to purchase in our “safe” market. That is a good illustration of a good mind getting better. Single family homes have always been good investments. People need a place to live. Personally, I don’t buy any single family home for my own account, unless it is a place I’d personally live. I look for some ambience; is there a mountain view? Does it back to a green belt? Seems to me that we tend to complicate investment choices, when in reality, investing is somewhat pedestrian and boring. Once set, if the deal works, you can tend to let it work by itself over time. Single family homes are a good example of this process. They generate cash flow; they appreciate over time; they amortize favorable lending; normally all paid for by a tenant. But, they are boring and they are certainly are not sexy. As for the management, it is no different than a commercial property if the tenant screening is well done and if the lease and other paper is “good”. And of course, the crass commercial message – Hoff & Leigh can manage these properties for you, should you decide to track down this path.

I’ve attached an article written by George Freidman that explains the current financial situation and adds some historical perspective. I’ve added the contents of letter that I received from Bob Hoff below. Please enjoy these comments.


Real Estate 101:

“His name was George F. Babbitt. He was 46 years old now, in April 1920, and he made nothing in particular, neither butter nor shoes nor poetry, but he was nimble in the calling of selling houses for more than people could afford to pay.” “Babbitt” by Sinclair Lewis (1922)
I asked Bob Hoff for his spin on the recent events in Washington and Wall Street. What follows are his comments. For those of you who don’t know, Bob was my business partner for 20 years. He is now semi-secluded on a golf course in Arizona, where his major life crisis normally involves a long-handled pool scrubber. In a former life, Bob was the Mortgage Finance Chairman for the National Home Builder’s Association; the Vice-Chairman of the Kentucky Housing Corporation and was twice voted the National Home Builder of the Year.
“And the wolf finally came.

Well, what do you expect? In the last 16 years, we’ve had the slyest administration in the nation’s history and the dumbest since Millard Fillmore. The US economy has been running on blue smoke and mirrors for years and the unholy alliance of Wall Street and the US Congress finally ran it over a cliff.

No doubt it felt good to kick all the damn fools in Washington and New York in the shins on Monday. But that doesn’t get the job done. We’ve got to solve the immediate problem and that means we’ve got to get the financial markets moving again and American workers business producing again. Yes, I understand the bitter resentment we all have for the greedy & arrogant Wall Street operators who look down their nose at all of us in flyover country. However, the proposed bailout as it seems to stand now looks to provide strong oversight looks to prevent excessive compensation of those overseeing the bailout and it looks to provide the opportunity for Uncle Sam eventually to recover his front money. It will cause some substantial increment of inflation as Uncle Sam obviously doesn’t have the money and must either print it or borrow it at interest. So tell your congressman to hold his nose and vote for the bailout.

Once that’s done, it’s time for the post mortem so that we don’t have to do this again. Oh, there’s plenty of blame to go around. The US has balanced its budget in only 4 of the past 40 years. Spare me the Keynesian logic of Federal stimulus. Stop any citizen on any Main Street in any town in America and he or she will tell you that you cannot go on year after year spending more than you take in. Why do we know that - and Congress doesn’t? Countries, like individuals, have got to have a cushion to cover emergencies. In fact the Federal government, required all financial entities to maintain certain reserves and only with the Financial Services Modernization Act of 1999, approved by Bill Clinton and passed by our Congress, did we open the doors to all kinds of lending powers to all those entities and lower the reserve requirements. And in the year 2000, still in the Clinton administration, Congress passed the Commodity Futures Modernization Act which further “protected the financial institutions from overregulation.” Yes, it surely did that.

And then Congress, in general, and Rep. Barney Frank of Massachusetts in particular, pushed Fannie Mae and Freddie Mac to lower their standards for credit approval. And then the hedge funds and the brokerage houses and the investment bankers lowered their standards; and the ratings people – Standard & Poor’s and Moody’s, etc. – lowered their standards and pulled ratings out of thin air. Then we got no-down- payment loans and builder-assisted down payment loans and adjusted rate loans (exploders!) and ninja loans (no income, no job, no assets) and jumbo loans and Alt-A loans (no verification of income).

Who made these loans? Why, your friendly, local mortgage lenders. They made the loans, charged a whole schedule of imaginative fees, took the fees into earnings which raised the value of their stock and then sold the loans to hedge funds (maybe Bear Sterns) or an investment bank (maybe Lehman Brothers). Then they made a new loan from the sale of the old one. It was as close to the perpetual motion machine as you can get. And, of course, he didn’t care if it was a bad loan or a marginal loan. He was gone – down the road to the next one.

Then the buyer packaged these loans in a pool of mortgages, issued bonds with the loans and the underlying security, obtained his Scarlet AAA rating from the rating company and sold the bonds to an investor here or abroad.

How dumb is this? Ask any citizen on any Main Street in any town in America and he or she will tell you that you don’t make a mortgage loan to someone who has no job or income or assets. How’s come we know that and Congress doesn’t? Well it isn’t just dumb; it’s greedy and the ability to pass the problem off on someone else.

Something like 44% of our Gross National Product to day derives from the financial sector and only 20% from manufacturing a product, where it was 20/44 the other way in 1965. A fellow named Kevin Phillips said it well not long ago. “The credit markets – banks, investment banks, hedge funds, mutual funds, etc – have increasingly been used less to facilitate economic activity and more and more to leverage bets on asset prices.”

So what do we do now? We better bet some kind of a bailout bill passed just to restore confidence in the financial system. And I’m not so sure that the Federal Government is going to lose billions in the bailout. If it buys those debt instruments at a deep discount – 50%, 60% or 70% - of face value and then holds them to payoff or maturity, we’re likely to get our money back. 90% of all mortgage loans today are current; they’re not in foreclosure or delinquent. When some do go into foreclosure if they are properly maintained and managed for a reasonable time and are not sold on a fire sale, the government will probably make money on them. We just need to make sure that they are managed by responsible and capable local real estate management companies and not by the same set of greed-heads who helped to cause the problem.

We need to see that responsible underwriting standards are used. There is nothing intrinsically wrong with no down payment or low down payment loans. FHA and VA have proved that. But the borrower does need a good credit history and a stable employment record and a reasonable ratio of assets to debts. And if he does have a down payment with money he earned or inherited or obtained in some responsible manner and not provided by the builder or with a second mortgage, so much the better.

Lenders in Europe use a debt instrument called a covered bond. The lender originates a mortgage, pools them and then issues bonds backed by those mortgages. He then guarantees a certain percentage of the face amount of the mortgages. Because the lender has made this guarantee, he is interested in making a good loan. Yes he still has some contingent liability but it is lessened by only guaranteeing a percentage and, of course, as time passes his possible liability lessens. And, of course, his real liability is limited by his making good loans.

It isn’t that those officials, elected or appointed, don’t recognize the consequences of their actions, or their inactions. Most are intelligent and capable individuals. They are simply unwilling to present the voting public with the needed actions for fear of losing an election or an appointment. They have so great a love of office that they shut their eyes and they shut off their minds. And someday we’re going to have to address that problem. The Founding Fathers never imagined that we would end up with a set of permanent office holders such as we have now.”

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

Marketing 101:

Keys to Success

In my travels & teaching, I find that most young business people want to know one thing – how to get rich! Of course that’s the wrong question, but it leads me to an evening over 30 years ago while I was still working on my BSBA. My friend Marland and I went to an AMWAY dream night at the armory auditorium in Grand Forks, North Dakota. The speaker cried out, “Who would like to have a lake cabin?” Marland looked at me and said, “I have one of those.” The speaker cried out, “Who would like to have a speed-boat?” Marland looked at me and said, “I have one of those, too.” The speaker cried out, “Who would like a motor home?” Again, Marland said, “I have one of those.” When the speaker asked who wanted a corvette and Marland had one of those, he said, “Let’s get out of here. I already have everything this guy has.” Over time, Marland helped me learn some of the following keys to success.

1. Find something you love – make your avocation your vocation
2. Develop a vision; refine your vision to a set of goals; write them down; commit to action
3. Develop a missionary zeal for your work
4. Act like you’ve already made it
5. Remember, “You become what you think about all day long.”
6. Keep a journal

The real trick to success is not success per se, but. It’s becoming the new person. Its becoming the new person you have to become, who does those things that successful people do. Figure out what you want. Find someone who has what you want. Do what they do. You should get their results. It’s pretty simple.

If you want a copy of my full article, e-mail 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