December 31, 2008
December 29, 2008
Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
December 29, 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 = $110.59 (DOWN from $111.13 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 = $73.82 (DOWN from $74.04 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:
2760 North Academy Boulevard: This is the small building at The Offices at the Park. The price was dropped from $750,000 to $540,000 which now makes it for sale at $40.98 per square foot. At this price, it is a great value. The property needs to be re-tenanted. The physical plant it in good condition with no apparent roof or HVAC issues. There is plenty of parking.
3645 Jeannine Drive: This is like an auction. I’m lowering the price again. You will have to call to find out what the deal is. This is the best opportunity for a value added investor in the market. At the current list price, $995,000 it’s 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 or MAKE AN OFFER. 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: UNDER CONTRACT. This is a bank repo. They were very interested in selling; they lowered the price and the buyer showed up as predicted. The asking price was $60.00 per square foot. This is selling a 10% cap rate. The physical plant’s in good condition. This is a cash-cow. 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: THE SELLER IS MOTIVATED. MAKE AN OFFER. 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 doesn’t need 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 would guarantee that vacant space leases.
Want to know more? Contact me Tim@HoffLeigh.com
View 100’s of listings on our web site, http://www.hoffleigh.com.
719-630-2277
Tim’s Market Notes:
I don’t know what your Christmas was like, cold most likely, unless you’re my friend Lee, in Australia, where it’s warm this time of year. Personally, I knew that if I didn’t leave town, I’d spend Christmas day working. And, how boring does that sound? And how stupid? What can I say?
So, it was “off to San Francisco” and a visit with the kids. It was a great trip. We saw Phantom of the Opera; hiked the pristine coastal wetlands just north of the Golden Gate Bridge; and saw more people with nothing to do that I’ve seen in one place. In fact, I didn’t know there were so many people with no place to be and nothing to do until we spent the morning at Fisherman’s Warf!
I thought about our commercial real estate market and knew you’d be interested in some of the following statistics furnished by Paul Turner. Mr. Turner publishes a quarterly report outlining the state of commercial real estate in the Pikes Peak region. According to Turner’s database, only 190 office buildings have sold in Colorado Springs since 2000. Not believing that statistic, I called Paul. He told me not to panic. That in fact, nearly 685 office buildings have sold, but he has only been able to secure good sale data on 190 of them. Something about cooperating real estate brokers; for sale by owners and pocket listings!
Virgil McCormack always told me, “Figures lie and liars figure.” So, how do the figures lie?
Year - Asking Price PSF - Selling Price PSF - Total SF Sold
2000 - $100.95 - $ 93.21 - 123,560
2001 - $ 99.25 - $ 87.67 - 268,969
2002 - $104.96 - $ 88.72 - 196,642
2003 - $ 83.35 - $ 78.68 - 132,624
2004 - $ 89.68 - $ 78.72 - 249,131
2005 - $100.43 - $ 92.80 - 276,376
2006 - $111.31 - $104.09 - 217,167
2007 - $138.35 - $125.03 - 217,419
2008 - $90.71 - $81.27 - 177,911
The best year to have been a seller was last year; oops, did somebody say, “a day late and a dollar short?” The price declines we have seen so far this year have been substantial and they will be called dramatic by the end of 2009.
Then, finally, some good news. The Economic Development Corporation (EDC) said they have tracked 1,287 new jobs that will “come-on-line” in Colorado Springs over the next 3 years, generated from 13 EDC assisted companies. The financial impact from these 1,287 primary jobs is the creation of a multiplier of 2.5 new local jobs, or the equivalent of 3,218 new jobs. They are sure to have a nice, financial impact on the region.
And Major General Mark Graham said that the fabled 12,000 new troops, who have been forecast to arrive at Fort Carson is a done deal; the orders have been cut and we should expect to see the troops clogging up our roadways by mid-summer. According to smart people who figure this stuff out, each new troop will have 2.5 dependants attached to him/her. The net effect will be a swelling population – to between 25,000 – 30,000 new people moving to Colorado Springs over the next few months.
While it is easy to get lost in the TARP, Madoff and other grave financial issues of the day, it will do us all good to remember that, according to Little Orphan Annie, “The sun will shine tomorrow.”
Happy Holidays!
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
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
December 21, 2008
.
Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
December 21, 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 (NO CHANGE from 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 (NO CHANGE from 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: This is like an auction. I’m lowering the price again. You will have to call to find out what the deal is. This is the best opportunity for a value added investor in the market. At the current list price, $995,000 it’s 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 or MAKE AN OFFER. 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: UNDER CONTRACT. This is a bank repo. They were very interested in selling; they lowered the price and the buyer showed up as predicted. The asking price was $60.00 per square foot. This is selling a 10% cap rate. The physical plant’s in good condition. This is a cash-cow. 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: THE SELLER IS MOTIVATED. MAKE AN OFFER. 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 doesn’t need 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 would guarantee that vacant space leases.
Want to know more? Contact me Tim@HoffLeigh.com
View 100’s of listings on our web site, http://www.hoffleigh.com.
719-630-2277
Tim’s Market Notes:
I’m always amazed by the myriad things to poke fun at. Every week I think, “You can’t make this stuff up!” Watching the current political scene . . . Will the idiot Governor with the big hairdo resign? What does he know about Obama? Will someone kill him? It’s classic soap opera drama. Then, just when it can’t get any better, along comes Mardoff’s Ponzi scheme.
Ponzi schemes are named for Charles Ponzi, who in 1920 lured thousands of small investors into a deal that looked safe & lucrative using government stamps. He made millions – in 1920! If you can imagine, people actually mortgaged their homes to invest. He offered guaranteed returns! What was his trick? He paid 1st investors with money from last investors. That’s what Mardoff did. And, is case you’re wondering, there is nothing new under the sun.
And there’s our social security system. It’s the same. The money collected by our fathers in Washington is supposed to be held in trust. Oh yea, I forgot; the government figured out a way to transfer that money from the trust to the general fund thinking they could fund the social security obligation on the backs of the next generation of depositors. Can you say Ponzi? Mardoff? As long as there are more deposits than withdrawals, we’re OK. Unfortunately, there’s a science called demography. It says baby boomer are going to stop putting money in, and, Yicks!, start taking money out, and when that happens, we’re going to be Mardoff’d. I can’t wait until Monday to find out what’s going to happen next. It’s like watching Dallas reruns.
As entertaining as all this is, the week did unfold a very non-descript press release that calls for a sobering wake up call. Warren Buffett, Alan Greenspan, David Walker and other politicos call our national fiscal irresponsibility the single biggest looming disaster facing America today (aside from a nuclear attack on our homeland). The following link is something everyone should watch http://www.iousathemovie.com/. The startling news from the Peter G. Peterson Foundation (http://www.pgpf.org/) says “The sum of America’s liabilities and other financial commitments now exceed the collective net worth of its citizens.”
So you don’t fly off the handle and think I’m writing right wing, nut-job garble, you should know that David Walker, the former Comptroller of the Currency and former head of the Government Accounting Office (GAO) is the President of the Peterson Foundation. He’s tracks these non-partisan figures. They’re scary and they significantly impact the way you should look at your business, investing and our kids’ future.
Peterson’s figures were calculated using the government’s latest data including growth in unfunded commitments for Social Security & Medicare and the drop in American’s net worth, which is driven, in part by diminishing home equity (in September, national housing stock was valued 31% lower than 1 year ago) and the precipitous drop in our stock & mutual fund holdings, which according to The Economist, have lost nearly $2,400,000,000,000 (that’s trillions of dollars; you recognize a lot of money when you count 4 groups of zero’s) in value, in the last 18 months. That’s a loss of 1/5 of their value; for the math challenged, that’s called a 20% haircut. It’s not likely that Obama can throw enough money at our deficit to save us this year. By the way, these figures don’t take into account the recent market declines or newly proposed bailouts.
I decided to dig a little to see just how upside-down we are. According to government financial statements, we have approximately $56.4 trillion in national debt. That’s against the Federal Reserve’s estimate of total household net worth of $56.6 trillion. It could be worse. From the Sunday Gazette, “Pale blue bank notes that say Z$1,000,000 Zimbabwean dollar really means Z$10,000,000,000,000,000,000, or Z$10 quintillion. (I chuckle when I read that because you truly can’t make this stuff up!) In Zimbabwe, inflation is so out-of-control they can’t figure out what Z$1 million note is actually worth on any given day.”
So how about a quick lesson in simple math? The Federal Budget is pretty easy to understand. Our situation looks like this:
SOURCE OF NATIONAL INCOME:
Personal Income Tax: $1,220,000,000,000 B
Payroll Tax: $ 910,000,000,000 B
Corporate Income Tax: $ 345,000,000,000 B
Other income: $ 46,000,000,000 B
Total Expected Income: $2,521,000,000,000 T
NATIONAL EXPENSES:
Social Security: $ 610,000,000,000 B
Medicare: $ 330,000,000,000 B
Medicaid: $ 204,000,000,000 B
Military: $ 607,000,000,000 B
Everything else: $ 936,000,000,000 B
Education
Veterans Benefits
National Parks
Food Stamps
Roads & Bridges
NASA
Interest costs of our National Debt: $ 244,000,000,000 B
Total Expected Costs: $2,931,000,000,000 T
DIFFERENCE: $ 410,000,000,000 B
Damn. A smart guy in Washington once said, a billion here and a billion there and pretty soon we’re talking about real money. Its pretty easy to see that we produce less than we consume. It’s simple math. It’s about $410 Billion. Our expenses exceed our income. I can’t make it any simpler to understand than that.
We got here by following government policy. We borrowed our way to prosperity. We leveraged our future on the expectation of ever increasing value. And as we’ve now learned, nothing, (as Ponzi & Mardoff would likely confess), ever goes up forever. However, we live in a unique time so we don’t have to accept responsibility. You see, Shannon, we’re not to blame, because remember, in our culture, “Nobody’s personally culpable for their actions and everybody else is to blame.”
Individually and collectively, we spend more than we produce. That creates a negative savings rate. Again, from history; in 1960 we saved 12.4% of our national income; at our peak, in 1980 we saved 13.6% of our national income; in 1990, we saved 6.7% and started down the slippery slope. Our national saving rate is now a negative 2.9%. Basically, as a nation, we go backward every month. Do you know anybody who runs out of money before they run of out month? That’s what I’m talking about.
And, unfortunately, it now seems like the incentive to save has disappeared. Figures from Morningstar say, if Joe the Plumber saved $100 per month for the past 10 years, in an average equity fund, he would have accumulated $10,932. That’s $1,068 less than the total of his deposits. (The mattress sounds pretty good – unless you’ve got a Seat under which you can store your savings; or just sell.) And by the way, AARP says that as regards savings, “Only 37% of retired people have a pension plan that works”.
So that you don’t think I’m a Bah Humbug, listen to what my friend Barry Kold told me. He says, “Financial markets tend to revert to the mean.” He goes on, “High past investment returns normally indicate low future investment returns. But, on the other hand, low past investment returns create an opportunities for stout-hearted investors”.
Historically, Joe the Plumber bought high and sold low. Barry said, “Now is the time to take stock and start saving & investing.” Buy low and. . . Hmm, that’s an interesting concept.
Our national financial crisis (and that nobody saves), has implications for real estate, which is what I’m supposed to be writing about. Non-savers don’t have money needed for down payments; they don’t have capital available for inevitable capital calls, which trust me, will come in 2009 as loans reset. What are the implications? You don’t need a degree in Rocket Science to figure that out. Ouch. (Anecdotally, one of our buyers just went under contract on the 1st Bank Repo of the New Year. It’ll close January 30th!) Banks will call notes; foreclosures will occur and assets will be reallocated to people with cash. Uh, people with cash - those would be called savers! Their powder’s dry. They have bait. They have skin to put into the game.
I used to think people were pretty savvy with savings and budgets. Then I overheard Barry discuss a large furniture-rental company’s operation. He was explaining a concept called Golden Handcuffs. Basically, he was talking about guys who buy Mondo Sized houses and become house-poor. They actually rent their furniture! Goes hand-in-hand with the $800 per month car payments! Then I read about Mardoff’s savvy client list. Then I think (in my best North Dakotan accent), “What the heck, hey, I’m not doing too darn bad.” My chicken, little investments, unsophisticated as they are, actually return principal & nominal profit. Getting an annualized 8% - 20% on a single family house or small commercial building looks pretty darn good!
So where do we go from here? The reality check was in order. We got that this month. The economy couldn’t inflate forever. Resetting the game is a natural part of our economic cycle. Resetting allows us to ride the inflation bus again. And, in case you were wondering, the government has to inflate the economy (see above!) to cover itself. What’d they say, “Follow the money?” How about this, “Follow the zeros”.
Where do we go from here? Short term there will be a lot of hurt. Owner’s - take leases at most any rate! In the long run, if you understand the rules of engagement, you can win. If you don’t, you’ll likely be put out of the game. Long-term, real estate is a great place to be. But, you have to have staying power. That’d be the concept of saving. Barry says “Lowered interest rates and a government sponsored economic stimulus packages will jump start things”. Then, he says, “Like everything the government does well, its reaction will be overkill and inflation will rear its ugly head. The smart guys in Washington will demand high interest rates by the Fed to combat inflation and kill the small guy in the process”.
There is an ignorance tax. That may be the lesson in all of this.
Happy Holidays!
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
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
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
December 21, 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 (NO CHANGE from 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 (NO CHANGE from 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: This is like an auction. I’m lowering the price again. You will have to call to find out what the deal is. This is the best opportunity for a value added investor in the market. At the current list price, $995,000 it’s 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 or MAKE AN OFFER. 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: UNDER CONTRACT. This is a bank repo. They were very interested in selling; they lowered the price and the buyer showed up as predicted. The asking price was $60.00 per square foot. This is selling a 10% cap rate. The physical plant’s in good condition. This is a cash-cow. 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: THE SELLER IS MOTIVATED. MAKE AN OFFER. 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 doesn’t need 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 would guarantee that vacant space leases.
Want to know more? Contact me Tim@HoffLeigh.com
View 100’s of listings on our web site, http://www.hoffleigh.com.
719-630-2277
Tim’s Market Notes:
I’m always amazed by the myriad things to poke fun at. Every week I think, “You can’t make this stuff up!” Watching the current political scene . . . Will the idiot Governor with the big hairdo resign? What does he know about Obama? Will someone kill him? It’s classic soap opera drama. Then, just when it can’t get any better, along comes Mardoff’s Ponzi scheme.
Ponzi schemes are named for Charles Ponzi, who in 1920 lured thousands of small investors into a deal that looked safe & lucrative using government stamps. He made millions – in 1920! If you can imagine, people actually mortgaged their homes to invest. He offered guaranteed returns! What was his trick? He paid 1st investors with money from last investors. That’s what Mardoff did. And, is case you’re wondering, there is nothing new under the sun.
And there’s our social security system. It’s the same. The money collected by our fathers in Washington is supposed to be held in trust. Oh yea, I forgot; the government figured out a way to transfer that money from the trust to the general fund thinking they could fund the social security obligation on the backs of the next generation of depositors. Can you say Ponzi? Mardoff? As long as there are more deposits than withdrawals, we’re OK. Unfortunately, there’s a science called demography. It says baby boomer are going to stop putting money in, and, Yicks!, start taking money out, and when that happens, we’re going to be Mardoff’d. I can’t wait until Monday to find out what’s going to happen next. It’s like watching Dallas reruns.
As entertaining as all this is, the week did unfold a very non-descript press release that calls for a sobering wake up call. Warren Buffett, Alan Greenspan, David Walker and other politicos call our national fiscal irresponsibility the single biggest looming disaster facing America today (aside from a nuclear attack on our homeland). The following link is something everyone should watch http://www.iousathemovie.com/. The startling news from the Peter G. Peterson Foundation (http://www.pgpf.org/) says “The sum of America’s liabilities and other financial commitments now exceed the collective net worth of its citizens.”
So you don’t fly off the handle and think I’m writing right wing, nut-job garble, you should know that David Walker, the former Comptroller of the Currency and former head of the Government Accounting Office (GAO) is the President of the Peterson Foundation. He’s tracks these non-partisan figures. They’re scary and they significantly impact the way you should look at your business, investing and our kids’ future.
Peterson’s figures were calculated using the government’s latest data including growth in unfunded commitments for Social Security & Medicare and the drop in American’s net worth, which is driven, in part by diminishing home equity (in September, national housing stock was valued 31% lower than 1 year ago) and the precipitous drop in our stock & mutual fund holdings, which according to The Economist, have lost nearly $2,400,000,000,000 (that’s trillions of dollars; you recognize a lot of money when you count 4 groups of zero’s) in value, in the last 18 months. That’s a loss of 1/5 of their value; for the math challenged, that’s called a 20% haircut. It’s not likely that Obama can throw enough money at our deficit to save us this year. By the way, these figures don’t take into account the recent market declines or newly proposed bailouts.
I decided to dig a little to see just how upside-down we are. According to government financial statements, we have approximately $56.4 trillion in national debt. That’s against the Federal Reserve’s estimate of total household net worth of $56.6 trillion. It could be worse. From the Sunday Gazette, “Pale blue bank notes that say Z$1,000,000 Zimbabwean dollar really means Z$10,000,000,000,000,000,000, or Z$10 quintillion. (I chuckle when I read that because you truly can’t make this stuff up!) In Zimbabwe, inflation is so out-of-control they can’t figure out what Z$1 million note is actually worth on any given day.”
So how about a quick lesson in simple math? The Federal Budget is pretty easy to understand. Our situation looks like this:
SOURCE OF NATIONAL INCOME:
Personal Income Tax: $1,220,000,000,000 B
Payroll Tax: $ 910,000,000,000 B
Corporate Income Tax: $ 345,000,000,000 B
Other income: $ 46,000,000,000 B
Total Expected Income: $2,521,000,000,000 T
NATIONAL EXPENSES:
Social Security: $ 610,000,000,000 B
Medicare: $ 330,000,000,000 B
Medicaid: $ 204,000,000,000 B
Military: $ 607,000,000,000 B
Everything else: $ 936,000,000,000 B
Education
Veterans Benefits
National Parks
Food Stamps
Roads & Bridges
NASA
Interest costs of our National Debt: $ 244,000,000,000 B
Total Expected Costs: $2,931,000,000,000 T
DIFFERENCE: $ 410,000,000,000 B
Damn. A smart guy in Washington once said, a billion here and a billion there and pretty soon we’re talking about real money. Its pretty easy to see that we produce less than we consume. It’s simple math. It’s about $410 Billion. Our expenses exceed our income. I can’t make it any simpler to understand than that.
We got here by following government policy. We borrowed our way to prosperity. We leveraged our future on the expectation of ever increasing value. And as we’ve now learned, nothing, (as Ponzi & Mardoff would likely confess), ever goes up forever. However, we live in a unique time so we don’t have to accept responsibility. You see, Shannon, we’re not to blame, because remember, in our culture, “Nobody’s personally culpable for their actions and everybody else is to blame.”
Individually and collectively, we spend more than we produce. That creates a negative savings rate. Again, from history; in 1960 we saved 12.4% of our national income; at our peak, in 1980 we saved 13.6% of our national income; in 1990, we saved 6.7% and started down the slippery slope. Our national saving rate is now a negative 2.9%. Basically, as a nation, we go backward every month. Do you know anybody who runs out of money before they run of out month? That’s what I’m talking about.
And, unfortunately, it now seems like the incentive to save has disappeared. Figures from Morningstar say, if Joe the Plumber saved $100 per month for the past 10 years, in an average equity fund, he would have accumulated $10,932. That’s $1,068 less than the total of his deposits. (The mattress sounds pretty good – unless you’ve got a Seat under which you can store your savings; or just sell.) And by the way, AARP says that as regards savings, “Only 37% of retired people have a pension plan that works”.
So that you don’t think I’m a Bah Humbug, listen to what my friend Barry Kold told me. He says, “Financial markets tend to revert to the mean.” He goes on, “High past investment returns normally indicate low future investment returns. But, on the other hand, low past investment returns create an opportunities for stout-hearted investors”.
Historically, Joe the Plumber bought high and sold low. Barry said, “Now is the time to take stock and start saving & investing.” Buy low and. . . Hmm, that’s an interesting concept.
Our national financial crisis (and that nobody saves), has implications for real estate, which is what I’m supposed to be writing about. Non-savers don’t have money needed for down payments; they don’t have capital available for inevitable capital calls, which trust me, will come in 2009 as loans reset. What are the implications? You don’t need a degree in Rocket Science to figure that out. Ouch. (Anecdotally, one of our buyers just went under contract on the 1st Bank Repo of the New Year. It’ll close January 30th!) Banks will call notes; foreclosures will occur and assets will be reallocated to people with cash. Uh, people with cash - those would be called savers! Their powder’s dry. They have bait. They have skin to put into the game.
I used to think people were pretty savvy with savings and budgets. Then I overheard Barry discuss a large furniture-rental company’s operation. He was explaining a concept called Golden Handcuffs. Basically, he was talking about guys who buy Mondo Sized houses and become house-poor. They actually rent their furniture! Goes hand-in-hand with the $800 per month car payments! Then I read about Mardoff’s savvy client list. Then I think (in my best North Dakotan accent), “What the heck, hey, I’m not doing too darn bad.” My chicken, little investments, unsophisticated as they are, actually return principal & nominal profit. Getting an annualized 8% - 20% on a single family house or small commercial building looks pretty darn good!
So where do we go from here? The reality check was in order. We got that this month. The economy couldn’t inflate forever. Resetting the game is a natural part of our economic cycle. Resetting allows us to ride the inflation bus again. And, in case you were wondering, the government has to inflate the economy (see above!) to cover itself. What’d they say, “Follow the money?” How about this, “Follow the zeros”.
Where do we go from here? Short term there will be a lot of hurt. Owner’s - take leases at most any rate! In the long run, if you understand the rules of engagement, you can win. If you don’t, you’ll likely be put out of the game. Long-term, real estate is a great place to be. But, you have to have staying power. That’d be the concept of saving. Barry says “Lowered interest rates and a government sponsored economic stimulus packages will jump start things”. Then, he says, “Like everything the government does well, its reaction will be overkill and inflation will rear its ugly head. The smart guys in Washington will demand high interest rates by the Fed to combat inflation and kill the small guy in the process”.
There is an ignorance tax. That may be the lesson in all of this.
Happy Holidays!
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
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
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
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
December 7, 2008
Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
December 7, 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 = $109.71 (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 $132,759,895.
Somewhat interesting property for sale:
905 Motor City Drive: This property intrigues me. It is one of our newer 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, but I have it on good authority that the Seller will get VERY aggressive to get it sold THIS WEEK! 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.
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:
As they say, those who do not study history are doomed to repeat it. So we should consider the Panama Canal. Here’s the history lesson. The French started construction in 1885. They screwed up the deal and ultimately bailed-out. It was completed by Teddy Roosevelt in 1914 and after WW I, it was opened to commercial trade. This journey from start to finish is amazing and includes theft, corruption, anti-Semitism and the death of over 22,000 people. Bear with me.
A Frenchman, Ferdinand DeLesseps was mainly responsible for the construction of the Suez Canal. The Suez Canal was started in 1858, just before the civil war and between 2 world-wide financial panics, (1837 & 1893). It was completed in 1869. It was built with slave labor. (That was an effective cost cutting measure that’s since been universally outlawed, unless you’re a Realtor, who everyone knows, still works like that.) Beaming from that success, DeLesseps, who was at the time, a Rock Star and who, in the eyes of the French, could do no wrong, took-on the Panama Canal project and started construction 16 years after the Suez. Thinking about a late starting career? DeLesseps is now a guy that was 16 years past his prime and had, in the meantime, 12 new children (with the same wife).
DeLesseps’ idea for Panama was to copy his success with the Suez, which was to dig a flat canal from the Atlantic to the Pacific. (Here’s an interesting geography lesson – the Panama Canal goes from North to South, not east to west.) Unfortunately, unlike the Suez, the Panamanian Isthmus is mountainous and the likelihood of a flat canal was DOA. DeLesseps was a promoter; not an engineer. His original cost estimate, $400,000,000 was funded by an IPO stock offering to the French people who quickly and greedily gobbled up the shares with the idea of becoming rich. (Here’s an interesting financial lesson - All markets are driven by greed or fear.) And in case you’re wondering, I pronounce that our market will turn around when our greed overcomes our fear.
Back to Panama; Somewhere along the way, costs were overrun; death tolls mounted and the deficient engineering became apparent. And all the while, DeLesseps continued to go back to the French government for more money. Everybody repeat after me, “BAILOUT! BAILOUT! BAILOUT!” Now, as the smart guys in Washington (there’s an oxymoron!) convene and think about the various reasons for or against the bailout of the Big 3 this week, they should consider the plan originally offered by DeLesseps.
Contextually, at the time, the French Economist Newspaper wrote “We shall see the most terrible financial disaster of the nineteenth century. . .” if we don’t bail out the canal company. What was the DeLesseps’ idea? And I’m not making this up; he proposed floating “lottery bonds”. Lottery bonds could be sold to the public to raise the cash needed to complete the project. Lottery bonds would be sold with numbered tickets attached, some of which, the winning tickets, would be worth large cash prizes. This was not without precedent, because in the final year of the Suez Canal, when an issue of conventional bonds failed to provide funds sufficient to finish the work, just such a lottery issue had saved the canal. I wonder if the City or County or School District 11 should think about this idea.
As it is, according to the Brookings Institute, there are 2 compelling arguments for providing emergency loans to the Big 3. The 1st is humanitarian. Do we really want to throw thousands of workers out of their jobs when unemployment continues to rise daily? The 2nd is self interest. The economy is already losing more than 400,000 jobs per month. Private consumption is sinking. Investors are leery any investment with risk greater than T Bills. In the case of a Big 3 meltdown, they predict, we’d lose so much consumer confidence that the entire economy could become irretrievable
To validate the Brookings Institute, we read in the Gazette, “According to the Pikes Peak Association of Realtors, in November, 34.4% of all property sales closed in El Paso County was a short sale or foreclosure.” (That’s 1 of every 3 sales!) Furthermore, “November was the lowest volume sales month in the past 8 years.” If that is not enough, you should note that 10% of all homeowners are at least 1 month behind in their mortgage.
Sinclair Lewis wrote that “He is all of us, Americans at 46, prosperous but worried, wanting passionately to seize something more than motor cars and a house before it’s too late.” He went on to describe George F. Babbitt as “a small businessman, a kind of middleman who neither manufactures nor distributes. His trade is selling – in particular, selling people houses for more than they want to pay for them. In short he’s a real estate broker.” Our production’s inefficient; we’ve earned too little; consumed too much; and saved nothing in our pursuit to be Babbitt.
So what the heck does that have to do with commercial real estate in Colorado Springs? Nothing much, except to say that we, as owners of commercial real estate are DeLesseps. And, we are Babbitt. Unfortunately, there is no lottery bond to bail us out.
Now, as I’ve written in the past, the money is made when the blood is flowing in the streets. We are nearly there. So, to take advantage of any market opportunities, I’m forming an investment fund. If you’d like to know if and how you can participate, contact me by phone (719-630-2277) or e-mail Tim@HoffLeigh.com
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
November 30, 2008
Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
November 30, 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 = $109.71 (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 $132,759,895.
Tim’s Market Notes:
I am mostly recovered from my surgery, enough to be back at work full time.
To all of you who wished me a speedy recovery - Thank you.
If you wish to see this week's data, to minimize the space required by this letter, we have provided links at the bottom of this letter.
The snow has finally come to Colorado Springs and I’m not going to lie, I don’t like it. I grew up in North Dakota. As a snotty-nosed teenager, I was able to skate 4 blocks across frozen streets from my childhood home on Reeves Drive to the hockey rink at Central Park. In the process of learning to skate and play hockey, I froze my fingers and toes so often that I no longer enjoy cold seasons. When I was a kid, it was so cold that when we’d chink pucks off the metal goal posts, they’d shatter. When I was a kid, it was so cold the scruffy old rink attendant always had a ½ pint handy to warm his spirits - and to share with curious adolescents who were more than willing. I mean, really, not that I would ever. But I had friends. And while I’m not positive, I think he may have taken up residence in Monument Valley Park behind the Chinese Elm tree along the south fence. When I was a kid, the snow was so deep. . . A friend of mine knows its time to migrate south when he can no longer play golf in sandals. I think he may be onto something!
There continues to be interesting reading in the business pages this week. The El Paso County pension fund says, for example, that they need $4.7M per year in additional funding to remain solvent. I remember when I was jealous of city and county employees. I thought, “They have it made. They have steady jobs with guaranteed retirement and an easy life with no stress or worries”. NOT. Then there’s the state run PERA who now has $52.5 Billion in liabilities against $29 Billion in assets. How does that math work? PERA has always projected and depended on an 8.5% annual rate of return on assets to grow and be sufficient to pay its obligations. I know lots of folks who would almost kill for that rate of return, (or any return), at this point. Earlier this year, my wife, a Memorial Hospital employee for over 20 years was planning to cash-in her retirement plan early. Now, she wonders what her pension will look like. I told her not to worry; she married a good retirement plan!
Then there is Tucker Hart Adams who may have the only good news for those of us who continue to believe that real estate is still a good asset class and a very good, long-term investment. She is forecasting “strong inflationary pressures over the next few years as the increase in money supply pushes up prices.” She goes on to say, “I’m concerned they’re (that would be the government, Bob!) creating huge problems down the line. . The potential for inflation is enormous.” When you think about it, it all makes sense. What alternative does the government really have? Inflation will make us think we’re rich and it will allow the government to pay-off the national debt at a discount. By the way, that national debt is now estimated to be in the range of $10.6 Trillion. What the heck kind of number is that? People who know about these things say that if the economy inflates the value of real estate increases. If that’s true, call me quick! Load up now before it’s too late! The value of your small commercial building should increase. There is a trick. It’s called dry powder. Some people would know this as cash flow. The obvious trick is to make it long-enough.
Is your tooth aching yet? There’s more. Of the 455,000 homes purchased in the Denver Metro-plex over the past 5 years, the smart people say “over 145,000 of them are worth less than their debt”. You should re-read that. That’s 32% of the houses sold in the past 5 years are over-loaned. It’s called “being under water.” Add this term to your vocabulary. Heck, I always thought being under-water was what happened when I swam-up to the bar in Cancun for “Cervasa, por favor”.
Now Charles Krauthammer says we have moved from a market economy to a political economy. He says “Today’s extreme stock market is not just a symptom of fear – fear can’t account for days of wild market swings upward”. He says to consider “On Tuesday, Paulson broadly implies he’s only using ½ the $700 Billion bailout money. Having already spent most of his $350 Billion, he’s going to leave the rest to his successor. The message received on Wall Street was – “I’m done. I’m gone”. Facing the prospect of 2 month’s of political limbo, the market craters. Led by the banks, whose balance sheets did not change between Tuesday and Wednesday, the market sees the largest 2 day drop in the S&P since 1933. The next day, word leaks of Timothy Geithner’s impending nomination as Treasury Secretary. The mere suggestion of continuity sends the DOW up 500 points”. More political announcements drive the DOW up again and again over the next couple of days. Then I wonder if I missed the bus. I think of these times, that in the future, we’ll wonder where we were the day the market dropped 900 point, or rose 500 points, much like we wonder where we were the day Kennedy was shot. There have been no real economic reason for the wild swings, but political. Thus argues Krauthammer, we are in a political economy. He says we no longer look to New York for financing, but to Washington for bailouts. When do we Realtors receive our bailout?
I asked a friend of mine, who manages a mutual fund for his own account, about investing in the market. He said it’s not investing right now. It’s gambling. Damn. Since I’m not a gambler, then I can’t place a bet on General Electric or Osh Gosh, which is not a pants company. Not that I’m too competitive or anything. I merely I want to buy low and sell high and make a zillion dollars without risk or worry. I thought that was part of the new American culture. You can’t lose. You can only win.
They didn’t teach us that at the rink. Winners worked harder and got better outcomes. They shot more often. The scored more goals. They celebrated victory. Losers? Back in the old days, it sucked to be them.
Want to know more? Contact me at Tim@HoffLeigh.com
If you wish to see this week's data,
to minimize the space required by this letter,
I have asked my PA's to provide links at the bottom of this letter.
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
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
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
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
November 10, 2008
Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
November 10, 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 = $110.83 (DOWN from $111.35, last week.)
There are currently 113 office buildings for sale.
This is 1,213,401 square feet, which represents a total market value of $134,479,895.
All Market Average Industrial Building Sale Price PSF = $74.63 (UP from $74.41 last week.)
There are currently 99 industrial buildings for sale. (This is 2 more than last week.)
This is 1,391,679square feet, which represents a total market value of $103,866,425.
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:
As I survey the landscape and recall the past week, I’ll report that we had a good week. In the midst of a falling stock market, which lost about 4% of its total value (ugh!) we were able to sell 2808 West Colorado Avenue, a 10,000 square foot office building and write several leases, including a lease for American Medical Response, who is re-locating an administrative office from the Denver area. As the world seems to be falling down on its financial knees, I remind you of the oft quoted statement that “When the blood flows deepest fortunes are made”. Now is the time to buy. If you are a commercial building owner trying to sell, and you don’t have to sell today, don’t.
As you read this report, you should note that the total number of office buildings for sale has decreased to 113 and the average price per square foot has dropped to $110.83. That there are fewer buildings on our “office buildings for sale list” is a reflection of more accurate data and better tracking. We have moved several buildings that were formerly classified as “office building” to a new category we’re developing, “mixed-use”. In our market, there seems to be more mixed-use properties than pure office, retail or warehouse. Mixed use property could be, for example, a former parts store on Fillmore Street that could now be used as a small office building.
There are 6 office buildings priced over $200 per square foot. There are 3 office buildings priced less than $45 per square foot. At the high end of the range, you’ll find mostly small buildings with good utility value that would be hard to replace on a square foot basis. On the low end, there are the usual suspects which are low price because of poor location and functional obsolescence. (And, lest you never forget, I’ll drive home the number’s 1, 2 & 3 rules of successful real estate investing – location; location; location!). For example, Potter Drive is one of the worst locations for an office building in the city. None-the-less, it continues to be an attractive entry point for buyers because of its pricing. Cascade Avenue and the area just north of the downtown remain one of the best real estate micro-markets in the city.
At the lowest end of the scale is 3645 Jeannine Drive. This is a 47,596 mixed-use property that is 50% office & 50% warehouse. I’ve left it on the office building list because it’s ½ offices. This is an attractive deal because of its pricing per square foot. The play is to buy it cheaply, add value with remodeling and re-tenanting and sell it on reasonable cap rate – say 10%. This deal will likely get done somewhere around $18.00 per square foot with an “equity kick”. With an improvement budget of $9.00 psf, the total cost for acquisition & reconstruction would only be around $27.00 psf. Bob Hoff and I handled the leasing on this property for several years. We kept it full. The tenants were always happy and the tenant turn-over was usually very low. It has since suffered through a period of very bad management which now creates the opportunity for a turn-around buyer.
I had the occasion to be involved in several conversations last week, or should I say counseling sessions? The general sentiment is that nobody has any money. It seems that nobody is buying anything and therefore, tenants are not able to pay rent. The rental income that was used to make mortgage payments is drying up. In fact, that is the case in many instances. Many building owners are jumpy because they have begun to experience this lost income and they now believe the mainstream press; that we are heading down a very difficult path into a prolonged recession. Many of my friends, who have been very strong financially, are concerned that they will run out of money before they run out of month. As the pendulum of leverage is good in good times, it is bad in bad times.
I have been coached that free-and-clear real estate is the way to go. I had always been doubtful, but in times like these, even low leverage ownership becomes at risk. The game is taught that the highest net worth is the winner. It should be taught that the highest free-cash-flow, without regard to net worth is the winner! Its not about net worth, it’s about net income.
I have met with several bankers who feel that the value of commercial real estate will drop significantly over the next 6 – 12 months because of lost income from reduced tenant rents. They are factoring that belief into their lending. I see investment lending becoming more onerous with higher debt coverage ratios and higher down payment requirements. Investment lending notwithstanding, there seems to be a pretty good pool of money available for buyers that are purchasing for their businesses use. SBA lenders, for example, have a couple of good SBA lending options with relatively low interest rates and low down payment requirements.
People want to know what I think. Here it is. It’s my opinion that we are the front end of an inflation caused by the Fed’s infusion of large amounts of capital into the monetary system, and that commercial buildings, (as will all hard assets), will increase in value over time. So hold on to your hat. We’re in for a bumpy ride over the next few months, but it’s not the end of the world. Business will be done in spite of what you hear and read. It’s my guess that we’ll feel the impact of the various bail-outs within the next few months. By next spring we’ll all feel better about the economy. The sun will be shining, the flowers will be blooming, the birds will be chirping, and the Incline will still be taunting. Some things never change. The economy’s not one of them.
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
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
November 2, 2008
Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
November 2, 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 = $111.35 (UP from $107.96, last week.)
There are currently 116 office buildings for sale.
This is 1,264,185 square feet, which represents a total market value of $140,722,895.
All Market Average Industrial Building Sale Price PSF = $74.41 (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 $102,996,425.
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 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 (DOWN from 143.71, last week)
There are currently 93 2nd generation office condos for sale. This is 3 more than last week.
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:
None worth bragging about.
New Industrial Building listed this week:
None worth bragging about.
Somewhat interesting property for sale:
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.
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.
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 warm weather; the warm sunshine, the crisp autumn leaves and the blue-bird skies seem to relax the spirit and soul and slow the pace of play.”
With the falling stock market; oh, wait, the rising stock market; oh, wait the falling stock market, its hard to know what to do. My advice is to take stock of the good things, and enjoy the Colorado life-style. The markets will continue to be choppy for the foreseeable future, and they will continue to affect your commercial real estate decisions. At the end of the day, it’s likely that the sun will continue to shine and people will continue to do business. Of course now may be good time to pay-down some debt and conserve some dry powder.
The question of the week has been, “Who or what can you trust?” Does the rise and fall in the stock market feel like pump & dump, where the market makers are raking in huge profits? Not to be too cynical, but you do have to wonder. I was speaking with one of my money manager friends this week, who manages over $500M dollars. He’s the real deal and in my opinion, a pretty smart guy. He validated my statement. His advice has been to “stay put”. If you are in cash, stay in cash; if you are in stocks, stay in stocks.” My advice is the same but couched into my world it’s “If you’re a seller and your property’s not selling, lower your price to the market and be a seller. Otherwise you’re a buyer. And, if you are a buyer, stay put.”
By the way, who can you trust? Here’s a commercial message. You can trust your Realtor. Not because he’s such a good guy or because he’s so bright, but because you can run the numbers yourself and validate his statements. You don’t have to wonder if the financial statements contain real figures or not. And, as Virgil McCormack used to tell me, “figures lie and liars figure”. What’s good asset class should you be investigating now? Ah, “that would be Real Estate Bob”. If you are interested in steady cash flow and appreciation on a very tax favored basis, give me a buzz at 719-337-9551 or Tim@HoffLeigh.com. Don’t think you can afford a commercial property? Don’t worry. Even our residential deals make sense for many small investors.
Talking to the guys at Lightening Lube over the weekend, they tell me that their retail customer business is down 40%. They are not alone. On East Platte Avenue, one of the local used car dealers used to carry 8 cars in inventory every month; he now carries 4, and he didn’t sell any cars this month! It’s pretty tough as a Landlord to collect rent in that deal. We have had a couple property insurance agencies, who I thought were totally impervious to any recession or drop-off tell us that their production has fallen off-the-table. One guy, who is a “hitter”, was about in tears trying to negotiate a rent reduction. He said he’s not had this dismal a production run in over 25 years!
Luckily, at the Global Headquarters, we’ve not seen a huge drop-off in new leasing activity. However, hopefully, win, lose or draw, when the election is over this week, people will settle down, realize the consequences of the election and start to move their businesses forward. I think that will be the case and we expect a pick-up in commercial property leasing and sale activity city wide.
Speaking of the election, I saw a very insightful quote this week, “It’s time for the great princes of property to share their resources. Growth will not provide for the poor; only redistribution will” No, the quote is not Obama’s. It’s attributed to Franklin Roosevelt from a speech delivered in 1932.
I had a chance to speak to a couple of commercial banks regarding their lending policies this week. One very large bank with offices littered across the entire west, told me that they are increasing their down-payment requirements, raising their rates and increasing the debt coverage ratio to 1.4, even while the FED has lowered their fed funds rate. I pointed out this incongruity. Their reasons were 1) their rates are tied to LIBOR, not prime, (and I was told that this is more and more the case); and 2) I was told that most banks expect all commercial real estate values to drop in the near term and that increased down payments were to cover their margins in that case.
So, where you might have otherwise expected a commercial loan with 20% or 25% down, you can now expect 30%, 40% or 50% down payment requirements and rates starting in the 7% range, or more, depending on your history and current credit. I was told that the deals that are getting done are with increasing cap rates, at or above 8%. There is a very clear indication of falling values. (Of course other lending options exist – SBA, seller financing, sandwich leasing, etc.) Feel free to call if you’d like to discuss the current state of lending in detail and how it may affect your situation.
Many of my friends have been renegotiating loans and in the process have had capital call requirements “just to renew”. If you want to witness a macro-unwinding of otherwise good real estate investments, (and if you have several million dollars and want to take advantage of someone’s bad luck), check out General Growth. They are a publicly traded company that buys shopping centers. Their market capitalization rate has dropped off the charts; their stock price has fallen (from the $50’s per share – to below $3.00 per share at last look!) to the point of absurdity and millions of dollars have been lost in the process. This is all because of the credit crisis and that likely, some young, inexperienced loan officer, who hasn’t seen bad times, and who is still soaking wet behind the ears, has forced them to pay-down on loans to refinance. From what you can read and see, General Growth hasn’t been able to match their capital call requirements with current liquidity and will likely go out of business. That will be a tragedy.
And lest we forget the housing crisis that started all of this, here are a couple of things I learned last week. One is that in Minneapolis, where it’s just about to deep-freeze, in many of the low income areas, where the buyers who couldn’t afford to purchase bought with option-arms or some other trick pony and have since been foreclosed upon; the municipal government has stepped in and has started to knock down many of those homes. The theory is that when winter comes, since there are no buyers for those homes, and if there were, no lending for them, the liability attendant with vacant homes and potentially burst water & gas pipes is greater than vacant ground.
And, from a US Senate witness, “There will be this situation. There will be 3 mortgages in a block on all equally valued property. One mortgage may be for $3,000 on a house, another for $4,000 and another for $5,000, on houses that originally sold for $7,500, which are cut down in value now to $4,500. The man who holds the $3,000 mortgage on the 1st property wants to get his money. Someone comes along and says, “I’ll give you $2,500 for it.” He replies, “Make it $2,750” and the deal is closed on that basis. That fixes the value for all the houses in the entire row.” This is from a Senate hearing in 1931.
You could make the same statement, but increase the prices and you would be describing situations all across the US in depressed real estate markets. I was told that this is the case with homes in Los Vegas, where sales are robust, but at 40% of former sales prices. Think of the poor schmuck who is still living in his house where he paid $375,000. The property on either side of his house has been foreclosed-on and now is on-the-market for $175,000. What do you think he’ll do? What would you do? How about, quit paying and use some new government program to purchase the neighbor’s house at the discount. Or after the foreclosure, buy your own home back from the bank or government. Yes, the system is jacked-up, but it’s the current market reality.
If all of this isn’t enough to make you lose your senses, I was driving down Garden of the Gods Road on Friday. I’ll admit, it had been a long week by then and I was running on low batteries. Some low-life, with a shiny ear lobe, and who looked like he had been the victim of a nail gun injury, shaved head and darkly tinted windows pulled next to me with his boom-box booming full tilt with some nasty Rap blaring; his bass was up as loud as it could go, to the point of making my 4-Runner vibrate. I couldn’t stand it. I decided to fight-fire-with-fire. I turned-up Rush as loud as I could. I turned-up the bass as loud as I could. I rolled-down my windows and shot Rush back as loud as I could. Who knows if I made a dent; but I felt better knowing I had done my part to save civilization.
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
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
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