January 17, 2009

Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
January 17, 2009

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 = $113.38 (UP from $111.20 last week.)
We are currently tracking 104 office buildings for sale.
This is 1,120,142 square feet, which represents a total market value of $126,114,895.

All Market Average Industrial Building Sale Price PSF = $73.71 (DOWN from $73.82 last week.)
We are currently tracking 91 industrial buildings for sale.
This is 1,284,185 square feet, which represents a total market value of $93,803,606.

Somewhat interesting property for sale:

2760 North Academy Boulevard: I hate to harp on this property, but I need to do until you look at this. THIS IS THE BEST VACANT BUILDING FOR SALE ON THE MARKET. 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: We have had several showings on this property over the past week. I think we are getting close to a serious contract. So, if you have anyone who may be interested, now is the time to take a run at this. This is the best opportunity for a value added investor in the market. At the current list price, $850,000 it’s only $17.90 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. 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 $17.90 + $8.72 = $26.62 psf. You can’t frame a building for that. 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.

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.

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:

Mary’s our new bookkeeper. She’s inspiring. She’s works early - every morning - Monday through Sunday. I like that. She reminds me of me! (And don’t you even think about calling and trying to hire her away.) To reward her hard work I felt compelled to make her an offer she couldn’t refuse; or so I thought. “Mary, do you own a hand-gun? Is your car reliable? I’m going to buy you a house! No strings attached! Really! Of course your commute will increase; the house is in Detroit. You know; the place where the Red Wings Suck!” I’m not known as a Big Spender, but when I found the deal, I thought “Even I can afford this deal - $1.00!” Mary kindly thanked me for the offer; admitted that she could get used to holding and firing a hand gun, but passed. She thought the commute or the community could be a killer.

What prompted my offer was an interesting article in the Sunday, Denver Post written by Al Lewis. He wrote about the housing market in Detroit. Lewis said he was offered a house for $1.00. I couldn’t believe it, so I went to the web and found Ian Mason, a broker with www.Bearing-Group.com (313-331-6000) and followed the links to a variety of homes for sale. For example, a clean 3 bedroom, 2 bath, 2 car garage home is now actively for sale at $4,950; a 2/1/1 for $2,900; a 2/1/1/ for $3,200. These homes were all clean looking; built in the mid 1950’s and were about 800 square feet. “Damn, I dreamed, if the miles-per-gallon on my gas-guzzler would only allow me to make the commute. I could buy a seat doughnut.”

According to Lewis, he was shown several properties by Mason and at one point was offered a house for FREE! Such a deal! The median price of a home in Detroit is $7,500, which is down 50% from last year. There are 1,228 homes listed for sale under $100,000 and 209 listed for sale, under $1,000. According to Mason, “Many of them are in pretty decent shape, and some can be lived in.” As I say often, “You can’t make this stuff up!”

Lewis’ tour continued through neighborhoods where the snow will never be plowed and in the summer, “You’d likely have to dodge a bullet or two”. According to Mason, “Those neighborhoods have not seen a live cop in years”. Lewis’ natural comment was, “So, if I buy one of these houses, I’ll need to get a security guard, too?” Mason replied, “Not necessarily. Some of these neighborhoods are so desolate crime isn’t much of a concern. . . I could take you on a tour of 30 blocks of urban prairie.” That’s amazing. So here’s my redevelopment idea – plant those open areas with Bush Gardens. (If you are not familiar with the concept of a Bush garden, call me 719-337-9551 or e-mail me, Tim@HoffLeigh.com).

So, as I sit here looking across the top of the La Quinta’s red roof and see Pikes Peak’s white top splashed against another blue-bird day, and realize that the median price of a home in Colorado Springs exceeds $200,000, I feel pretty lucky. We’re not Detroit with enormous buildings littering the downtown; we don’t have double digit unemployment; we’re not looking for a Federal bail out (although, I know, greedily, we’d take it!).

I’ve heard and previously written that Minneapolis, to combat what they saw in Detroit, is knocking-down distressed property and converting blighted areas to green-belts out of self defense. The theory is that it’s less costly to maintain green-belts than watch for urchins, criminals and frozen pipes.

Nationally, Realty Trac reported an 81% increase in foreclosures in 2008. (Realty Trac says they publish the largest & most comprehensive national database of foreclosure & bank-owned properties). They claim “The foreclosure prevention programs implemented to-date have not had any real success in slowing-down this foreclosure tsunami.” They go on to report what you’d expect. The Sunbelt cities and Detroit have landed on the Top 10 metro foreclosure rates list. Of particular interest to me was Sacramento, where the foreclosure rate was 1 in about every 20 homes. And Sacramento was only number 9 on the list. In Denver, the foreclosure rate is somewhat defined as the Aurora area, and is 3.2%, which is an increase of nearly 24% from 2007 to 2008. Gratefully, this time around, vis-à-vis the 1980 Savings & Loan crisis, Colorado Springs has been spared any notoriety.

So as we inspect the commercial property that is for lease or sale in our market, I once again state, “We are not knocking them out of the ballpark.” In fact, my thesis has been that investing in Colorado Springs, will likely never allow you to knock-them out of the ballpark. But, you can earn decent, realistic returns over a long-run.

What’s the trick? It’s the same story I preach week after tediously stated week. “Make sure your property is clean and functional; treat your tenants like they’re human; recognize that rental markets have an ebb & flow and adjust your rents accordingly.” At the end of the day, for most of the readers of this column, your property will provide nice returns if you are patient and if you work at paying-down or paying-off the debt.

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