May 31, 2009

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Tim Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
Leasing; Sales; Management; Buyer or Tenant Representation
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
May 31, 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 = $114.79 (DOWN from $114.89 last week.)
We are currently tracking 112 office buildings for sale.
This is 1,146,746 square feet, which represents a total market value of $131,639,500.

All Market Average Industrial Building Sale Price PSF = $79.22 (NO CHANGE from $79.22 last week.)
We are currently tracking 97 industrial buildings for sale.
This is 1,309,336 square feet, which represents a total market value of $103,726,606.


Property owners currently have 113 office properties on the market for sale. Their average asking sale price is $114.79, which is a downward trend. The assessor says these same properties are worth $70.30 per square foot. That is a difference of $44.49 per square foot which tells us that, according to the assessor, the market is overvalued by $51,000,000!

We have a lease pending for 104 North Tejon. It is a 3,400 square foot retail space for lease. We had originally listed it based on comparable other property in the downtown. I knew the price was more than a retail operator could pay in this environment. The property owner was wise enough to see that if she lowered her price “to the market” it would lease. It took about 3 weeks after the price reduction to find the tenant.

The moral of the story is “we’re still overpriced. When we come-to-grips with the market realities, we will see a significant increase in commercial real estate leasing and sales.”

Tim’s Market Report

“This is for all the broken people; thinking that life has passed them by.
Don’t give up until you drink from the silver cup and ride that highway in the sky.”
America – band BL

I generally like to sit in front of my computer every week, writing stuff that makes me feel smarter than it’s likely I am. I read a little, think a little, and write a little. Then I saw the ad. It was for Lipitor. Lipitor’s the drug old people take for their heart. The caption said, “I never thought it could happen to me; a heart attack at 53.” Crap. It was just 2 days ago that Lise reminded that I’m 53. Nice. Real nice. I guess it’s true; time is like the Energizer Bunny; it keeps on ticking, ticking, ticking along.

So, to prove I’m not old I took my “adult” kid’s Sunday morning Waldo Canyon Challenge. They thought it would be “just great” to run the loop. I suspect they all wanted to cleanse & detox from Saturday night, but nobody was talking. Waldo Canyon’s in the foothills just west of Colorado Springs on Highway 24. Running Waldo Canyon’s a lot like trudging to Jr. High School when you were a kid; up-hill both ways; thigh deep snow drifts; except that there was no snow. No ride in sight; no love from no-one. It kicked my butt. Did I mention I finished ahead of the kids? Strike a victory for the aged!

Some of you know that I’ve tracked business cycles. Turns out they run about every 11 years and have done so since the Revolutionary War. (Time does keep on ticking). Since most of us live in-the-moment without a historical perspective I’d like to assure you that, according to business cycle theory, we should be coming close to the end of this current financial debacle and our real estate values should start to recover. Realize, however, its’ my opinion that we have more green beans to eat before we get to the chocolate pudding.

To my point; I’ve been buying single family homes on the West side for years. Last summer I bought the money pit. This summer’s not so bad. My theory is “If he could buy a house a year for 10 years, the average person could retire.”

I bought my 1st house for $69,000 in 1983; I sold it for $79,000 in 1992 (in a “real estate recession”). I was glad to unload it. I remember Bob Hoff admonishing me to “Take that offer without any changes!” That sounds like something you’d hear today. And as time keeps on ticking, markets for property go-up and down and cycle.

That same house today is worth around $295,000. That’s an average annual price inflation of around $12,000. (For the simple – that’s $1,000 per month for 17 years!). Here’s a test question, “If you continued to operate the way you have been, could you save an extra $1,000 per month?”

Here’s 4 legitimate reasons for buying small commercial buildings or houses; 1) Appreciation; 2) Amortization; 3) Cash flow; 4) Depreciation. Here’s an insider’s trade secret: “In most cases, small commercial buildings should be purchased for their utility value (just like you’d buy a house) and not purely as an investment.” When you buy a small commercial building hoping to capitalize increasing income for future sale at a profit, in most cases, in our market, that future increasing income is vaporous and you are likely to leave the dance without your slipper.

In normal markets, small commercial property and houses go up in value without regard to their rental income. Furthermore, most of the time, somebody else is paying-off the mortgage. And in a perfect world, you can generate cash flow while you occupy the property. And of course, Uncle Sam lets you claim that the property is going down in value (tax benefits) while you claim it’s going up.

Advice for the day; buy something from me. My wife needs a tennis outfit!

I had a chance to visit Austin last week. That would be Austin, Texas, not Minnesota, where the only thing they have is mediocre, high-school hockey and world-class mosquitoes; not live music and BBQ and roof top bars and world-class hiking trails; and abundant water resources. Say, that sounds like Colorado Springs!

Flying into Austin, I was immediately struck by the volume of water. From the air, it looks like there are lakes & rivers everywhere; and there are. There are 85 miles of lakes mostly connected by their river system including the Llano, the San Saba, the Concho and the Colorado. They call this collection The Highland Lakes System. It passes right through Austin, “giving Austinites year-around access to world-class fishing, boating and waterfront fun.” And, guess what? They have water restrictions and some rationing because of prior-rights-calls on water? So much for the voluptuous suitor.

Austin markets itself as a region, not a city. If Colorado Springs would take that same approach, it could boast significant water resources; the Pueblo Reservoir; the Arkansas River; Twin Lakes, 11 Mile Reservoir, the emerging Fountain Creek water-way, etc. We’re no slouch. And now we have SDS, which assures a continuous flow of sufficient water for coming generations.

Austin claims to be the “Live Music Capital of the World” and I suspect they’d like to lay claim to being the live BBQ capital of the world, too, but that title’s still up for grabs. They’ve got one famous BBQ venue, The Saltlick, which was started by an entrepreneur who got sick of traveling for work. He made a commitment, “Hisako, I’ll do whatever I have to, to stay home!” and built a pit, and starting cooking and selling Bar-B-Q to people passing by on Highway 1826 and the rest, as they say, “is history”.

So what the heck was I doing in Austin? I was traveling with a contingent from Colorado Springs seeking the Holy Grail of economic development. “How did Austin grow from being a relatively small, sleepy-time-town, (population 300,000) to the 14th largest city in the US, (population 800,000), where nearly 84 people a day move-in and clog the free-way, and have done so for the last 20 years?”

Their answer is pretty simple. They were lucky. Yup; luck has a lot to do with it. Seems like “being in the right place at the right time” is a great strategy. BL, (that’s back in the 80’s before Lipitor); Austin made a pitch to snag a microelectronic consortium. Long story short; they got the bid; the consortium located in Austin and several micro-chip manufacturers followed them. Now they’re much wiser. They’re a city – no they’re a region with vision, process and cooperation across the board. They brag that they’re a regional economic powerhouse, and they are; they’re not just a city.

Austin’s Chamber of Commerce, their Economic Development organization and their government work hand-in-hand looking for business opportunity for their region. They operate with the best interests of the city and their region fully at heart. Consider their city motto: “Human capital – it’s all about workforce” or consider their other city motto, “Clean, safe, fun!” or consider their other city motto; “We don’t get even, we get ahead!” (The last one’s not really their city motto. It’s actually my family motto. I thought I’d throw-it-in just to entertain myself.) I’d let Colorado Springs adopt my family motto. As we search for new enterprises and compete in the Global Economy, it’d be OK for us to believe we can get ahead! I’m told that mottos have meaning; they drive vision. Austin envisions itself to be a “city with short pants.” What? I was told that men who wear short pants are “on-edge”; they’re not living in a comfort zone; they’re seeking new realities. Guys in long pants are pudgy, bald, middle aged and somewhat comfortable and not prone to change. The same is said about cities.

BL, Austin focused on the moment. That was high tech. Note to self; “at the time” is past tense. High tech has high-tailed-it. It’s gone. Austin’s new focus is GREEN. They’re reconditioning empty high tech buildings for use by green & sustainable businesses. There’s a novel idea. I wonder if Colorado Springs has any unused buildings that could be used for that.

Have a great week! Call me if you’d like to discuss any aspect of your personal real estate situation. 719-337-9551.

Tim Leigh

To view our most recent Colorado Springs Business Journal Ad please click below
http://hoffleigh.com/Doc/May28.pdf

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