September 27, 2009

Hoff & Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
Leasing, Sales, Management, Buyer or Tenant Representation
4445 Northpark Drive, Suite 200
Colorado Springs, CO USA 80907
September 27, 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 = $111.04 (DOWN from $111.40 last week.)
We are currently tracking 144 office buildings for sale.
This is 1,496,446 square feet, which represents a total market value of $166,170,173.

All Market Average Industrial Building Sale Price PSF = $83.23 (UP from $82.63 last week.)
We are currently tracking 138 industrial buildings for sale.
This is 1,692,080 square feet, which represents a total market value of $140,838,556.


To View Tim Leigh’s ad, please click below!
http://hoffleigh.com/Doc/Tim%20Leigh.pdf


To view our most recent Colorado Springs Business Journal Ad please click below
http://hoffleigh.com/Doc/9.25.09.pdf

Tim’s Market Notes

I must be one of the least smart people I know. My legs hurt; my knees hurt and my ankles hurt. I just finished the scenic round-trip to Mountainview (½ the way to the top of Pikes Peak) and coincidental run-down the scenic 7 miles of Barr Trail back to The Cog Train Station. I guess the good news is, I’ll be in Washington, DC this week and will be forced to take a breather from my compulsion and my legs will have a chance to recover. It’s likely there’ll be a party in Washington, but not like the party they threw in Iran several years ago.

“Persepolis, the capital of the ancient Persian Empire (Iran), was sacked by Alexander the Great in 330 B.C. and left for over two millennia in deserted ruins. In October 1971 it was brought back to dazzling life. Three huge tents and 59 smaller tents were erected on the desolate site. The occasion was what Time Magazine called “one of the biggest bashes in all history,” put on the by the Shah of Iran to celebrate the founding of the Persian Empire 2,500 years before.

The assembled dignitaries (who came to put their snouts in the trough) included the President of the Soviet Union, the Vice-President of the US, Marshal Tito of Yugoslavia, 20 Kings and Sheikhs, 5 Queens, 21 princes & princesses, 14 other presidents, 3 other vice-presidents, 3 premiers and a couple foreign ministers. In the course of the ceremonies, the Shah publicly communed with the ghost (are you kidding me?) of King Cyrus the Great, the empire’s founder. He promised to continue the tradition and works of the King, now dead for 25 centuries. (OK – that’s just plain weird.) The jeweled & medal bedecked guests were taken in buses up the hill, above Persepolis for a stunning son et lumiere under the stars that dramatized, strangely enough, Alexander’s destruction of the city.”

The cost of the pageantry and celebrations was estimated to be nearly $200 million dollars! If you want some context, that’s about what it cost to run the city of Colorado Springs for 6 months; and if you multiplied the cost of the Shah’s party by 22, you’d have the cost of the Beijing Olympics ($44 Billion). And people wonder why we distrust any government to handle our money.

So, I’ll be on The Chamber of Commerce’s annual Legislative Action Trip this week trying to find out just why, when you get to Washington, DC you get stupid. Pray for me. And it’s likely, that instead of nursing my legs, I’ll be nursing my brain. I will be trying to see and learn as much as I can. I’m sure I’ll get a chance to meet many jeweled & medal bedecked politicians on The Hill who will defend high taxes, unsustainable budget deficits and ruinous debt.

If you know me, you likely know I’m a “less government is more” kind of guy. I don’t buy-into the idea that the government can run anything more efficiently than Mr. Market who says “supply & demand dictate pricing & profit.” I’m pretty sure that most people operate for their own self interest and in the end, Mr. Market corrects all inequities. Obviously, I realize that we need some governance to “maintain-the-peace” with offers “we can’t refuse”The Godfather I and the general conditions for commerce; it’s all the meddling that makes me crazy.

For example, Colorado Springs is currently embroiled in a conversation about the need “To raise or not to raise; that is the question” the city property tax (mill levy) to assist funding our general fund. I have a serious stake in the outcome of that conversation so I’ve interviewed representatives from both sides. Frankly, I’m not convinced either side can support their position empirically with a straight face. So I did a little research and napkin calculation on the impact of the new tax on my personal portfolio. It was ugly. I suggest you do the same for yourself and reach your own conclusion.

I concluded that the proposed new tax would nearly double my annual property tax bill. I’ll go from paying about $125,000 in annual property tax to nearly a Quarter of a Million dollars in annual tax! Say that out loud and then say, “Damn!” There is an attendant other cost, which is not being talked about, which is the diminution in value to my property. From Mr. Market, “Generally, increased taxes reduce property values.” Now there’s a revelation! Yet some don’t seem to get it.

Randomly choosing, I found that on 3 properties alone, my cumulative loss in value because of increased tax expenses would be around $180,000. Gee, I don’t know, selling everything and moving back to North Dakota is sounding better and better all the time. (By the way, those crazy Norwegians run their government and provide their state with an annual tax surplus!) “Hey Oly, can you teach us how you do it? Fiscal restraint you say? Well, now; ya. You betcha, den; Der’s a tought.”

The folks “for the tax increase” claim the cost would be a nominal increase in monthly payments to the average homeowner. However, they fail to disclose the cost on commercial property owners who pay the Lion’s Share of Colorado Springs’ property tax. I advise you to check-out the impact of the tax increase on the value of your commercial property. (And, by the way, if you’re a tenant, don’t count on a free-ride. The increased tax will be imputed into your rent, eventually.) The proposed mill-levy increase is to 6% in year 1, with a 1% additional increase thereafter for 4 more years to 10%.

Of course, every level of government is looking for more money. When “they” do “their” budgets, they don’t think of “the money” as “real” and they spend accordingly. As a result of this attitude, according to Steve Kittelson, “Every taxpaying family is now indebted by over $1,000,000 to pay its share of the US Treasury debt, unfunded future liabilities and current federal government obligations.” Add any other new tax on top of that and you have to start wondering what the point of work is.

Kittelson goes on to say, “Even if the federal budget was instantly balanced and if we ignored interest expense and decided to try pay-this-off over a reasonable time frame, (such as the average number of years in retirement in the USA – approximately 20 years), the following would be required: Every taxpaying family would have to pay an extra $50,000 per year in taxes, for 20 years!”

Is there a solution? Of course; there are 2 likely solutions - 1) inflation or 2) taxes. Hmm. . . Better A or better B?
I wonder? Do you think there’s either (or both) in our future?

Arthur Laffer says “Over the past 12 months, the Federal Reserve has increased the monetary base (bank reserves plus currency in circulation) by well over 100%. Dr. Kochtu used to teach us, “Too many dollars chasing too few goods not good ting.”.

In 1934 - 1935, the highest estate tax rate was raised from 45% to 70%. The highest gift tax rate was raised from 33.5% to 52.5%. The highest corporate tax rate was raised to 15% with a surcharge attributed to undistributed profit up to 27%. In 1936, the highest personal income tax rate was raised from 63% to 79%. Laffer says, “A government simply cannot tax a country into prosperity. . . If there were a warning I’d give, it’s that tax policies are on an economic crash trajectory.”

I went to the optometrist the other day. He asked me, “Better A or Better B?” Hmm. . . .

Have a capitalistic week!

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