.
Hoff & Leigh’s Weekend Market Report
Hoff & Leigh, Inc.
Leasing; Sales; Management; Buyer or Tenant Representation
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
August 16, 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 = $112.60 (DOWN from $112.63 last week.)
We are currently tracking 147 office buildings for sale.
This is 1,533,972 square feet, which represents a total market value of $172,728,213.
All Market Average Industrial Building Sale Price PSF = $83.18 (DOWN from $83.27 last week.)
We are currently tracking 131 industrial buildings for sale.
This is 1,633,504 square feet, which represents a total market value of $135,879,656.
To view our most recent Colorado Springs Business Journal Ad please click below
http://hoffleigh.com/Doc/8.14.09.pdf
Tim’s Market Notes
The afternoon clouds are rolling in and I expect the thunder, lightning and rain to start at anytime. And actually, I remember being told Colorado was the place where rain was scarce and home of over 300 days of annual sunshine! And, in case you weren’t aware; yes, the rain is another off-shoot of global warming.
And as the summer has waned, the rain has fallen hard. No, it’s fallen very-hard. It’s fallen on many parades and the casualties are littered across the landscape. Survivors are hanging on by mere threads praying for the Federal Reserve Bump, which, it seems, is the ointment many are crying for as the only salve able to stop the bleeding & heal the wounds.
And once again this past week was humbling. I met with, yet another guy, whose net worth used-to-be very large, but who’s now joining the chorus, (which, daily, grows louder & louder and literally “shivers your timbers”), and cries out, “I’m out of the game if I don’t get this stuff sold, soon!” Week after week I meet this guy over & over. Oh, yes, he’s a real guy. His net worth was (pick a number) $18,000,000; $12,000,000; $6,000,000; $4,000,000, etc., only a year ago, and now he’s on his way off the field, stuck-out by unsupportable leverage. Fame & money; they’re fleeting, but the deep philosophical question doesn’t go away; “What do you do with a middle aged, fat, white guy, (now-broke-entrepreneur), that has no employable skills?”
And on top of all that, I was accused of being Pollyannaish in last week’s report, where I talked about how bad things were for the “That Guy” and how good things were for Hoff & Leigh. Well, well, well, my friend, let me tell you, we feel the pain too. It’s just that I’ve chosen not to participate in the beatings. We make “it” look “easy”, but trust me; there’s no “easy” at 4:00 o’clock in the morning (which is when my normal work day starts) and there’s no “easy” on Saturday or Sunday. What we do is plain, hard work - brow sweat & elbow grease. We share your struggles and anxieties. We know you rely on us for advisement and solutions and we’re doing our best not let you down. We prepare for battle daily.
Personally, I feel the individual pain of each and every one of our clients & customers; and we take each assignment very seriously. And, I get it; “that small business is hurting; I understand that nobody has the cash they used to have; nobody is making the sales they’d like to make; overhead doesn’t go away”. It’s been said that these are the times that try men’s souls, and truly, they are.
So how do the numbers stack up? According to our research whiz, Matt, the vacancy rates in commercial buildings are at historic highs. For example, Matt reports that class “B” office building vacancy rates are now hovering around 38%! Class B buildings are the normal, small office building (less than 40,000 square feet) that most of you would be involved with. By the way, Matt reports that Class “A” office building vacancy rates are not much better - about 25%. For context, the historical norm is about 12%. We’re working on the numbers for industrial & retail and as soon as we have them, so will you.
Matt says “Average rents have dropped like an iron-life-jacket off the side of The Bismarck”. (Great metaphor Matt - he is a German exchange student, after all.) We’re finding that most commercial real estate is not only “not increasing its revenue” but most operators are hoping to “merely hang on, at any rate!”
And then there’s Fred Crowley. He says El Paso County has turned the corner. Thanks for that. I saw the notice in the Gazette today. Obviously, “If it’s in the Gazette, it’s true”. And I hope Fred’s right. I think Fred’s one of the really bright thinkers in our community, but when I see so much “available” commercial space I have to wonder if his numbers or Matt’s tell-the-tale.
So how in the world are we doing anyhow? Check out these actual cases; 805 North Murray is a former credit union. The building owner implored us to “Lease it out!” We said, OK and priced it for a 3 year lease at $1.00nnn; $2.00nnn; $3.00nnn. Follow the math with me. In that case, whoever leases that property will get about 40,000 square feet of nicely-appointed-space for about $3,500 per month! That’s nuts, but true. That’s the condition of our market. (By the way, if you know anybody – call me!)
I had another guy engage me to sell his building last week. He’s been through a couple of competitor companies who didn’t have-it-in-them to truthfully discuss his situation. (I guess one of the benefits of grey hair is that you’re able to tell the truth with a straight face.) His building’s going to sell at a deep discount.
If you want to see the listing, look at the office building’s for sale attachment. It’s number 7 and with the new pricing, it will become #1 as the lowest-price office building for sale in Colorado Springs. The building’s located at 1757 South 8th Street; the assessor says it’s worth $348,300 and we’ve listed it for $299,000. That’s a new (price per square foot) low in the current market; $34 per square foot. I know we’ll sell it quickly, because we’re going to match the price to the market. (Anecdotally, the previous listing price exceeded $550,000, and truthfully, in a normal market, it may have been appropriately priced at that.) That’s the condition of the market.
And, so I don’t leave too sour a taste in your mouth this week, I’d like to share a bit of insight from 2 of my friends, who tell me they periodically enjoy reading some of what I write. The 1st is a very bright attorney:
“I have just read this weekend's market report and am about to dash off to a real estate closing for commercial property (!). I was struck by something in your report. Each week you attempt to gauge momentum in the real estate market. The only national momentum gauge that I am aware of is for the industrial sector, which, of course, is very important to the commercial real estate market. That report is the Purchasing Managers Index of the Institute for Supply Management. That's a rather interesting index because of the way it is structured. Basically, a reading of 50 or higher indicates that manufacturing is expanding, and probably indicates an expansion in GDP. A reading of 42 or higher is an indication of economic expansion. The current index (as of end of July) is 48.9%. This is up from June of 44.8%, and would indicate a strengthening of the manufacturing sector, but not yet an expansion. And, as we know from history, Colorado Springs tends to trail national expansion. Sub-indices for new orders and production are growing, but employment and inventories are contracting. Significantly, prices of manufactured goods are increasing, an indicator of slight inflation, which is good for the economy right now. Exports seem to be growing. As evidence of momentum, this is good news. Moving in the right direction, but slowly.”
The 2nd is from Raphi Sassower, who many of you know. Raphi may be one of the more brilliant thinkers in our midst:
“Years ago, when I was a graduate student in Boston, I went to visit one of my committee members in the hospital. He was on the Committee of Nine after WWII (in charge of Italy); he was the former chair of the economics department at MIT, former distinguished professor at UT in Austin, and the director of the Center for Latin America Development at BU. His landmark article was published in 1934. And here he was, a small and sick man in his 80s, lying in his hospital bed in a crowded corridor, awaiting a nurse to wheel him to take some tests. We exchanged some pleasantries, when he said smiling: “compared to medicine, economics looks like an exact science.” I carry this statement in my mind whenever economic pundits proclaim with certainty that this or that is happening in the economy.
Economics was never meant to be nor has it ever become an exact science. It was always political economy, a way of seeing how political institutions and economic markets affect each other. Adam Smith’s famous The Wealth of Nations (1776) doesn’t have one mathematical equation in it! It tells stories about a pin factory and customs tariffs. So, whatever one can say about the state of the economy is simply anecdotal and extremely personal—that’s all we can hope to rely on. The secret is to make sure we know the biases and prejudices of those who tell us stories about the economy.
Here’s mine for this week: our contractor for the renovation of the Mining Exchange project (Rick) told my partner Perry Sanders and I that the price of lumber is getting more expensive. Assuming you believe in the law of supply and demand, this should mean that the demand for lumber worldwide is increasing, which means that economic activity is increasing, which means that the recession might be over sooner rather than later. Now of course we have recently learned that this law has been manipulated by hedge-fund experts to spike the spot-prices of crude oil for their own benefit and without any correlation to the actual supply of and demand for oil. Could this also happen in the case of lumber? My guess is that lumber is not as sexy a commodity and therefore Rick’s report is indicative of a trend. My prediction, then, relies on the “commodity-sex-appeal-index” which I just invented. I may be right or wrong. It’s up to you to decide what to do.”
If you’d like to discuss your personal situation, give me a buzz at 719-630-2277 or Tim@HoffLeigh.com.
And, have a profitable 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
Hoff & Leigh, Inc.
Leasing; Sales; Management; Buyer or Tenant Representation
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
August 16, 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 = $112.60 (DOWN from $112.63 last week.)
We are currently tracking 147 office buildings for sale.
This is 1,533,972 square feet, which represents a total market value of $172,728,213.
All Market Average Industrial Building Sale Price PSF = $83.18 (DOWN from $83.27 last week.)
We are currently tracking 131 industrial buildings for sale.
This is 1,633,504 square feet, which represents a total market value of $135,879,656.
To view our most recent Colorado Springs Business Journal Ad please click below
http://hoffleigh.com/Doc/8.14.09.pdf
Tim’s Market Notes
The afternoon clouds are rolling in and I expect the thunder, lightning and rain to start at anytime. And actually, I remember being told Colorado was the place where rain was scarce and home of over 300 days of annual sunshine! And, in case you weren’t aware; yes, the rain is another off-shoot of global warming.
And as the summer has waned, the rain has fallen hard. No, it’s fallen very-hard. It’s fallen on many parades and the casualties are littered across the landscape. Survivors are hanging on by mere threads praying for the Federal Reserve Bump, which, it seems, is the ointment many are crying for as the only salve able to stop the bleeding & heal the wounds.
And once again this past week was humbling. I met with, yet another guy, whose net worth used-to-be very large, but who’s now joining the chorus, (which, daily, grows louder & louder and literally “shivers your timbers”), and cries out, “I’m out of the game if I don’t get this stuff sold, soon!” Week after week I meet this guy over & over. Oh, yes, he’s a real guy. His net worth was (pick a number) $18,000,000; $12,000,000; $6,000,000; $4,000,000, etc., only a year ago, and now he’s on his way off the field, stuck-out by unsupportable leverage. Fame & money; they’re fleeting, but the deep philosophical question doesn’t go away; “What do you do with a middle aged, fat, white guy, (now-broke-entrepreneur), that has no employable skills?”
And on top of all that, I was accused of being Pollyannaish in last week’s report, where I talked about how bad things were for the “That Guy” and how good things were for Hoff & Leigh. Well, well, well, my friend, let me tell you, we feel the pain too. It’s just that I’ve chosen not to participate in the beatings. We make “it” look “easy”, but trust me; there’s no “easy” at 4:00 o’clock in the morning (which is when my normal work day starts) and there’s no “easy” on Saturday or Sunday. What we do is plain, hard work - brow sweat & elbow grease. We share your struggles and anxieties. We know you rely on us for advisement and solutions and we’re doing our best not let you down. We prepare for battle daily.
Personally, I feel the individual pain of each and every one of our clients & customers; and we take each assignment very seriously. And, I get it; “that small business is hurting; I understand that nobody has the cash they used to have; nobody is making the sales they’d like to make; overhead doesn’t go away”. It’s been said that these are the times that try men’s souls, and truly, they are.
So how do the numbers stack up? According to our research whiz, Matt, the vacancy rates in commercial buildings are at historic highs. For example, Matt reports that class “B” office building vacancy rates are now hovering around 38%! Class B buildings are the normal, small office building (less than 40,000 square feet) that most of you would be involved with. By the way, Matt reports that Class “A” office building vacancy rates are not much better - about 25%. For context, the historical norm is about 12%. We’re working on the numbers for industrial & retail and as soon as we have them, so will you.
Matt says “Average rents have dropped like an iron-life-jacket off the side of The Bismarck”. (Great metaphor Matt - he is a German exchange student, after all.) We’re finding that most commercial real estate is not only “not increasing its revenue” but most operators are hoping to “merely hang on, at any rate!”
And then there’s Fred Crowley. He says El Paso County has turned the corner. Thanks for that. I saw the notice in the Gazette today. Obviously, “If it’s in the Gazette, it’s true”. And I hope Fred’s right. I think Fred’s one of the really bright thinkers in our community, but when I see so much “available” commercial space I have to wonder if his numbers or Matt’s tell-the-tale.
So how in the world are we doing anyhow? Check out these actual cases; 805 North Murray is a former credit union. The building owner implored us to “Lease it out!” We said, OK and priced it for a 3 year lease at $1.00nnn; $2.00nnn; $3.00nnn. Follow the math with me. In that case, whoever leases that property will get about 40,000 square feet of nicely-appointed-space for about $3,500 per month! That’s nuts, but true. That’s the condition of our market. (By the way, if you know anybody – call me!)
I had another guy engage me to sell his building last week. He’s been through a couple of competitor companies who didn’t have-it-in-them to truthfully discuss his situation. (I guess one of the benefits of grey hair is that you’re able to tell the truth with a straight face.) His building’s going to sell at a deep discount.
If you want to see the listing, look at the office building’s for sale attachment. It’s number 7 and with the new pricing, it will become #1 as the lowest-price office building for sale in Colorado Springs. The building’s located at 1757 South 8th Street; the assessor says it’s worth $348,300 and we’ve listed it for $299,000. That’s a new (price per square foot) low in the current market; $34 per square foot. I know we’ll sell it quickly, because we’re going to match the price to the market. (Anecdotally, the previous listing price exceeded $550,000, and truthfully, in a normal market, it may have been appropriately priced at that.) That’s the condition of the market.
And, so I don’t leave too sour a taste in your mouth this week, I’d like to share a bit of insight from 2 of my friends, who tell me they periodically enjoy reading some of what I write. The 1st is a very bright attorney:
“I have just read this weekend's market report and am about to dash off to a real estate closing for commercial property (!). I was struck by something in your report. Each week you attempt to gauge momentum in the real estate market. The only national momentum gauge that I am aware of is for the industrial sector, which, of course, is very important to the commercial real estate market. That report is the Purchasing Managers Index of the Institute for Supply Management. That's a rather interesting index because of the way it is structured. Basically, a reading of 50 or higher indicates that manufacturing is expanding, and probably indicates an expansion in GDP. A reading of 42 or higher is an indication of economic expansion. The current index (as of end of July) is 48.9%. This is up from June of 44.8%, and would indicate a strengthening of the manufacturing sector, but not yet an expansion. And, as we know from history, Colorado Springs tends to trail national expansion. Sub-indices for new orders and production are growing, but employment and inventories are contracting. Significantly, prices of manufactured goods are increasing, an indicator of slight inflation, which is good for the economy right now. Exports seem to be growing. As evidence of momentum, this is good news. Moving in the right direction, but slowly.”
The 2nd is from Raphi Sassower, who many of you know. Raphi may be one of the more brilliant thinkers in our midst:
“Years ago, when I was a graduate student in Boston, I went to visit one of my committee members in the hospital. He was on the Committee of Nine after WWII (in charge of Italy); he was the former chair of the economics department at MIT, former distinguished professor at UT in Austin, and the director of the Center for Latin America Development at BU. His landmark article was published in 1934. And here he was, a small and sick man in his 80s, lying in his hospital bed in a crowded corridor, awaiting a nurse to wheel him to take some tests. We exchanged some pleasantries, when he said smiling: “compared to medicine, economics looks like an exact science.” I carry this statement in my mind whenever economic pundits proclaim with certainty that this or that is happening in the economy.
Economics was never meant to be nor has it ever become an exact science. It was always political economy, a way of seeing how political institutions and economic markets affect each other. Adam Smith’s famous The Wealth of Nations (1776) doesn’t have one mathematical equation in it! It tells stories about a pin factory and customs tariffs. So, whatever one can say about the state of the economy is simply anecdotal and extremely personal—that’s all we can hope to rely on. The secret is to make sure we know the biases and prejudices of those who tell us stories about the economy.
Here’s mine for this week: our contractor for the renovation of the Mining Exchange project (Rick) told my partner Perry Sanders and I that the price of lumber is getting more expensive. Assuming you believe in the law of supply and demand, this should mean that the demand for lumber worldwide is increasing, which means that economic activity is increasing, which means that the recession might be over sooner rather than later. Now of course we have recently learned that this law has been manipulated by hedge-fund experts to spike the spot-prices of crude oil for their own benefit and without any correlation to the actual supply of and demand for oil. Could this also happen in the case of lumber? My guess is that lumber is not as sexy a commodity and therefore Rick’s report is indicative of a trend. My prediction, then, relies on the “commodity-sex-appeal-index” which I just invented. I may be right or wrong. It’s up to you to decide what to do.”
If you’d like to discuss your personal situation, give me a buzz at 719-630-2277 or Tim@HoffLeigh.com.
And, have a profitable 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
