.
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 23, 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 = $112.02 (DOWN from $112.60 last week.)
We are currently tracking 147 office buildings for sale.
This is 1,537,998 square feet, which represents a total market value of $172,280,713.
All Market Average Industrial Building Sale Price PSF = $82.99 (DOWN from $83.18 last week.)
We are currently tracking 132 industrial buildings for sale.
This is 1,639,456 square feet, which represents a total market value of $136,054,656.
To view our most recent Colorado Springs Business Journal Ad please click below
http://hoffleigh.com/Doc/8.21.09.pdf
Tim’s Market Commentary
What a country! With a cup of hot Joe (Because I’m notoriously cheap & because its only $.35 at McDonald’s, that would be “1 senior coffee with 1 cream, please”) in my hand, I’m watching the sunrise in the east as it layers its multi-colored pink-hues onto an awakening Pikes Peak; there’s no wind, a blue-bird sky and refreshingly clean, crisp, “fall-like” Rocky Mountain air. OK, on the 3 count, let’s all take a deep breath.
Now, let’s see, aside from writing this column & catching-up in preparation for the coming week, which cool thing should I do today? Golf at one of our area’s award-winning courses; ride the mountain-bike-trails; ride the Pike’s Peak Cog-Train ½ way to Mountainview, (and run down the 7 miles of rolling trail); run the friggin Incline & continue trashing and bashing my knees; trek to the Pueblo Reservoir for boating or Buena Vista to the Hot Springs? Or, should I be a mere spectator and take part in the activities at the Fine Art’s Center, The Manitou Mountain Music Festival or the watch the Sky Sox, The Rockies or the Olympic-Masters riders at the Velodrome? Hmm. . . so many choices; so little time. SFC - Safe, fun, clean; that’s what this community is.
And it’s all good; because “we all need a break from the routine”. And speaking of routine, Matt tells me that it’s become a routine that the numbers continue to decline. Those would be the numbers that reflect average prices for commercial real estate in Colorado Springs. Last week, for example, (you can read the full report – it’s attached), our office building’s for sale list showed an average price reduction of $.50 per square foot. That’s a “somewhat significant” number and it’s a trend we’ve been watching. This is the 4th week in a row that we’ve seen prices decline. These declines are healthy because the lower they go, the closer to the bottom we get; and as we get closer to the bottom, we get closer to “the-turn-around”. (And remember, while the dentist didn’t give you a shot of Novocain, the pain is only temporary.)
If you’re a faithful reader, you know that I’ve been preaching that Colorado Springs commercial real estate prices need to drop about 35% to come-into-line with Mr. Market before sales & leasing activity take’s-off. And not known for being kinder & gentler, Mr. Market is forcing us to move in his direction. And by the way, just so you know, you can’t outsmart Mr. Market. Don’t bother trying; recognize & embrace him. Your life will be better. And by the way, I tried to outsmart Mr. Market & have since learned his lesson the hard way. He will teach you who the boss is, and I’m sorry to say, “It ain’t us.”
So, here are a few buildings that are heading in his direction:
1757 South 8th Street; its price was reduced (This is a 9,000 sf building.) from $475,000 to $299,000. That’s a 37% reduction! This new price casts the building as the lowest-cost-per-square-foot office building currently for sale in Colorado Springs. (Re-read that; then E-mail me; Tim@HoffLeigh.com to make your offer!) It’s priced less than the assessor’s valuation ($404,376), which validates “It’s a good deal, Oly!” My guess is; we’ll sell it this week. (And not to toot our own horn, it’s one of our clients – and therefore, our firm’s enabling that pricing – so, Toot! Toot!) The last time we saw “real-pricing” we sold the property “real-fast” - in 3 hours!
1307 Aeroplaza Drive was reduced by $500,000 last week. Their initial pricing was so high it had to have been a result of initially-poor judgment (or bad advice) caused by the community-wide real estate crack-train we were riding. The new price is a 33% price reduction! It’s a step in the right direction. Who knows what caused it - a sudden rush to reality? Maybe the Seller went through Real Estate Rehab! (I heard they opened a drop-in clinic just south of downtown.) “Hi! My name’s Bob and my building is overpriced!” Yes, it’s priced at $999,500, but the assessor swears it’s only worth $429,272; really. “Hey, Bob, don’t miss the meeting next Tuesday – you have a ways to go.”
2993 Broadmoor Valley Road reduced its price by 13%. It’s now priced $186,920 LESS than the assessor’s value. I don’t know what’s wrong with that building, (it could have low-paying tenants or an infestation of bad management), but “Its beginning to look a lot like Christmas.”
5245 Centennial Boulevard reduced by 6%; which is a small, puppy-sized step; not nearly enough. The assessor says the property is worth $988,000 and even with the price reduction it’s still priced at nearly double. Christopher Reeves made a classic movie once about that pricing model. It was called “Another Time & Place.” Ah, yes, in another time & place it may have been worth that once.
And I read with a great deal of interest, an op-ed piece written by the Oracle of Omaha last week. I note his reference to the national debt vis-à-vis the national gross domestic product (GDP). He says too much debt may be our eventual downfall and he says,
“In nature, every action has consequences, a phenomenon called the butterfly effect. These consequences, moreover, are not necessarily proportional. For example, doubling the carbon dioxide we belch into the atmosphere may far more than double the subsequent problems for society. Realizing this, the world properly worries about greenhouse emissions. The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy - Greenback Emissions.
To be sure, we've been doing this for a reason I resoundingly applaud. Last fall, our financial system stood on the brink of a collapse that threatened a depression. The crisis required our government to display wisdom, courage & decisiveness. (Whose government is he talking about?) Fortunately, the Federal Reserve & key economic officials responded more than ably to the need.
They made mistakes, of course. How could it have been otherwise when supposedly indestructible pillars of our economic structure were tumbling all around them? A meltdown, though, was avoided, with a gusher of federal money playing an essential role in the rescue.
The United States economy is now out of the emergency room & appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent (but not benign) for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.
To understand this threat, we need to look at where we stand historically. War-years aside, the largest annual deficit the United States has incurred since 1920 was 6% of GDP. This fiscal year, though, the deficit will rise to about 13% of GDP. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.
Because of this gigantic deficit, our country's "net debt'' (that is, the amount of debt held publicly) is mushrooming. During this fiscal year, it will increase more than 1% per month, climbing to about 56% of GDP from 41%. No one can know the precise level of net debt to GDP at which the US will lose its reputation for financial integrity.
Increases in federal debt can be financed in 3 ways: borrowing from foreigners, borrowing from ourselves or printing money. Let's look at the prospects for each individually - and in combination.
The current account deficit (dollars we force-feed to the rest of the world and that must then be invested) will be $400 billion or so this year. Assume, in a relatively benign scenario, that all of this is directed by the recipients (China leads the list) to purchase United States debt (treasury notes & bonds). Never mind that this all-treasuries allocation is no sure thing because some countries may decide that purchasing American stocks, real estate or entire companies makes more sense than soaking up dollar-denominated bonds. Rumblings to that effect have recently increased.
Or take the second element of the scenario; borrowing from ourselves. Assume Americans save $500 billion, (far above what they've saved recently), but perhaps consistent with the changing national mood. Finally, assume these citizens opt to put all their savings into United States Treasuries (mostly through intermediaries like banks). Even with these heroic assumptions, the Treasury will be obliged to find another $900 billion to finance the remainder of the $1.8 trillion of debt it’s issuing. Washington's printing presses will need to work overtime.
Slowing them down will require extraordinary political will (that’s a good one!). With government expenditures now running 185% of receipts, truly major changes in both taxes & outlays will be required. (How do you spell tax increase?) A revived economy can't come close to bridging that sort of gap.
Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, “they can opt for high rates of inflation,” which never require a recorded vote and cannot be attributed to a specific action that any elected official takes.
In fact, John Maynard Keynes long ago laid out a road map for political survival amid an economic disaster of just this sort. He said, "By a continuing process of inflation, governments can confiscate, secretly & unobserved, an important part of the wealth of their citizens .... The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
It was a wise man who said, "All I want to know is where I'm going to die so I'll never go there." We don't want our country to evolve into the banana-republic economy described by Keynes. Unchecked carbon emissions will likely cause icebergs to melt. Unchecked Greenback Emissions will certainly cause the purchasing power of currency to melt.”
Alan Greenspan, when interviewed by George Stephanopoulos on August 2nd, said, “I’m worried that Fed Chair Bernanke’s estimate of having a couple of years before reigning in inflation may be too optimistic. I hope they have a couple of years. I don’t think they do.”
And finally, more arsenic from the construction trades. In speaking with 3 of my friends last week, I got these reports from ground-zero: One told me he’s planning to lay-off 50 of his 125 employees this fall; another told me that he’s already done so (same numbers, except he’s down to a 25 man skeleton crew); and the last told me that most of his architect friends have no “significant projects” in the pipeline and that one of the state’s largest architectural firms (a Denver based company) recently laid-off about 70% of its staff.
Hmm. Decreasing asset prices; expectant high inflation; and according to the article in Saturday’s Gazette, jobs lost (8.1% unemployment in El Paso County); payrolls declining (the equivalent of 10,000 lost jobs in the last 12 months in El Paso County); and bad news from the construction industry. I’d say we’re at a tipping point. But, look on the bright side; I do. There’s only one way to go – uh, that would be Up, Bob! We have to believe that we can turn the machine around; we have to remain positive and adopt an attitude of “yes”.
I know the turn-around has started. Heck, read the paper; but, brother, can anyone spare a dime?
I hope you have a profitable week.
Hoff & Leigh, Inc.
Leasing; Sales; Management; Buyer or Tenant Representation
4445 Northpark Drive, Suite 200
Colorado Springs, CO 80907
August 23, 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 = $112.02 (DOWN from $112.60 last week.)
We are currently tracking 147 office buildings for sale.
This is 1,537,998 square feet, which represents a total market value of $172,280,713.
All Market Average Industrial Building Sale Price PSF = $82.99 (DOWN from $83.18 last week.)
We are currently tracking 132 industrial buildings for sale.
This is 1,639,456 square feet, which represents a total market value of $136,054,656.
To view our most recent Colorado Springs Business Journal Ad please click below
http://hoffleigh.com/Doc/8.21.09.pdf
Tim’s Market Commentary
What a country! With a cup of hot Joe (Because I’m notoriously cheap & because its only $.35 at McDonald’s, that would be “1 senior coffee with 1 cream, please”) in my hand, I’m watching the sunrise in the east as it layers its multi-colored pink-hues onto an awakening Pikes Peak; there’s no wind, a blue-bird sky and refreshingly clean, crisp, “fall-like” Rocky Mountain air. OK, on the 3 count, let’s all take a deep breath.
Now, let’s see, aside from writing this column & catching-up in preparation for the coming week, which cool thing should I do today? Golf at one of our area’s award-winning courses; ride the mountain-bike-trails; ride the Pike’s Peak Cog-Train ½ way to Mountainview, (and run down the 7 miles of rolling trail); run the friggin Incline & continue trashing and bashing my knees; trek to the Pueblo Reservoir for boating or Buena Vista to the Hot Springs? Or, should I be a mere spectator and take part in the activities at the Fine Art’s Center, The Manitou Mountain Music Festival or the watch the Sky Sox, The Rockies or the Olympic-Masters riders at the Velodrome? Hmm. . . so many choices; so little time. SFC - Safe, fun, clean; that’s what this community is.
And it’s all good; because “we all need a break from the routine”. And speaking of routine, Matt tells me that it’s become a routine that the numbers continue to decline. Those would be the numbers that reflect average prices for commercial real estate in Colorado Springs. Last week, for example, (you can read the full report – it’s attached), our office building’s for sale list showed an average price reduction of $.50 per square foot. That’s a “somewhat significant” number and it’s a trend we’ve been watching. This is the 4th week in a row that we’ve seen prices decline. These declines are healthy because the lower they go, the closer to the bottom we get; and as we get closer to the bottom, we get closer to “the-turn-around”. (And remember, while the dentist didn’t give you a shot of Novocain, the pain is only temporary.)
If you’re a faithful reader, you know that I’ve been preaching that Colorado Springs commercial real estate prices need to drop about 35% to come-into-line with Mr. Market before sales & leasing activity take’s-off. And not known for being kinder & gentler, Mr. Market is forcing us to move in his direction. And by the way, just so you know, you can’t outsmart Mr. Market. Don’t bother trying; recognize & embrace him. Your life will be better. And by the way, I tried to outsmart Mr. Market & have since learned his lesson the hard way. He will teach you who the boss is, and I’m sorry to say, “It ain’t us.”
So, here are a few buildings that are heading in his direction:
1757 South 8th Street; its price was reduced (This is a 9,000 sf building.) from $475,000 to $299,000. That’s a 37% reduction! This new price casts the building as the lowest-cost-per-square-foot office building currently for sale in Colorado Springs. (Re-read that; then E-mail me; Tim@HoffLeigh.com to make your offer!) It’s priced less than the assessor’s valuation ($404,376), which validates “It’s a good deal, Oly!” My guess is; we’ll sell it this week. (And not to toot our own horn, it’s one of our clients – and therefore, our firm’s enabling that pricing – so, Toot! Toot!) The last time we saw “real-pricing” we sold the property “real-fast” - in 3 hours!
1307 Aeroplaza Drive was reduced by $500,000 last week. Their initial pricing was so high it had to have been a result of initially-poor judgment (or bad advice) caused by the community-wide real estate crack-train we were riding. The new price is a 33% price reduction! It’s a step in the right direction. Who knows what caused it - a sudden rush to reality? Maybe the Seller went through Real Estate Rehab! (I heard they opened a drop-in clinic just south of downtown.) “Hi! My name’s Bob and my building is overpriced!” Yes, it’s priced at $999,500, but the assessor swears it’s only worth $429,272; really. “Hey, Bob, don’t miss the meeting next Tuesday – you have a ways to go.”
2993 Broadmoor Valley Road reduced its price by 13%. It’s now priced $186,920 LESS than the assessor’s value. I don’t know what’s wrong with that building, (it could have low-paying tenants or an infestation of bad management), but “Its beginning to look a lot like Christmas.”
5245 Centennial Boulevard reduced by 6%; which is a small, puppy-sized step; not nearly enough. The assessor says the property is worth $988,000 and even with the price reduction it’s still priced at nearly double. Christopher Reeves made a classic movie once about that pricing model. It was called “Another Time & Place.” Ah, yes, in another time & place it may have been worth that once.
And I read with a great deal of interest, an op-ed piece written by the Oracle of Omaha last week. I note his reference to the national debt vis-à-vis the national gross domestic product (GDP). He says too much debt may be our eventual downfall and he says,
“In nature, every action has consequences, a phenomenon called the butterfly effect. These consequences, moreover, are not necessarily proportional. For example, doubling the carbon dioxide we belch into the atmosphere may far more than double the subsequent problems for society. Realizing this, the world properly worries about greenhouse emissions. The butterfly effect reaches into the financial world as well. Here, the United States is spewing a potentially damaging substance into our economy - Greenback Emissions.
To be sure, we've been doing this for a reason I resoundingly applaud. Last fall, our financial system stood on the brink of a collapse that threatened a depression. The crisis required our government to display wisdom, courage & decisiveness. (Whose government is he talking about?) Fortunately, the Federal Reserve & key economic officials responded more than ably to the need.
They made mistakes, of course. How could it have been otherwise when supposedly indestructible pillars of our economic structure were tumbling all around them? A meltdown, though, was avoided, with a gusher of federal money playing an essential role in the rescue.
The United States economy is now out of the emergency room & appears to be on a slow path to recovery. But enormous dosages of monetary medicine continue to be administered and before long, we will need to deal with their side effects. For now, most of those effects are invisible and could indeed remain latent (but not benign) for a long time. Still, their threat may be as ominous as that posed by the financial crisis itself.
To understand this threat, we need to look at where we stand historically. War-years aside, the largest annual deficit the United States has incurred since 1920 was 6% of GDP. This fiscal year, though, the deficit will rise to about 13% of GDP. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.
Because of this gigantic deficit, our country's "net debt'' (that is, the amount of debt held publicly) is mushrooming. During this fiscal year, it will increase more than 1% per month, climbing to about 56% of GDP from 41%. No one can know the precise level of net debt to GDP at which the US will lose its reputation for financial integrity.
Increases in federal debt can be financed in 3 ways: borrowing from foreigners, borrowing from ourselves or printing money. Let's look at the prospects for each individually - and in combination.
The current account deficit (dollars we force-feed to the rest of the world and that must then be invested) will be $400 billion or so this year. Assume, in a relatively benign scenario, that all of this is directed by the recipients (China leads the list) to purchase United States debt (treasury notes & bonds). Never mind that this all-treasuries allocation is no sure thing because some countries may decide that purchasing American stocks, real estate or entire companies makes more sense than soaking up dollar-denominated bonds. Rumblings to that effect have recently increased.
Or take the second element of the scenario; borrowing from ourselves. Assume Americans save $500 billion, (far above what they've saved recently), but perhaps consistent with the changing national mood. Finally, assume these citizens opt to put all their savings into United States Treasuries (mostly through intermediaries like banks). Even with these heroic assumptions, the Treasury will be obliged to find another $900 billion to finance the remainder of the $1.8 trillion of debt it’s issuing. Washington's printing presses will need to work overtime.
Slowing them down will require extraordinary political will (that’s a good one!). With government expenditures now running 185% of receipts, truly major changes in both taxes & outlays will be required. (How do you spell tax increase?) A revived economy can't come close to bridging that sort of gap.
Legislators will correctly perceive that either raising taxes or cutting expenditures will threaten their re-election. To avoid this fate, “they can opt for high rates of inflation,” which never require a recorded vote and cannot be attributed to a specific action that any elected official takes.
In fact, John Maynard Keynes long ago laid out a road map for political survival amid an economic disaster of just this sort. He said, "By a continuing process of inflation, governments can confiscate, secretly & unobserved, an important part of the wealth of their citizens .... The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
It was a wise man who said, "All I want to know is where I'm going to die so I'll never go there." We don't want our country to evolve into the banana-republic economy described by Keynes. Unchecked carbon emissions will likely cause icebergs to melt. Unchecked Greenback Emissions will certainly cause the purchasing power of currency to melt.”
Alan Greenspan, when interviewed by George Stephanopoulos on August 2nd, said, “I’m worried that Fed Chair Bernanke’s estimate of having a couple of years before reigning in inflation may be too optimistic. I hope they have a couple of years. I don’t think they do.”
And finally, more arsenic from the construction trades. In speaking with 3 of my friends last week, I got these reports from ground-zero: One told me he’s planning to lay-off 50 of his 125 employees this fall; another told me that he’s already done so (same numbers, except he’s down to a 25 man skeleton crew); and the last told me that most of his architect friends have no “significant projects” in the pipeline and that one of the state’s largest architectural firms (a Denver based company) recently laid-off about 70% of its staff.
Hmm. Decreasing asset prices; expectant high inflation; and according to the article in Saturday’s Gazette, jobs lost (8.1% unemployment in El Paso County); payrolls declining (the equivalent of 10,000 lost jobs in the last 12 months in El Paso County); and bad news from the construction industry. I’d say we’re at a tipping point. But, look on the bright side; I do. There’s only one way to go – uh, that would be Up, Bob! We have to believe that we can turn the machine around; we have to remain positive and adopt an attitude of “yes”.
I know the turn-around has started. Heck, read the paper; but, brother, can anyone spare a dime?
I hope you 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
