March 21, 2010

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
March 21, 2010

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 = $102.80 (DOWN 0.01 from last week)
We are currently tracking 82 office buildings for sale.
This is 773,210 square feet, which represents a total market value of $79,482,414.

All Market Average Industrial Building Sale Price PSF = $100.35 (DOWN 0.26 from last week)
We are currently tracking 62 industrial buildings for sale.
This is 784,888 square feet, which represents a total market value of $78,763,156.

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/3.19.10%20Colorado%20Springs%20Business%20Journal%20Ad.pdf


Tim’s Market Report


I have a friend who built an office building in the worst possible time. Buoyed by rising real estate values, illusory and easy riches, and what he believed to be the best location along the front-range, he went to the bank, easily borrowed more than he could have imagined and proceeded to go broke. When he was rich, he was heard to periodically cackle that he “couldn’t imagine any bank lending him nearly $13,000,000” over the life of the project. The market crashed; my friend’s bubble burst and the property went to bankruptcy and his cackle grew softly hollow; Boom-bust-boom.

The Antler’s Hotel, as it turned out, opened at the worst possible time on June 1st, 1883. Colorado Springs was in the midst of a “five-years-doldrums” . . . The Spring’s population was static at 4,500 . . . “just too few people to support all those Antler’s Hotel bathrooms (7) and leather upholstery” . . . Within a year of opening, the hotel was unable to meet Mr. Caird’s 8% interest and went into trusteeship.” And while the town-folks despaired, they couldn’t imagine help was on the way! And prodigious help was on its way which would invigorate the town beyond imagining; Boom-bust-boom.

Zalmon Simmons, (the guy who made the original Simmons Beauty Rest Mattress), made a trip “out west” to investigate the success of one of his military application inventions – a wooden insulator for telegraph lines. He took a 2 day mule ride “on Balaam’s razor edged back” to the top of Pikes Peak. After several days of painful recovery, he decided that he’d invest $1,000,000 “so that he, and the rest of the soft-bottomed human race could ride up Pikes Peak in the greatest comfort that technology could provide - specifically a Cog Railroad.” The 1st train took off around 8:30 AM on June 30th 1891 and as they say, the rest is history . . . Boom-bust-boom.

Colorado Springs’ story is a 140 year saga of one real estate boom and bust after another. When you’re able to get your arms around that fact, it becomes easier to stomach the current downturn.

For example, when it was first founded and being settled, General Palmer’s agents, (former Colorado Governor Hunt and Irving Howbert), set about buying acre lots for $.80. They later sold them (during the next 20 years for over $15,000 per acre!) But, in the meantime, Palmer went broke at least once and maybe twice. What’s it they say, “It’s a long, bumpy road to Lasting Riches.” And it’s the same now. Many have been rich; now they’re poor, but they’ll likely be rich again; Boom-bust-boom.

Then, there’s Burt Myers who owned about 700 acres on the “flats” just east of the Broadmoor Hotel where he grew wheat and corn. In 1881, Billy Wilcox, who “was suffering from the tuberculosis” bought the parcel and converted it to the Broadmoor Dairy. The crisp Colorado air cured Wilcox but couldn’t redeem his ineptitude as a dairy farmer. Luckily, Count James Portales, while traveling from his Silesian estate looking for real estate deals in America showed up. (Portales was looking for ways to shore-up the finances of his Glumbowitz estate. Glumbowitz was the 9 Polish villages and surrounding lands Portales inherited.) Portales was looking for fabled 8% mortgages, that he was told, he could find “out west in America”. Instead of mortgages, Portales invested $25,000 in the dairy which subsequently suffered from continuously-sick cows and dirty competition; (his competitors dumped oil into his Broadmoor Dairy milk cans!); Boom-bust-boom.

And, so you know, almost everyone I know confides in me, at one time or another, “I want to retire and do what you do”. (I know, I usually laugh, too). But, seriously, they say “I want to get into real estate!” Folks, let me tell you, the illusion of easy money’s an illusion.

And in that context, the real estate bug bit Portales. He gave up the diary and started the Cheyenne Lake Land & Improvement Company. He started “doing real estate” (which is another euphemism I never understood) Portales built a lake and casino to attract home-site buyers to his new development. (The Gazette called the development “a sunny place for shady people!” which was probably a tribute to characters like John “The Bath” Coughlin, Alderman of Chicago’s 1st Ward, who lived there and had a hand in starting the Zoo.) Unfortunately, while Portales was working on his project, the banking panic of 1893 hit. (Damn, that sounds familiar!) Money couldn’t be borrowed - even at 15%! The inevitable happened and Portales lost the property to a receiver; Boom-bust-boom.

So, as our history has been and our present is, our future will be – one long boom-bust-boom. And, yes, once again, we’re in the midst of the doldrums; a terrible cough. And it’s likely to get worse - until Mr. Market accepts the reality that our inventory of commercial property is tired & worn-out and become priced appropriately. Gladly, history repeats itself and we’ll get better; Boom-bust-boom.

In 1883 our population was 4,500. By 1890 with the advent of the Cog Train, other tourist oriented attractions and other economic developments, our population shot-up to nearly 12,000. In 1884 (at the depths of their depression) Mr. Marcellin DeCoursey bought a lot on Tejon Street for $500 bucks. He had the Little River Band’s courage to hang-on and buy when “the blood was running reddest in the street”. He sold his lot 6 years later for $15,000; Boom-bust-boom.

Boom-bust-boom . . .

And now, I’d be remiss if I did not recount The Candidate’s recent activities because the heat’s being turned-up. We’re now only about 12 ½ months away from a local election that will shatter all precepts of how we “do business” in Colorado Springs and that will redefine our expectation local government. So, here’s the report:

Over the course of the past week, I’ve continued my self-study on “How to run a city 101” a curricula course on the way to a self-designed Masters Degree in mid-city politics. I’ve been in meetings and conversations learning more and more about Colorado Springs, how it works and “how the game is played”.

I attended a briefing at Peterson Air Force base where there was the equivalent of 15stars presenting. That’s three 4 star generals and one 3 star general. (Oh, Colonel, can you fetch me some coffee, please?) Wow! I’m not sure the average citizen realizes how important we are to the military and how important the military is to our community. What was my take-away? One of the presenters said with certainty that we will have another terrorist attack on our homeland sometime in the next 3 years. It’s not a question of “if” it’s only a question of “when” and “where”. The likely target would be a jet and the likely goal would be the disruption of our economic system. And yes, my stomach turned.

Did you know that Ft Carson is now home to nearly 75,000 folks? That it’s the largest employer in the state, except the state; that is has nearly a $4.3 billion impact on the economy; that it will have $500,000,000 in new construction this year; that it recently finished construction of 408 new homes, 96 4-plexes and is finishing a 78,000 sf fitness center? Ft Carson has always been a big part of our regional economic success and has played a significant role in insulating us from the national downturn, so far. And by the way – a little history - Camp Carson was the child of the city fathers in the mid-1900’s who lured them by plying the generals with sunshine and moonshine. (That would be Spec Penrose’s secret stash of fine liquor, Bob.)

And I sat with Rear Admiral Mike Parks at breakfast on Saturday. Mike was one of the commanders in charge of the Haiti relief effort. His former job was “Chief of Staff for the United States Coast Guard Atlantic Area, an area that encompasses the eastern half of the world”. Re-read that – “the eastern half of the world”. Our military partners have scope, depth and power and we need to build-on and solidify those relationships.

Mike told me to imagine the worst possible poverty that I could. He said that would be Haiti. Then he said imagine that on steroids. That would be Haiti after the earthquake. Nearly (the equivalent of) ½ the population of Colorado Springs died in the 1st wave of the earthquake. Stop. Rethink that. Today, volunteers feed nearly 200,000 homeless Haitians daily and they expect that it will take nearly $12 Billion to get Haiti back to being “just poverty stricken”. (If you’d like to hear the whole story, call my friend Jay Flanagan at 719-640-5076.)

And I met the guys that want to run the trolley system through the downtown. We’ve had a trolley system before. In fact, Stratton spent nearly $2,000,000 renovating the system in 1900. It was said that “He had no better use for the two million dollars and he was ready to meet any deficits.” I like the idea of trolley cars. The question will be “how can they fund it?” Where’s Stratton when you need him?

And I met with some folks from the Colorado Springs Utilities. (Yes, they’re the guys normally depicted as wearing black hats.) We’re concocting a plan to turn the Monument Creek watershed into a city amenity at no cost to the taxpayers with volunteers. When we get that done, I’m handing out white hats!

Our history is one of financial peaks & valleys and it’s not an understatement to say we’re living in turbulent times. We’re bombarded “daily” with bad news. But, if you dig a little below the surface, which is what I’ve been doing for the past several months, you’d discover what I’m discovering. There’s great reason for optimism. We’re smart and we’ll figure-out how to work-through our troubles. There’s a groundswell clamoring for positive change and in the midst of our doldrums, people are finding opportunity and moving forward with positive, creative first steps.

And now for the crass commercial message: My web site, www.timformayor.com went live yesterday. Please visit the site and e-mail your comments to me. Tell your friends to visit the site. Make a commitment. Make a donation. You can do it on-line and nobody will ever know. It’ll be our secret! As the most non-endorsed “endorsed candidate” in the city’s history, I’d appreciate your support, even if it’s anonymous.

And, because my son-in-law told me to say so, I have to remind everybody that, yes, I’m a Realtor and we earn our living by completing real estate transactions, and we need your help. If you, or anybody you know, need the assistance of a competent commercial real estate company or broker, call or e-mail us. We specialize in property management, leasing & sales (and, yes, we’re “at least” competent). We’re now offering a new service – free appraisals of your commercial building. Call 719-630-2277 or Tim@HoffLeigh.com

A final story; this is about a tourist promotion that occurred in 1889. Some promoters got together and launched a steamer called the “Chicago”. It was about the length of Prospect Lake. Normally, you’d say, “Big deal! Steamers are launched every day” and you’d be correct. But, they launched this steamer in Prospect Lake for “excursionists”! Now that’s a creative solution to a tourism problem and, yes, that’s what I’m talking about!


Sincerely,

TJL
Tim Leigh
719-337-9551
Tim@HoffLeigh.com