Colorado Springs Real Estate Briefs: April 2, 2004

Colorado Springs Business Journal, Apr 2, 2004 by Becky Hurley

Spring break drew a number of the city's deal-makers and business owners to warmer climates or mountain getaways. So, they wanted to hit the ground running this week. With the DALSA announcement of 25 immediate tech jobs and 25 more on the horizon - along with SI Corp. winning an $800 million defense contract, the commercial real estate pace could soon pick up.

Carter reports apartment trends

Through 20 years of market ups and downs, Doug Carter, a regional multifamily broker and researcher, has seen it all. For the first time in months, however, he's has good news to report from the multifamily sector - and says that almost 75-percent of those queried responded to his quarterly survey.

We've passed the peak 14 percent vacancy rate in 2003 and now see a decrease to 10.6 percent, he said. Carter attributes the decrease to a general improvement in the economy, low interest rates (which caused the home-buying exodus of renters from even the most affordable complexes), completion of units under construction and most importantly, to the return of more than 8,000 troops.

He remains cautious about predicting a complete market turnaround, since many of the soldiers might be re-deployed by fall.

It will be a while before we see 5 percent vacancy rates again, he said. I also wonder what kind of fallout we'll see when some of the folks who struggled to pay their rent are now struggling to make house payments.

No new apartment construction planned

The fact that there's no new construction on the horizon in 2004 is significant, Carter said. I know of one Houston developer who's breaking ground on a new complex in Denver, but he's betting that by the time the project's complete and leasing two years from now, the market will come back.

As far an apartment sales go, most have been older properties which have sold for record prices. A post-1990s complex did sell earlier this year, he said, but at a price of $70,000 per unit compared to $90,000 per unit two years ago.

Average rents for March were $535 for apartments built pre-1980, $640 for apartments built in the 1980s, and $844 for units built after 1990. Those figures reflect a 2 percent improvement over 2003. These figures do include rent concessions, he said.

Downtown office building sells

Lonnie Wagner of NAI Highland Commercial represented the seller, Barbara Furlong, in the sale of an office building at 28 Willamette Ave. The new owner, James Thieme, CPA, was represented by Tom Brown of Thomas R. Brown and Associates. The selling price was $198,650 for the 1,973-square-foot building in the city's central business district.

Contractor celebrates first year in business

Vince Colarelli, former marketing VP with GE Johnson Construction, spun off to start his own firm just over a year ago and has already bagged some notable commercial jobs, including new offices for Colorado Springs Utilities and the Stewart Title office in the Plaza of the Rockies South Tower. The company is in the midst of tenant finish for Nor'Wood's corporate headquarters in the North Tower.

The firm completed work for ABC Bank, headed by Mike Cafasso, on its headquarters facility at 434 S. Tejon.

Colarelli was selected as general contractor for the Woodmen Valley Chapel and was awarded the contract for the church's new campus at Woodmen and Marksheffel. We'll be completing their new Rockrimmon community center in June and just broke ground & on their new east side campus - with plans already in the works for phase two at the same location, Colarelli said.

Other projects include Colorado Springs Health Partners' north 24,000-square foot single-story facility (breaking ground in May) and two school additions for School District No. 20.

Cameron, Butcher launch

commercial company

Sam Cameron and Kevin Butcher have opened a commercial real estate company in the Conover Building. Their spin-off from The London Group earlier this year seemed to create few waves. The latter's Mike Heritage says the companies will continue to work together and refer business - a sentiment echoed by Cameron and Butcher.

Cameron, a partner in new firm, explained the move. We're a bit different than typical brokerage, he said. We do some investment and syndications, but we also initiate our own development projects.

It's always been a goal to move into our own business and the time was right. We've been putting syndications together for the past three years - and that creates some new pressures. You know you have to perform because you're tied to the same small group of investors - under constant scrutiny. We're comfortable with that.

So far our clients are outpacing expectations - from seven to eight percent and up.

Northgate, Centennial projects move forward

Responding to a March 18 update from EDC's John Cassiani about the need for an R&D campus to support new business in north Colorado Springs, Cameron said that some pharmaceutical and biotech companies - especially start-ups - are scouting the Garden of the Gods corridor.

We see Northgate catering primarily to entrepreneurs who live in that area, he said. Some live in Black Forest, Monument, or Douglas County. Rents may be higher than in other parts of town, but it's more convenient. People's time is so valuable.