National homebuilders predict consistent 2002 sales
According to a February 15 announcement from the National Association of Home Builders, the housing market index (HMI) has dropped two points, after a 13-point cumulative rise in November, December and January, to 58 points in February. This news comes as the nation’s economy enters its recovery phase. So far, housing starts and sales continue to provide an important barometer for overall economic conditions.
“The February number represents a small decline after the rebound from post-Sept. 11 lows, “ said Gary Garczynski, the newly elected NAGH president. “We’re now looking at a strong, sustainable level of builder confidence in the beginning of what promises to be a good year for home builders and buyers.”
According to the NAHB, the HMI is calculated from surveys collected from a cross-section of home builders. In February’s HMI, the index gauging the current sales of single-family homes declined three points, to 61, from the previous month, while the index measuring prospective buyers fell four points to 46. Interestingly, the index gauging sales expectations for the next six months remained unchanged at a very solid 66, according to Donna Reichle, of NAHB.
Job numbers to improve in second half of 2002
Since commercial and residential real estate depends to some degree on the health of our overall economy, here are some updates on the national economy.
From the Meyers Group’s Key Market Indicator Alert comes word that despite negative job growth, unemployment improved slightly to 5.6 percent in January, breaking a trend that has been climbing upward since reaching a low of 3.9 percent in October 2000. Jeff Meyers says that there are signs that the employment situation will improve in the latter half of 2002. He bases his predictions, in part, on “the positive growth rate of 0.2 percent reflected in the early release of fourth quarter GDP – representing the mildest recession in over 60 years.” The forecaster also points to the Leading Economic Indicator Index which improved during December, increasing 1.30 to 111.4, marking the largest increase since February 1996.
Meyers also notes that employment-generated demand for housing units is “effectively non-existent” at present – and that builders are currently creating a potential supply of 1,836,000 units. Though he sees a sharp decline in the demand/supply and employment/permit ratios that will, in turn, negatively impact home buying trends, Meyers does see a scramble to purchase homes before the anticipated rise in interest rates, once the economy turns around.
Transaction reports
A healthy number of commercial real estate transactions continued through early February. Here’s a look at some of the highlights.
Deals cooking at the Olive Real Estate Group
Lloyd Riphenburg of the Olive Real Estate Group represented the tenant, Spectrum Exploration, in its expansion to 12,000 square feet of office/warehouse space in the Harrison Business Park. The California-based soils testing company will share part of its new facility at 2271, Suite C Janitell Rd. with High Country Crane. Jerry Sommers of High Country Crane handled construction on the project.
From John Winsor comes news of a 6,500 square foot lease for a freestanding restaurant at 1665 Newport Road, recently leased to Solo’s Restaurant. The new structure will be located in front of the Raddison Hotel at the northeast corner of Powers and Fountain Boulevards. According to Winsor, the restaurant’s design features an actual airplane adjacent to the building that can seat up to 50 people . Projected opening is March, 2002.
In more retail news, Tracy Morton and Scott Gray represented Jewelry Doctors in their move from the Pueblo Mall to a high traffic location at Pueblo Boulevard and Northern Avenue. According to the two retail brokers, CDOT plans a “full motion intersection” at the same intersection, slated for a Super Wal-Mart and Regency Shopping Center.
Palmer McAllister sees retail and office/industrial activity
Mark Useman, veteran retail broker with Palmer-McAllister announced the sale of a 47,900 square foot site at the First and Main Shopping Center location to TCF National Bank for a new branch bank building. Useman represented the purchaser in the $1.1 million transaction. Nor’Wood Ltd. was the owner. Powers Boulevard traffic and access may continue to challenge commercial developers, but there’s no new development slowdown in sight.
A new industrial 3,000 square foot lease was completed by David Bacon of Palmer-McAllister at 3435 Fillmore Ridge Heights. Bacon represented the tenant, InSure Fire and Water Restoration, in the deal. Dar Faarborg of America 2000 represented the landlord.
Paul Engel reports a new lease on 1,500 square feet of industrial space at 646 Elkton Drive by Osprey CM, Inc., a general contractor and developer. NAI Highland Commercial represented the landlord who is headquartered in California.
And from Grubb & Ellis/Quantum…
Andrew Oyler of Grubb & Ellis/Quantum Commercial Group, represented the tenant and Frank Tuck of NAI Highland Commercial Group represented the owner on the lease of 2,437 square feet of office space at 5446 N. Academy Boulevard, Suite 202 to a mortgage company owned by Chad Schara.
Appraisers: Take note!
It appears that both Fannie Mae and HUD may crack down on appraisers whose incorrect valuations lead to defaults in the FHA (Federal Housing Administration) mortgage insurance program, according to Kenneth Haney in a February 25 Realty Times article. While the majority of home loan evaluators will not be affected, real estate appraisers do “seem to be in the firing line” at HUD and elsewhere says Peter Barish, head of the American Society of Appraisers’ Washington, D.C. office. Nationwide, the industry is under assault from new technologies Haney reports, including “automated valuation models” which tap into online property databases and allow lenders to check approximate home valuations instantaneously, at minimal costs. Part of the problem, Haney says, comes from appraisers who tend to evaluate a home’s value based on the price of the sales contract. Conventional home loan financing organizations were not quoted in the article.
G.E. Johnson to partner on Parker Hospital
In an announcement on February 18, G.E. Johnson spokesperson, Lisa Taute, said that the company will partner with Kitchell Contractors out of Arizona on an upcoming hospital facility for Centura Health in Parker, Colorado. The 206,000 square foot Parker Adventist Hospital will open with 100 beds, a Level II Trauma Center, full-service surgical suites, women’s and children’s services, diagnostic and imaging services, and cardiac services with catheterization lab. According to Taute, the company has partnered with Kitchell on a number of other healthcare projects. They also continue to work closely with Penrose-St. Francis Health Services in Colorado Springs in completing renovation and upgrades to various facilities.
19th Street corridor to see development
In a recent issue of the West Side Story, published by the Organization of Westside Neighbors (OWN), news comes that an addition to the existing Stepping Stones community, called “Madison Ridge” is in the planning stages. “There is also talk of an additional retail center at 19th and Henderson streets and a smaller townhome project in the same area,” OWN president, Tom Gallagher said. Harmony Homes is exploring a 60-unit two and three bedroom townhome community at 19th, between Henderson and Glenn. Another 22 new townhomes are also in the pre-planning stages, according to Gallagher, just south of the Madison Ridge property, west of 20th street on Henderson. To date, OWN has no objections to these developments.