This week’s real estate column comes to you from downtown Manhattan, just two blocks from Ground Zero. There is still much activity in the area although retail districts have been hard-hit by the loss of as many as 50,000 former World Trade Center-area employees who no longer come to WTC Plaza each Monday through Friday to work, eat and shop. What’s amazing is the resiliency of the local business community in the face of last year’s incredible devastation.
Palmer McAllister’s Hollenbeck Shares Third Quarter Results
Gary Hollenbeck, president of Palmer McAllister in Colorado Springs, recently published his third quarter update on the commercial real estate market. Overall, he says, the market is stabilizing after taking big hits due to tech company closings and lay-offs. Highlights included news of increased leasing activity and decreasing unemployment numbers – from 6.6 percent in second quarter to 5.7 percent by the end of September. He also reports increased investment and sales activity focused on properties of 5,000 to 30,000 square feet (judging from the CSBJ’s regular RCIS updates, desirable investment properties are in high demand – but are hard to find). Hollenbeck also says that Real Estate Investment Trust investors are “outperforming the overall market and have become a popular long-term investment alternative to the stock market.”
He also noted that office lease transactions exceeded second-quarter totals by 119,689 square feet. Two of the largest leases included the Wells Fargo Home Equity Group’s 86,453-square-foot expansion/renewal at Prime Center in Briargate and SY Technologies’ lease of 37,500 square feet at Platte Air Park Center. Hollenbeck also reported a number of small industrial leases, which helped absorb 189,485 square feet of available space.
In overall statistics, the Palmer McAllister researchers say that office vacancies edged just under 12 percent – and with sublease space included, stand at 16.3 percent. Unfortunately, another 62,000 square feet of office space was added to the existing lease and sublease pool since second quarter. Industrial vacancy rates rose to 9.4 percent and absorption remains negative, with large chunks of space in north Colorado Springs contributing to a –95,464 square feet – or a total negative absorption of –495,921 square feet of space. Those numbers were impacted by the completion of the Aerotech Distribution buildings on the east side of town.
Retail seems to be the shining star, according to Palmer McAllister, for 2002 and into 2003. The total retail vacancy rate hovers at 8.1 percent – and is 6.9 percent in shopping centers of 60,000 square feet or larger. Rental rates are averaging from $12.27 NNN in larger centers – with newer anchored centers commanding as much as $18 to $25 per square foot NNN.
Moody’s National Snapshot…
Moody’s Investor Services lists Denver as 31 on its “red” list of the five worst commercial real estate markets in the country through second quarter 2002. The Mile High City is joined by Austin, TX; Portland OR; Stamford, CT; and Baltimore, MD. Among the top five (“green” list) locals are Long Island, NY; New York, NY; Norfolk, VA; Los Angeles, CA; and northern New Jersey.
In addition, Moody’s Sally Gordon, vice president, Senior Credit Office says that the strongest sector of the commercial market continue to be the consumer-driven multi-family and shopping center areas. Community and neighborhood centers actually posted large gains over last year, while the office/commercial market still lingers in the doldrums. Nationally, the industrial market track record hovers near 2002 levels. On a scale of 0 to 100 (0 is worst; 100 is best), the struggling hotel market was lowest average scores of 0, Gordon said. Wonder if those numbers will impact financing the proposed Colorado Springs Convention Center?
Palmer McAllister Reports New, Sublease Office Space
Four office transactions topped the list of leases reported by Greg Phaneuf, Kent Mau, and Andy Lindquist. Phaneuf represented the owner, ITT Industries, Inc. on 10,564 square feet sublease at 2550 Tenderfoot Hill Rd. The Reich Company represented new tenant, the U.S. Anti-Doping Agency, in the transaction. Phaneuf and Mau also represented the owner, Tech 6 Associates on the lease of 1,462 square feet to Office Depot at 5555 Tech Center Drive. Cushman-Wakefield of Denver was the cooperating broker. Kent Mau facilitated both sides of the transaction on a 13,308-square-foot lease to Memorial Hospital in the former Doctor’s Hospital at 2502 East Pikes Peak Ave. Phaneuf worked with Mau to represent the tenant on the deal. Finally, Kent Mau and Andy Lindquist represented the landlord, Memorial Hospital, and the tenant, Colorado Spring Internal Medicine, on the lease of 6,613 square feet of space in Printer’s Park at 175 Union Boulevard.
Bacon and Heineke Lease Kurt Building
David Bacon and Kevin Heineke facilitated both sides of the transaction in the lease of a 22,000-square-foot Pueblo industrial building to OTD Transportation and Storage at 350 Keeler Parkway.
Maggie Moo’s Opens New Store
Mark Useman and Greg Kaufman represented the owner on the sublease of 1,400 square feet to ice cream retailer, Maggie Moo’s in the Woodmen Plaza Shopping Center. The Olive Real Estate Group’s John Winsor represented the tenant on the transaction. Useman recently relocated the primary tenant, Woodmen Wine and Liquor, from its former location next to Kings Soopers to a larger, 12,000-square-foot pad site.
Grubb & Ellis/Quantum Commercial Group Lands Office Leases
George Swintz and Mary Frances Cowan, both of Grubb & Ellis/Quantum, represented the tenant, the State of Colorado’s Department of Regulatory Agencies, Division of Civil Rights on the lease of 885 square feet from the owner at 1259 Lake Plaza Dr. Frank Tuck of NAI Highland Commercial represented the landlord. In other news, Andy Oyler of Grubb & Ellis/Quantum represented the owner, Pueblo Bank & Trust at 101 N. Cascade Ave. on the lease of 3,069 square feet to TEAUS. Gary Feffer of Fountain Colony represented the tenant in the transaction. Finally, Verizon, represented by Oyler and G & E colleague, Craig Yatsu, leased 1,500 square feet from the Housing and Building Association of Colorado Springs at 4585 Hilton Parkway, Suite 201. Eric Steiner of Central Colorado Management Company represented the owner.
Women’s Council of Realtors Recognizes Chaney and Carty
Rosalinda Chaney and Judy Carty were singled out last week for their contributions in leadership and service to the Pikes Peak Association of Realtors Women’s Council of Realtors (WCR). According to Daniel Vasey, marketing director for the company, Chaney was also named 2002 Realtor of the Year by her peers in the business. Chaney’s dedication to her industry, combined with her community volunteerism with Care and Share, Silver Key, the Salvation Army and the American Cancer Society’s Relay for Life all contributed to her selection as the 2002 honoree. Carty was installed as the acting vice president of membership & marketing. As a realtor in the Pikes Peak region since 1995, Carty has volunteered on WCR boards and committees at the state and local level – and has served as a team captain for Relay for Life. Very impressive!