07.23.06
Posted in Colorado Springs Real Estate at 1:31 pm by Angela Byrne
If you consider yourself a real estate investor (current or prospective), have you thought about putting your dollars to work in the commercial real estate arena? Right now vacancy rates for commercial properties (offices, industrial buildings and shopping centers) are hovering right around 7.5%. Just a couple years ago, they were nearing 10%. There is currently ample opportunity to find qualified tenants, so investing in commercial property has a better profit margin than it did previously.
Here is the breakdown of vacancy rates and average rents in Colorado Springs:
Office building vacancy rates: 8.1%
Average office rents: $10.57 per sf
Industrial building vacancy rates: 7.3%
Average industrial rents: $7.05 per sf
Shopping center vacancy rates: 6.9%
Average shopping center rents: $13.14 per sf
Source: Turner Commercial Research
My experience helping clients to search for commercial property (whether for purchase or lease) often has me wondering why there isn’t more available inventory for certain types of properties. In fact, it is fairly common for tenants/buyers to physically change the property once they take possession because they couldn’t find something that suited them perfectly in their search.
As far as land goes, there is a limited supply so prices have been climbing steadily. With the price increases for land, commercial building investors have been motivated enough to pay top dollar for the land they purchase. This is a good sign for the economy and for future investors. Though some local commercial real estate practitioners say the current market is “nothing dramatic”. Some would say the circumstances are fairly balanced while others would say that we still have our areas of sluggish market response.
On a positive note, we’ve had more job growth in Colorado Springs, so new businesses are being developed and existing businesses have been expanding. According to Turner Commercial, retail space in particular “is experiencing extraordinary demand”.
Starting a commercial real estate portfolio can be a bit intimidating since a lot of the terminology and the practices differ from the residential arena. Selecting an experienced agent who can navigate the commercial waters for you is imperative. The possibilities are endless for this type of investment, so it’s definitely worth looking into.
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07.10.06
Posted in Colorado Springs Real Estate at 9:25 am by Angela Byrne
Colorado Springs Real Estate: Market Update
July 9, 2006
Yesterday morning, an article printed by The Gazette confirmed our latest suspicions about the Colorado Springs real estate market. The current inventory of homes is climbing. We know that this is the case, but the most recent statistics indicate higher numbers than I’ve seen in other reports. According to The Gazette and the Pikes Peak Association of Realtors, the current home inventory is about thirty percent higher than it was at this time last year. Is this something to be concerned about? Yes and no.
First of all, The Gazette confirmed that we have more homes on the market right now than we did in 1989 (when Colorado Springs was considered by many “The Foreclosure Capital of the World”). The Gazette didn’t spend much time explaining this and I think we should have seen some base numbers to accompany their analysis. I think this inventory presents us with a different market. However, I don’t think we are seeing the same conditions that we did in the 80s. There are many, many more people living in Colorado Springs (and surrounding areas) now than there were in the 80s. The variety of loan programs available are more abundant now, as well. This means, there is a MUCH higher demand for homes now. So, although we see more homes on the market, there are also more Buyers available to demand them.
Another important thing to consider is that the current median home price (currently at $225,000) is continuing to climb. This means that our market is still able to support continued appreciation and further supports the notion of an increasing buyer demand. This is extremely important in encouraging home ownership as the choice between owning or buying is impacted by the rate of appreciation. I like the fact that our appreciation is around four to seven percent per year in most areas. We are not a hyper-market, but we aren’t sleeping either. This means that there are fewer barriers to home ownership in our Colorado Springs real estate market.
Finally, even with the increased supply, I still do not believe we are in a Buyer’s market. Sellers do have to be on their toes to make a sale happen quickly (under 30 days) here, but they aren’t forced to market at crippling list prices. While it’s always important to select hard-working, honest and knowledgeable representation, it is now utterly imperative that Sellers get a good Realtor to list for them. Sellers must be sure to do their homework and find someone who is knowledgeable in market trends and the most effective selling tools. Failure to do so could mean a weak sale…or worse, no sale at all.
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