2007: Shifting markets for real estate, construction in Colorado

Even as the National Association of Realtors and the National Association of Home Builders warned about the fallout from the subprime lending crisis, few expected that its affect would ripple so completely through the Pikes Peak region's residential real estate community.

Builders and residential brokers interviewed early during 2007, still held out hope that the "slowdown" would reverse direction by year end. While some companies reported surprisingly steady sales through the third quarter, a complete turnaround did not occur.

By mid-summer, builder optimism had shifted to stoic acceptance. Through November, the market witnessed a 35 percent drop in new single-family permits, compared to the prior year. That was accompanied by a double-digit increases in homes listed for sale and a 16.3 percent drop in the number of closed single-family sales compared to November 2006.

The market did see a 1 percent increase in the median price of a home in the Pikes Peak region through November -- good news in an otherwise tough year. Still, million dollar home sales remained impressive in areas like The Broadmoor Resort, Cathedral Pines, The Reserve at Walden Pond, Monument and Pine Creek.

Commercial real estate and non-residential construction, on the other hand, churned along with measurable increases. C.B. Richard Ellis, for example, reported its brokers had participated in nearly $100 million in sales in the Colorado Springs market during 2007.

While retail absorption was down slightly compared to last year, vacancies rose to more than 8 percent. New shopping centers on the city's east and northern perimeter saw vacancies near 2 percent, while older retail centers began to see major redevelopment take place. Lowe's announcement that it was moving to Citadel Crossing and United Properties' demolition of the former Mall of the Bluffs in favor of "lifestyle" retailers were just two examples. The Craddock Cos. also spruced up the Mission Trace Shopping Center and worked on re-tenanting the well-located retail hub near Fort Carson.

Not to be outdone, the Citadel Shopping Center sold for $153.2 million, and Falcon added its share of new retail near the Safeway Center off Highway 24. East Woodmen Road also saw signs of new retail crop up as the two-lane arterial began expansion to four lanes.

In addition, some of the area's first "spec" office buildings in years broke ground at Patriot Park and near Memorial Hospital North. The city's supply of medical office buildings grew by nearly 500,000 square feet and at least half of that was leased during the year.

Construction spending in the Pikes Peak region seemed to follow national trends. The Associated General Contractors of America and the U.S. Census Bureau reported through the third quarter that residential construction spending fell 16 percent compared to the prior year. Nonresidential construction investment grew 17 percent through the third quarter of 2007.

The area's general contractors stayed busy with a number of large projects, fueled by an influx of plenty of outside investor cash.

With national investor attention focused on the area, the first new Class A office buildings at the Colorado Springs Airport -- an 80,000-square-foot headquarters for The Aerospace Corp., built by Colarelli Construction -- opened during the summer. Central Bancorp also announced its plan to remodel and expand the office building at 1 City Center in downtown, introducing the central business district's first new signature building in five years.

Bryan Construction, still on the job at Patriot Park for Corporate Office Properties Trust, was the bank's general contractor.

J.E. Dunn finished construction on the $146 million 89-bed Memorial Hospital North and a seven-level parking garage for the hospital's central facility in 2007. It also completed renovation and remodels for the Beth-El College of Nursing and Dwire Hall at the University of Colorado at Colorado Springs.

G.E. Johnson spent the year completing the $28 million addition to the Fine Arts Center and moving ahead on the $200 million five- story Penrose-St. Francis Medical Center building off North Powers Boulevard.

The Claremont Business Park successfully sold most of its first phase owner-user buildings and added a number of new tenants, while a number of new neighborhood shopping centers and office parks sprung up from Barnes Road north along Powers Boulevard.

Perhaps the most dramatic commercial real estate news of the year came from Realty Development Services, developers of the approved 22- story Cooper Tower hotel tower, expected to begin construction during 2008. The $100 million project was three years in the making, and will kick off with pre-construction residential condominium sales in January or February.

Other major projects moved ahead, including the University Village Colorado mixed use center along with approved plans for a new Lowe's and Costco. Both national retailers expect to be open for business by spring 2009, said Kevin Kratt, who along with Tom Cone of Olive Real Estate Group, is developing the property.

Copyright 2007 Dolan Media Newswires
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