The year in real estate/construction in Colorado Springs area:

The following quarterly overview provides a recap of some of the year's top real estate and construction news.

First Quarter

Economic forecast

In a presentation to the Pikes Peak Association of Realtors, Fred Crowley, University of Colorado, Colorado Springs senior economist, said the Pikes Peak region residential real estate outlook was less gloomy than that of hard-hit cities in Florida or California.

"We have no bubble bursting here," he said. "What we do have is a six month housing supply and a very young market. In fact, our local population has 3 percent more young people as a percent of total population than the national average. Right now many of them are renting or buying town homes, but in the next few years they'll outgrow those smaller places and be ready to enter the new home market."

Crowley also estimated that building permits would fall 1.1 percent during 2007, on top of the 35 percent decline during 2006, and that nonresidential construction would decrease up to 21.6 percent from 2006 levels because of higher construction costs and a slowdown in investor-funded new construction. He said county's population growth would continue at a healthy 1.9 percent pace, and unemployment would drop to at least 4.9 percent.

Retail

Following 985,000 square feet of new absorption during 2006, new retail product in the northeast quarter was expected to lease at between $20 and $30 per square foot. Average rents were expected to climb to $18 per square foot.

Vacancy rates were predicted to fall even in older shopping centers and rents would edge up by 5.6 percent. Rent growth would be strongest along the city's busy eastern and northern corridors as well as near Fort Carson.

New companies such as Costco, Mardel and iT'Z Family Fun Center, continued to enter the market.

Office

Office rents were expected to rise as shortages occurred in some categories, creating a landlord and seller's market and the opportunity to start "spec" projects.

New development would be spurred by the fact that only 30,000 square feet of the 220,000 square feet under construction was still available at the end of 2006.

Nearly 1.4 million square feet of proposed office projects were announced for 2007.

Colorado Springs gained stature as a stable secondary market investment opportunity with strong employment, population growth, military presence and little overbuilt commercial real estate.

Higher rents and declining vacancies boded well for investors who could obtain commercial loans at between 6 percent and 7 percent.

Industrial

Another 300,000 square feet of industrial owner-user condo or large floor plate construction was predicted for 2007.

Industrial buildings were in high demand after four years of absorption losses. Of more than 600,000 square feet of new industrial space added during 2006, only 40,000 square feet remained available in early 2007.

Grubb & Ellis said the community had reached "equilibrium" and would stay there through 2007, with even obsolete or dated properties attracting redevelopment. Asking rents during 2007 were expected to average about $6 per square foot.

Investment

In the investment arena of sales of $1 million or more, at least 70 percent of investment cash would continue to come from outside the city. The biggest challenge for investors would be to find good properties to buy.

A chorus of warnings came from brokers about the rising cost of new construction and what it would mean to both the development and leasing market.

Five office and office condominium projects have been proposed, though investors were expected to experience sticker shock, based on higher construction costs.

15-acre retail center

Located across the street from high-powered traffic generators like Lowe's Home Improvement, a Super-Target and the new Memorial North Hospital, B.G. Development LLC announced that it would break ground on the Market Center at Pine Creek during the spring.

The project included nine pad sites and a proposed 22,000-square- foot inline shopping center. About half the property has been reserved for a bank, retail center, a veterinarian clinic and a 10,000-square-foot medical building.

Limon business park

Cameron Butcher Real Estate kicked off development of the 150- acre Marketplace Business Park trucking and mixed use complex on the north side of Interstate 70 at Exit 359 near Limon.

Pikes Peak Center remodel

G.E. Johnson began construction on the Wells Fargo Plaza at the Pikes Peak Center for the Performing Arts.

In addition to an outdoor plaza and amphitheater, the center also added a new marquee and restrooms during its third phase renovation. The total cost was $1 million.

Powers Office Park

Harvey Salkow of Scottsdale, Ariz., announced plans to develop the 24-acre Power Office Park on the southeast corner of Powers Boulevard and Briargate Parkway.

The proposed 11-building complex will include up to 340,000 square feet of office and commercial space.