Colorado Springs Real Estate Briefs: February 1, 2008

Last year might have been tough on home builders, but multifamily landlords and owners saw a glimmer of economic hope.

The Apartment Insights Fourth Quarter and 2007 year-end report compiled by Doug Carter of Sperry Van Ness showed certain parts of the city faring very well with vacancy rates in the single digits. However, others saw vacancy rates as high as 21.6 percent, mostly because of troop deployments and the renovation of a large property which is 50 percent vacant.

Here is a brief rundown on vacancy rates for each sector:

Southwest - 6.11 percent

North -7.03 percent

North Central -7.69 percent

Airport -13.11 percent

South Central -13.42 percent

Security/Widefield/Fountain -21.66 percent

The report also pointed out that 1970s-vintage apartments had the highest vacancies (10.77 percent). Complexes built during the 1980s were 9.33 percent vacant and properties built after 1990 posted average vacancy rates of 6.65 percent.

The average gross rent increased only $4 during the fourth quarter to $695, up just 0.6 percent from a year ago.

Absorption, though positive for the last year, was slightly less than 700 units. That's down from the historical average of 1,000 units per year.

Apartment Insights did note that new construction was "virtually absent," allowing absorption to push down vacancy rates in existing product

Transactions slowing

Carter's recent presentation at the Institute of Real Estate Management's annual forecast breakfast included a number of observations.

Among those:

Since 2003, the overall vacancy rates have fallen from a high of 14 percent to today's 9.4 percent.

Newer and nicer properties are leasing fastest.

Rents remain mostly flat, but have begun to increase in Class A properties. Carter also said that renters today are paying almost the same for their apartments that they paid 10 years ago.

Investors are finding a "buyers' market." During 2007, there were $240 million in closed multifamily sales.

Last year, only 22 apartment buildings sold, just two-thirds of the number sold during 2000.

MIA: Sales of small older buildings with less than 100 units were the lowest in 20 years.

Older apartments have seen a decline in prices, $2,000 per year per unit, beginning during 2003.

Fewer investors are shopping for apartments, and there are more properties for sale than there are buyers. Lenders are tightening requirements or have pulled back from highly leveraged deals.

Carter's view might change based on announcements this week that three new apartment complexes will be built, two along North Powers Boulevard and one off Highway 85 in Fountain. But for apartment owners willing to hold on for five to nine years, he predicts solid returns.

PCL leases office

The Pacific Coast League of Professional Baseball Clubs Inc. has leased 1,187 square feet of office space at 630 Southpointe Court.

Mary Frances Cowan and Russell Stroud of Grubb & Ellis Quantum Commercial Group represented the owner, BK-630 LLC. Stan Kensinger and Jim DiBiase of the Olive Real Estate Group represented the tenant.

The PCL was previously located at 1631 Mesa Ave. in the El Pomar complex.

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