Swagata Guha, a principal partner with the Colorado Springs architectural firm Design Edge PC, is seeing a lot more volume in the custom housing business. That’s consistent with what the industry is experiencing nationwide. Architecture services are once again “poised for growth” after four months of declining business, according to the American Institute of Architects’ April report. Billings in March were flat compared with February, with 21 percent of firms reporting increases and 22 percent reporting declines. According to AIA, this was the second straight month in which the share of firms reporting growth in billings has jumped, which provides a little silver lining inside the dark economic cloud.
Residential firms nationwide are reporting strong growth, with a third of firms indicating increased billings in March, but firms in commercial and industrial sectors are reporting weaker billings.
Guha said the increase in the residential sector might have to do with interest rates.
“We had a lot of people postpone construction earlier this year because the money they invested in the stock market … seemed to disappear,” Guha said. The lowering of interest rates has spurred recent area growth.
Guha said she is seeing the same thing happen with multi-family buildings, even though the AIA reports a slowdown in commercial sectors.
“Actually we are doing a bit of commercial in comparison to last year, like more projects for individual owners, but not speculative work,” she said. “People aren’t building office buildings. We haven’t done (much) of that or speculative-type buildings.”
But one slowdown she sees in Colorado Springs is in small, retail start-ups.
“I think one thing we are seeing is a decline in small businesses, like mom-and-pop shops,” she said.
The construction industry seems still be speeding through the economic slowdown. Housing starts have remained strong with 1.61 million starts in March nationally. While overall employment growth has been fairly weak with payrolls increasing by less than 400,000 through the first quarter, 150,000 of the new jobs have been in the construction sector.
Gov. Bill Owens signed the Construction Fair Remedy Act on April 19, in an effort to protect the homebuilding industry by preventing frivolous lawsuits.
Tim Jackson, vice president of the Colorado Civil Justice League, stated the new law has three primary provisions. First, it requires a specific list of defects be filed within 60 days of the start of a lawsuit, with provisions that other defects may be added if identified later. Secondly, claims of negligence are allowed only if there is actual or probable damage or loss. And, homeowner association boards that decide to pursue litigation must notify all owners of the action being brought and the costs associated with it.
CCJL board member Stephen Brunston said there has been a favorable reaction from insurance companies in the form of decreased rates and broader availability. Jackson said lawyers, mainly from California, had moved to Colorado and “they were buying units in multi-family housing projects and taking them apart to determine what construction defects, if any, were present.”
And, Jackson said, once they found a defect they would ask the homeowners association representing the property owners to file a class-action suit against the construction companies involved to try to recover the damages from faulty construction. All the contractors involved in the homes’ construction would be named in the suit, he said, whether or not they had anything to do with the problems found.
“Some of these were frivolous,” said Jackson. “Often times it would be like nails and studs were 5 inches apart instead of 6 inches apart.”
“And if all these companies are named in the lawsuits, then the company’s insurance would have to back the subcontractors up in the major company’s defense,” said Jackson. “Much of the defense was needlessly costly because it wasn’t subcontractors’ fault.”
Jackson said for developments of 60-120 housing units, as many as 60 subcontractors are used, for everything from windows to concrete pouring to garages.
Zurich, a major insurer throughout the United States, pulled out of the Colorado market because of these lawsuits, said Jackson. “It’s likely they (Zurich) are already back in the market.”
Engelage Real Estate One LLC purchased the 14,028-square-foot Valli Hi building at 715 South Circle Drive from Henry Weiss for $510,000. The property is a two-story brick building and is 80-percent occupied by the USA Volleyball Association with Dean Eastepp and Robert Spaete occupying the balance. Engelage has begun to remodel the lobby and the building will now carry the USA Volleyball Association moniker. Craig Engelage, owner said he hopes the work will be completed before summer.
“We hope to have all the improvements done before the May 19 weekend when the World League tournament begins,” said Engelage. Tim Leigh of Hoff and Leigh Inc. facilitated the purchase.
Analytical Surveys Inc., founded in the Springs in 1981, but now with its corporate offices based in Indianapolis, has completed the sale of most of its assets for its Springs-based land mapping office. ASI sold its office to The Sanborn Map Company Inc. for a total consideration of $9 million for its 1935 Jamboree Drive building with approximately 30,000 square feet. ASI provides geospatial data management, including data capture and conversion, as well as planning, implementation, distribution strategies and maintenance services. Part of the reason for the sale was because the Colorado Springs office for ASI had a focus on government clients, rather than utilities like ASI’s four other offices.
“It was a much better fit for them,” said. “It helped our company get financially back on its feet, and allowed us to focus on the utility marketplace. It was a great win-win all the way around.”
Sanborn is the nation’s oldest map company, started in 1866, and has more than 1.5 million maps, documenting the development of U.S. cities and towns for more than 130 years.
Printer’s Park Medical Plaza at 175 South Union Boulevard is abundant with new leases with Memorial Hospital. Colorado Springs Vascular PC rented 3,223 square feet from Memorial Hospital for future relocation. Other companies planning to relocate to the plaza include: Larson, Lalonde & Ridnour LLC, a physician’s clinic that leased 6,095 square feet; Progeny Fertility Systems Inc. leasing 2,045 square feet; Dr. Steven E. Murk who leased 1,725 square feet for a physician’s office; and RFMC Inc., a physician’s office that has leased 6,420 square feet.
Kent Mau and Andy Lindquist, brokers with Palmer McAllister, A Fredrick Ross Co., were the listing agents as well as the cooperating brokers on the deal with Memorial Hospital’s Joan Martin.
The Hollowbrook Center at 2160 Hollowbook Dr. with 39,662 square feet is also a done deal between Lee Smith and Rio Nevada Development. Smith bought the property for $138,000 from Rio Nevada to build an 8,000-square-foot medical/office building. Mark Useman and Greg Phaneuf were the cooperating brokers with Palmer McAllister and the listing firm was Fidelity Real Estate.