They don’t happen every day. In fact, since the recession began, million dollar deals have become the exception rather than the rule — except during the past few weeks when two high-dollar deals were closed.
Peak Commercial Properties broker John Rodgers contacted the CSBJ with news of a significant industrial building sale at 6035 Galley Road.
The buyer, Michael Underwood, is making substantial improvements to the 40,000-square-foot building on 5 acres which he purchased from California-based 6035 Galley Road LLC.
Rodgers, who represented the owner, said the building had been listed for several years, but was recently priced to sell “in a timely manner.”
The selling price was $1.43 million.
Charley Conrad of the Olive Real Estate Group represented the buyer.
A second transaction — this time downtown — included a 32,325-square-foot landmark, the former home of Simpson’s Feed & Grain Co.
The building had recently served as the home of Carmichael Training Systems. This summer, however, the historic grain elevator with adjacent brick office space will become the headquarters for defense contractor NEK’s training operations.
The building at 110 Sierra Madre St. sold for $1.85 million and is currently undergoing renovation.
Tim Leigh of Hoff & Leigh represented the buyer and the sellers, Maureen Christopher and Marty Taylor.
In related news, with national commentators writing off the industry as a casualty of the recession and tight lending criteria, Colorado Springs might once again prove to be an anomaly. Not as overbuilt as some harder-hit areas, some brokers have hinted that sellers are sitting on overvalued buildings and land.
Hoff & Leigh owner-broker Tim Leigh wrote in his weekly client newsletter that based on assessed valuations, available industrial properties are $41 million overvalued and commercial office properties are priced $51 million higher than market value.
Whether they are or aren’t, Rodgers said, he hasn’t seen a spike in commercial foreclosures, although some properties might be headed back to the lender.
“I’ve seen at least one case where the loan on the property is $1.2 million — but the property would only sell in today’s market for 50 percent of that,” he said.
In their quarterly newsletter, Steve Bach and Mike Helwege of Bach Commercial Real Estate Partners didn’t mince words.
“The lack of significant primary job growth adversely impacts the commercial real estate market,” the two wrote, pointing out that first quarter 2009 metro office market space absorption — office space leased compared to available rentable space — was a negative 243,291 square feet, compared to a negative 18,213 square feet for all of 2008.
Similarly, industrial market absorption stood at a negative 318,301 square feet, double the negative 152,659 square feet leased during all of last year.
“Our community must redouble its business retention efforts to preserve the primary jobs provided by employers we have today, and to help those loyal companies grow,” the brokers said. “This requires reduced regulatory burden and cost.”
The City and County of Denver created its own mini-stimulus program, dubbed the “Home Renovation Bonanza.”
It offers local residents free building permits for home improvement projects during the first two weeks of June.
Not only was the program a success, doubling permit volume by almost 100 percent during the first week, but homeowners saved more than $1.4 million, according to the Denver Business Journal.
Residents saved almost $18,000 in estimated fees, city officials said, with an average of 73 permits pulled each day during the first five days of the program, versus an average of 40 a day during May.
The program was so successful that the National Home Builders Association posted a reprint on its Web site.
So why not try the same thing here?
Easier said than done, said Pikes Peak Regional Building Department special projects manager Bob Croft.
“The Pikes Peak Regional Building Department is structured very differently from the City and County of Denver. We’re an enterprise that receives no money from the city’s general fund,” he said, adding that staff has been cut by 40 percent since 2006.
Croft also said that officials with the combined city and county are able to make decisions on behalf of their constituents while the PPRBD supports seven jurisdictions: Colorado Springs, El Paso County, Manitou Springs, Green Mountain Falls, Monument, Fountain and Palmer Lake.
“We’d have to go before each jurisdiction and get permission for any increase or reduction in fees,” Croft said.
Croft also said that during May, the local department issued 2,808 permits for new or remodel projects.
“Those permit fees paid by users would have been $241,218,” he said, adding that the construction value for those same projects was about $10.4 million.
“The jurisdictions might be willing to consider such a move, but Pikes Peak Regional Building would have no other way to make up the difference,” Croft said. “Denver’s (building department) is financed by the general fund so taxpayer money is used.”
Becky Hurley covers real estate for the Colorado Springs Business Journal.