Report: Commercial real estate trading hands, vacancy rates still high

Recent commercial office space sales should spur lower vacancy rates and rising lease rates, according to reports from Cushman & Wakefield Colorado Springs Commercial, a realty group.

More than 700,000 square feet of office space has sold to user owners in Colorado Springs over the last two years, according to the company’s report.

Some notable sales include El Paso County’s purchase of the 300,000-square-foot office building along Garden of the Gods Boulevard. The Pikes Peak Library District purchased a 113,000-square-foot office building near the Chapel Hills mall. The Space Foundation, USA Volleyball and Braxton Technologies also purchased large facilities recently, according to the report.

Sale prices have ranged between $35 and $85 per square foot.

Cushman & Wakefield also reported that there are another 500,000 square feet of offices under contracts with sales expected to go through within the next few months.

That will take “an additional chunk out of the market vacancy and limit options for those tenants in the market to lease space,” according to the report.

That suggests the market is tightening. Some owners have put their properties on the market, another indication that the market is shifting, according to the report.

These changes could limit available space as the job market returns, causing lease rates and sales prices to go up.

However, vacancy rates are still high.

Submarket   Total square footage     Vacancy rate       Lease rate

North I-25     6,423,689                      25.51 percent     $11.68/sf

Airport           1,506,990                      47.68 percent     $12.19/sf

Central

Buiness           1,803,132                      13.93 percent    $14.75

One Response to Report: Commercial real estate trading hands, vacancy rates still high

  1. Currently, there doesn’t appear to be much movement in Colorado Springs’ average office vacancy rate. Real estate research firm Reis, Inc. (tracking a 15-million-square-foot office inventory of competitive general-purpose buildings of 15,000 square feet or more in six Colorado Springs submarkets) reports an average vacancy rate of 20.7% for the first quarter, unchanged from the end of last year. Still, there were early indications this year that three submarkets did begin to see occupancy improve: The Central, Northeast, and Southwest submarkets each saw the average office vacancy rate slide lower over the first two months of 2012. Given that little if any new office development is expected here over the near term, it will be interesting to see what impact, if any, owner-occupier office purchases have on market vacancy levels going forward.

    For more apartment, retail, and office property insights in 200 metro areas and 1,800 submarkets/neighborhoods nationwide, go to ReisReports.com.

    Connie Vitucci
    ReisReports.com

    Connie Vitucci
    April 25, 2012 at 5:15 pm