A key indicator of economic vitality in any metropolitan area is the health of its real estate market, and Colorado Springs is no different.
The incoming year, while as unpredictable as any, is shaping up to be positive in that regard, according to commercial and residential real estate experts.
Every prediction, forecast or outlook is fallible — but those that track the trends and crunch the numbers do their best to illustrate the future realistically and with whatever tinges of positivity or negativity are instigated by data.
In the Springs’ case, there seem only to be clear skies on the horizon.
The real estate market — both commercial and residential — continues to bounce back since turning the corner in 2011 and local experts see the coming year as a step closer to complete recovery. Colorado Springs real estate investors can only hope they are right.
The residential construction industry will continue to recover in 2014 since turning a corner in 2011, according to a Sept. 26 report by the Southern Colorado Economic Forum.
“Residential land sales will continue to be the hottest commodity in real estate due to the resurgence of housing construction, fueled by continued low interest rates, and a population growth in Colorado Springs that continues to outpace much of the nation,” wrote Dale Stamp, president of Quantum Commercial Group in an introduction to its 2014 Colorado Springs Forecast.
An estimate published in the Forum’s report suggests that 2013 could see a total of 3,000 single-family home permits issued in El Paso County, while 2014 could result in more than 3,700 — a 23.3 percent increase, compared to state (25.9) and U.S. (29.6) averages — due to fire damage in both Black Forest and Mountain Shadows.
Data in the report also suggest that multi-family permits will continue to increase and will have topped 600 by the new year. Home sales are also expected to increase in the new year to 12,000, up from 11,000 in 2013.
Foreclosures are predicted to decline from a projected 2,100 in 2013 to 1,700 in the next year.
Meanwhile, the report suggests that non-residential construction will increase by 20.4 percent, which is higher than both the Colorado (4) and U.S. (7.2) averages.
Construction promises also to have a successful year in terms of workforce development: Leading job growth sectors for the state include construction, which is expected to add 11,000 jobs or 8.7 percent.
The total value of construction is also poised to to be at its second-highest level within the past decade, climbing nearly 15 percent largely due to residential projects.
Meanwhile, total housing permits are expected to increase by 17.5 percent — single and multifamily development.
Two Springs-based commercial real estate firms expect 2014 to be a healthy year for the retail, office and industrial submarkets, as the regional economy nears stasis.
In their 2014 forecasts, Sierra Commercial Real Estate and Quantum Commercial Group predict positive trends for the year ahead: higher occupancy, higher leasing activity and higher lease rates — steady progress toward full recovery.
“The Colorado Springs commercial real estate market continues to slowly improve and instead of having dark clouds overhead in 2014, we will be experiencing partly cloudy skies with periodic rays of sunshine on the horizon,” wrote Stamp in an introduction to his company’s annual report.
Sierra attributes the strengthening of a buyer/investor market to a lack of construction in each submarket, and Quantum reported that the need for additional space will increase demand and likely result in increased construction in each submarket.
“In the commercial markets, continued strengthening will be the new norm for 2014 due to a lack of new construction related to speculative development in all sectors,” Sierra reported. “Office vacancies will continue to press downward … Retail will lead the way for any new development … Industrial will continue to rebound.”
Quantum’s report explains that — although facing potential delays due to sequestration — the Colorado Springs industrial market could be fully recovered by the end of 2014. Economic recovery in the Springs has typically lagged eight to 10 months behind Denver, according to the report.
Like the other submarkets though, the health of industrial relies heavily on job growth — namely, in fields affiliated with manufacturing and production — which has been stable. Sierra said that if this trend continues, the industrial market will benefit greatly.
“Overall, the industrial market will be good in 2014,” stated the Quantum report.
Analysts anticipate another healthy year for the retail commercial market, as large shopping centers across Colorado Springs continue to add new tenants.
The city’s retail submarket is expected to remain stable with slow improvement throughout the year, both reports suggest. With population growth expected to hover between 1.5 and 2 percent annually, and increased activity within large shopping districts, both groups seem optimistic.
“The completion of University Village Colorado in 2014, having added many new tenants and buildings this year including Stein Mart, and new tenants already announced for 2014, plus the simultaneous completion of the new Lane Center for Academic Health Sciences integrating primary healthcare services for aging adults with UCCS academic programs, will make 2014 a year of growth for retail in Colorado Springs,” according to Quantum’s report.