Denver-area Q1 commercial real estate sales down 47% from 2009

Thursday, May 20, 2010, 2:16pm MDT | Modified: Thursday, May 20, 2010, 10:00pm

LoopNet: Denver-area Q1 commercial real estate sales down 47% from 2009

Denver Business Journal - by Paula Moore

Denver-area commercial real estate sales for the first quarter were down 47 percent by dollar volume compared to the same period of 2009, according to a report Thursday from LoopNet Inc.

Selling price per square foot, by product type, dropped 27 percent year over year for office buildings and down 13 percent for industrial buildings, but was up 80 percent for retail buildings and up 7 percent for apartment properties.

Based in San Francisco, LoopNet operates LoopNet.com, an online real estate listing service.

The company’s first-quarter sales figures include transactions of $2.5 million and more.

Specific first-quarter sales information for metro Denver:

• Office buildings — Total sales volume dropped to $316 million from $667 million in 2009’s first quarter. Average price per square foot decreased to $135 from $185 year over year. By comparison, the average sales price per square foot nationwide in this year’s first quarter was $156, down from $252 year over year.

Major Denver-area office building sales for 2010’s initial period included a National Park Service Building in Denver ($28.7 million), Westmoor Technology Park in Broomfield ($24.3 million) and West End Plaza in Boulder ($14.5 million).

• Industrial buildings (warehouses, distribution centers, flex space) — Total sales volume dropped to $189 million from $415 million year over year. Selling price per square foot decreased to $66 in the first quarter from $75 in 2009’s initial period. Nationwide, first-quarter price per square foot decreased to $55 from $66 in the initial period of ’09.

Significant industrial property sales in the first quarter included the building at 13310 James E. Casey Ave. in Greenwood Village ($7.6 million), 1460 Over Look Dr. in Lafayette ($5.46 million) and Dry Creek Center in Greenwood Village ($5.3 million).

• Retail buildings (strip centers, grocery-anchored shopping centers, freestanding stores) — Sales volume increased to $597 million from $430 million in the initial period of ’09. Price per square foot rose to $267 from $148 year over year. By comparison, retail selling price per square foot nationwide in the first period was $142 compared to $180 year over year.

Major first-quarter retail sales included Meadows on the Parkway Shopping Center in Boulder ($30.79 million), Coal Mine Shopping Center in Littleton ($10.5 million) and the Petco store at 4100 E. Mexico Ave. in Denver ($7.8 million).

• Apartment properties — Total apartment/multifamily sales volume in the first quarter dropped to $393 million from $528 million for the same period of 2009. Price per unit increased to $78,318 from $73,112 year over year. Nationwide, price per unit dropped to $85,943 from $93,701 during the same period.

Major apartment deals in the metro area in this year’s first three months included 4550 Cherry Creek in Denver ($52.8 million), Jefferson at Arvada Ridge in Arvada ($28.4 million) and Coronado Crossing in Denver ($6.5 million).

pmoore@bizjournals.com

Shadow market drives vacancies in mountains

By John Rebchook on May 21, 2010 · Comment · ShareThis

The overall statewide apartment rental market showed strength in the first quarter, with the vacancy rate for areas outside of Denver falling to 6.6 percent in the first quarter from 8.5 percent a year earlier, a 22 percent change. (For an earlier report, please visit Colorado rental vacancies fall )

But Colorado’s mountain communities, hammered by a sinister “shadow” market, showed an unprecedented year-over-year percentage increases. Hit hardest was Steamboat Springs, which saw its vacancy rate rising to 8.0 percent from 1.2 percent a year earlier, a whopping 567 percent increase.

Terrance Hunt, a partner and broker with the Denver office of Apartment Realty Advisors had noticed the huge jump in vacancy rates and looked into it on behalf of clients in areas from Summit County to Glenwood Springs.

“We investigated it and came to the conclusion it was the shadow market caused by people buying homes and condos, and they are unable to afford the mortgages so they are renting them out,” adding to the supply, Hunt said. The shadow market, in this case, includes condos and homes that buyers expected to use solely as second homes for ski vacations and weekend getaways, but now are looking to rent them year around, or risk losing them to foreclosure. Indeed, the shadow market can include foreclosed homes that investors and lenders are renting until the for-sale market recovers.

Subprime loans culprit

“They purchased these second-homes with subprime mortgages,” Hunt said. “Now, they have seen a big drop in their nest eggs and IRAs, and they no longer feel rich. But they had a different point of view a couple of years ago. The idea was to “Why not just buy real estate? Real estate is always a great investment.” During the “easy money” period it was almost as simple to buy a second home in the mountains, as it was to buy a primary home, he said. Because the financing was available, many people didn’t hesitate in buying a vacation property, he said.

Though Aspen saw the lowest percentage increase of the resort areas – with vacancy rates up 28.6 percent – even that extremely expensive mecca is feeling the pinch. And despite almost a 30 percent increase, Aspen’s overall vacancy rate remains low at a mere 2.7 percent vacancy rate. On the other hand, it was as low as 0.7 percent as recently as the first quarter of 2007.

“I have a client who has a ranch in Aspen, and she told me she used to be able to lease her ranch out over the Christmas week for $75,000 or $100,000,” Hunt said. “Not anymore. Last year, there were no takers at any price. When people flew in from LA or out-of-the-country, they stayed in a nice hotel instead.”

Ryan McMaken, of the Colorado Division of Housing, said a an apartment property manager told him the same thing is happening in Greeley. While Greeley’s vacancy rate rose by about 18 percent, McMaken said it would be a much stronger rental market, if there weren’t so many vacant second homes competing with the traditional rental units.

Still, McMaken noted that in the mid-2000s, many of the mountain communities had much higher vacancy rates than they do today. For example, the vacancy rate as 20.4 percent in Eagle County in the first quarter of 2004, compered with 6 percent today. And the vacancy rate in Steamboat Springs was 22.1 percent in the first quarter of 2006.

“Even though we’ve never seen these kind of year-over-year percentage increases before, to put it in perspective, they are still relatively low,” McMaken said. “There is nothing to indicate, at least in the short-term, that we are going to return to the kind of vacancy rates we saw back in 2004.”‘

Hunt said those large vacancies came in the wake of the high-tech boom and bust.

Perception of wealth vanished

“In early 2000, a lot of people had this perception of wealth,” Hunt said. “Their stock portfolios were going crazy, filled with high-tech companies. People started buying mountain properties, and the demand caused developers to build new products. But a lot of the new product was a little too late, and the bottom fell out of the condo market.”

He said some developers were “too late to the party,” completing their properties 18 to 24 months following the “tech wreck,” in March 2001, followed by the terrorist attacks on Sept. 11 of that year.

“The way to preserve the too late to be sold had to find a way to preserve as much equity as they could, and the way they did that was rent them out instead of selling them,” Hunt said.

But then the mountain rental markets rebounded. For example, after hitting 20.4 percent in 2004, a year later the vacancy rate in Eagle County had fallen by more than half to 9.2 percent, only to drop another 86 percent to 1.3 percent in 2008.

Market	1Q 2009	1Q 2010	% Rate Change
Aspen	2.1%	2.7%	28.6%
Eagle County	2.1%	6.0%	186%
Glenwood Springss	1.5%	3.2%	113%
Steamboat	1.2%	8.05	567%
Summit County	2.7%	4.9%	81.5%

More Real Estate News from John Rebchook's Inside Real Estate News

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for GlobeSt.com, covering commercial real estate for the Internet publication.!
Visit John Rebchook's Inside Real Estate News

Five Bad Home Improvement Ideas

Five Bad Home Improvement Ideas

Published on Saturday, May 15, 2010, 6:18 PM Last Update: 2 day(s) ago by Kimbrough Gray

Category: All Articles » Sales Strategies and Tactics

When considering adding value to a home, you consistently hear from the real estate industry that updated bathrooms and quality kitchens stand out in a home sale. Those are proven sale closers. There are certain other improvements you can make to your home that will beautify it or create convenience for your family. When it comes time to selling, however, those improvements may do nothing to increase the value of the property and may even turn off potential homebuyers.

Over-the-Top Renovations

Au contraire mon frère, not all renovations will raise the value of your home. Just `cause it's bigger doesn't mean it will be perceived as better by future homebuyers. Unless your home is located in Beverly Hills or some other very posh neighborhood, don't install the bathroom with the supersized steam shower, imported Italian marble and several different spray heads ... unless you have the money to do it for your own pleasure and enjoyment only. That kind of improvement doesn't typically do anything to increase the value of the average home.

On the other hand, if you updated an old bathroom, you could see an increase of several thousand dollars to your home's bottom line. Real estate professionals suggest that homeowners pour over local home listings to see what amenities are the standard in your area, then upgrade your home to meet it. If you overdo it, however, you may not recoup your investment.

Swimming Pools

If you think installing a swimming pool in the back side of your home will draw hoards of homebuyers clamoring to make offers on your home at sale time, you'd be wrong. Some may consider it a perk, but others may perceive it as a pain with all the maintenance it will require.

Homeowners have even paid to have their swimming pools buried to create more yard space. If you shell out the expense to build one, don't expect your home's value to budge. The only exception to building a swimming pool is if you live in states where they are considered the norm.

Home Office Renovations

Although, a home office is often an amenity appreciated by those shopping for a home, it should be built with frugality in mind. Overhauling an office doesn't pay off when it's time to sell your home. Don't steal usable space from another living area to create a home office. Instead, make sure the space can easily be converted back into a bedroom or other living space if needed. If you decide you just have to have the built-in Curly Maple wood shelves, know that you will only recoup around 50 percent of your cost at sale time.

Unique Builds

Home magazines are always coming up with clever and creative ways to change the look of your living space. Some are exotic and outlandish, but they can pique your interest. Tempted to put a classic disco ball with lights in your bedroom, a constellation ceiling in your family room or a peaceful Koi pond in your back yard? Avoid making outlandish changes to your home or changes that will be perceived as adding work for a future homeowner. Don't be tempted to incorporate these ideas into your own home, unless you don't plan on selling anytime soon. Homebuyers may not share your enthusiasm.

Roof Renovations

If your roof needs repair, don't hesitate to have the work done. It will be one less issue you'll have to deal with when listing your home. If in your pursuit to list your home you think replacing your roof with cedar shakes or clay tiles will increase the value, think again. Although they have the ability to make your home stand out, they probably won't inspire homebuyers to pay more for them. So, unless you have the money to burn, keep it simple when preparing your home to be listed on the real estate market.

Ki has been an investor in the Austin real estate market for several years. The website has an Austin home search for listings in Austin, Texas. It also has general statistics covering Austin real estate along with several neighborhoods in Barton Creek.