Fountain commercial center expands again

The Markets at Mesa Ridge shopping center in Fountain, south of Colorado Springs, is continuing its expansion. A groundbreaking took place Wednesday, Aug. 13, for the addition of an Ent Federal Credit Union, Little Caesars Pizza and Papa Murphy’s Pizza. Construction should be completed in February. The Markets at Mesa Ridge, at Mesa Ridge Parkway and Fountain Mesa Road, is a joint venture between a California-based real estate investment company and members of the Janitell family of the Pikes Peak region. The development started in 2001 with construction of a Safeway grocery, and will include more than 500,000 square feet of commercial space when completed. Other existing tenants include Lowe's Home Improvement Warehouse, Walgreens, Advance Auto, Sonic, Subway, Wells Fargo, Chase Bank and Carl’s Jr. Project developers and Fountain officials say the Markets at Mesa Ridge will serve city residents as well as thousands of additional troops that will be stationed at nearby Fort Carson in the next few years. More information: Tammy J. Gilbert or Richard Walker of First Properties Inc., 576-2288; Lisa Cochrun, Fountain Economic Development Director, 322-2056; http://www.firstproperties1.com/.

New medical office building opens

NorthCare at St. Francis, an 80,000-square-foot, physician-owned medical office building linked via a skybridge to the new St. Francis Medical Center, opens today, Aug. 4.

Many of the tenants are relocating to the new hospital campus at Woodmen Road and Powers Boulevard from the area surrounding Penrose Community Hospital on North Academy Boulevard. That hospital is closing Aug. 16, the day St. Francis Medical Center opens.

Tenants in the new building include Pikes Peak Urology, Walgreens, Women’s Surgical Center, Davita Dialysis, Mountain View Medical Group Pediatric Specialists and numerous others.

The building was developed by NorthCare LLC, headed by local physician Dr. Kevin Weary and Michael Heritage of The London Real Estate Group. It is 85 percent leased, Heritage said.

Real estate professionals bullish on their companies

Commercial real estate professionals are a hearty lot. They recognize the worsening economic conditions nationally, but remain generally positive about the fortunes of their own companies. Those are some of the results of a survey of real estate professionals by accounting giant Grant Thornton LLP. In a survey this year, Grant Thornton found nearly six in 10 real estate executives -- 57 percent -- are pessimistic about the U.S. economy next year, and almost half -- 48 percent --feel the same about the real estate industry’s outlook. Those figures are up sharply from 2006, when 15 percent of survey respondents had a dim view of the national economy and 5 percent were pessimistic about the real estate industry’s outlook. In spite of the latest survey numbers, half of this year's respondents are optimistic about their own companies and only 12 percent had a pessimistic outlook. Other findings: When asked about the single most important issue facing their industry in the next year, 36 percent said the national economy; 21 percent cited earnings and operations; and 19 percent said the ability to borrow money. Also, 69 percent of survey respondents said they think unemployment rates in their industry will increase; 61 percent predicted commercial vacancy rates will rise; and 51 percent believe interest rates will fall. For its survey, Grant Thornton solicited online comments from nearly 1,900 real estate contacts in its database, and sought comments from 4,000 developers, owners and investors who are members of the National Association of Industrial and Office Properties.
The company collected 341 survey responses in March of this year. More information: http://www.grantthornton.com/

COPT buys Northrop building

Corporate Office Properties Trust, a Maryland-based real estate company, added to its local holdings Tuesday by paying $23.2 million for the Northrop Grumman building that opened in May in the Cresterra business park at the Colorado Springs Airport.
The 124,305-square-foot building, southeast of Powers Boulevard and the Milton E. Proby Parkway, houses 400 of Northrop Grumman’s 1,150 local employees. City officials selected Corporate Office Properties Trust last year as the business park’s master developer.
The company now owns 15 office buildings in the Springs, totaling 1 million square feet. It also is building three office buildings with 232,000 square feet, developing two others with 235,000 square feet and owns 192 acres that could accommodate 2.5 million square feet of space.

Commercial real estate outlook

If local commercial real estate vacancy rates climb this year, the reason probably will be 1.4 million square feet of newly constructed space coming on the market and not necessarily because of a surge of businesses closing up shop.
That’s part of this year’s commercial real estate outlook as seen by Paul Turner, whose Turner Commercial Research tracks the Colorado Springs market. Turner’s comments are included in his look back at the fourth quarter of 2007 and his look ahead at 2008.
Unlike last year, when chip-maker Intel Corp. announced it would close its Springs plant, there are no “major rumors” of impending business shutdowns that might chill the commercial market, Turner said. But, he said, a national economic downturn — higher unemployment, reduced manufacturing and a slowdown in retail spending — could affect Springs commercial real estate.
Also, it’s too early to predict what will happen to commercial rents this year, Turner said.
Looking back, Turner said the combined commercial vacancy rate for offices, industrial buildings and shopping centers finished 2007 at 8.2 percent; at the end of 2006, the combined vacancy rate was 6.6 percent.
Outside investors spent about $600 million acquiring commercial real estate in the Springs in 2007 — a solid year, but still well below the $1 billion spent in 2006, Turner estimated.

Intel closing will hurt industrial real estate market

A 2008 real estate forecast by Sierra Commercial Real Estate of Colorado Springs suggests the city's industrial market will have a tough go next year. A housing slowdown means building supply companies and heating and cooling businesses, for example, won't need as much space. A loss of manufacturing jobs also will result in less demand for industrial buildings. Intel Corp.'s closing of its 1.4 million-square-foot chipmaking plant on the Springs’ northwest side won't help, either. Finding a buyer will be difficult because it will be costly to remodel the sophisticated plant, said Dave Bacon, a Sierra managing director and industrial specialist. Yet, having the plant available if a major employer comes to town is a positive for the Springs, said Sierra President Dave Delich.

Commercial vacancies are up, but so are average rents

Colorado Springs commercial vacancy rates climbed during the third quarter of 2007, but rents inched up, too. What gives? Doesn't an increase in supply -- greater amounts of office, industrial and shopping center space available to lease -- and a reduction in demand result in lower prices? Not this time, according to the latest quarterly analysis of the market by Paul Turner of Turner Commercial Research in Colorado Springs. The paradox might be explained by several new projects, which carry higher rents, being added to the larger mix of buildings for lease, Turner said in his report. As a result, average lease rates have increased. According to Turner's latest report, third-quarter office vacancies rose to 8.2 percent from 7.7 percent during the same period last year; industrial vacancies increased to 7.6 percent from 6.6 percent; and shopping center vacancy rates climbed to 7.1 percent from 6.6 percent. Office lease rates averaged $11.39 per square foot in the third quarter of 2007, up from $10.61 per square foot a year ago at the same time; industrial rents averaged $7.18 per square foot, an increase from $6.98 last year; and shopping center rents averaged $13.82 per square foot, up from $13.35.