Colorado Real Estate Journal - February 4, 2015
A shadow-anchored retail center in north Colorado Springs traded for $10.8 million. NetREIT UTC LLC, an affiliate of Net REIT Inc., a real estate investment trust headquartered in Escondido, California, paid $245.22 per square foot, for Union Town Center, which comprises 44,042 sf. The buyer, which owns office and flex p r o p e r t i e s in the Colorado Springs market, was looking to d i v e r s i f y its portfolio within the city, noted Sperry Van Ness’ Troy Meyer. “The transaction really made sense for both buyer and seller,” he added. “It was the only asset the seller owned in Colorado Springs. The buyer benefitted by strengthening and diversifying their existing portfolio in Colorado Springs. We view this transaction as another positive sign of the demand for commercial property in Colorado and, especially, for the improving market in Colorado Springs.” Meyer, along with Sperry Van Ness’ Dean Corey and Kevin Matthews, and Nezar Aweida of Re/Max handled the transaction. Union Town Center I LLC and Union Town Center II LLC sold the property. Union Town Center is located at 8666-8680 and 8810-8850 Union Blvd. and 3478 Research Blvd. in the Briargate submarket. At the time of the sale, Union Town Center was 97 percent occupied. It was built in 2003 and 2006 and is shadowanchored by Albertsons.
Even though vacancy increased by a sizable amount in the fourth quarter of 2014, it remained low enough for long enough to support the strongest rent growth during this cycle of the Colorado Springs apartment market, according to Apartment Insights’ latest Statistics/Trends Summary. The Colorado Springs vacancy rate for conventionally operated, stabilized communities of 50-plus units increased 62 basis points during the quarter to 5.41 percent, offsetting the third quarter’s 44 basis point decline. The trailing four-quarter average vacancy rate increased 2 bps to 5.4 percent, but it remains below the year-end 2013 average of 5.71 percent. The summary noted that the number of occupied, marketrate apartments fell by 84 units during the quarter, however, larger gains in previous quarters left 2014 with positive absorption of 580 units for the year. In spite of the increase in vacancy, rental rates increased $7 to $832 per month, or $1.02 per square foot. The annual rental growth rate jumped to a record 7.2 increase, well above the record 5.9 percent pace set in the third quarter of 2014, according to Doug Carter of Sperry Van Ness/Doug Carter LLC, who co-authored the report with Cary Bruteig of Apartment Appraisers & Consultants. Five sales closed out the quarter, averaging $95,556 per unit. The yearly sales totals of 27 properties with 4,934 units were well above 2013 totals of 16 properties with 2,186 units. The annual dollar volume of just over $421 million was more than double the 2013 sales volume. While absorption for the year was moderate, the number of units in properties in lease up also has fallen below 600 units, the lowest since early 2013, with just over 200 of those units vacant, the report noted. “This shows that the market is comfortably absorbing the moderate new supply being added, also shown by a falling overall vacancy rate that includes units in lease up plus stabilized properties,” added Carter. Additionally, the report noted that the slow and erratic improvement in the rental market over the last few years, especially compared with the metro areas to the north, has kept the construction pipeline at modest levels. While vacancy is well below and rents well above the averages of eight years ago, the path to the present “has been anything but a straight line.” “This irregular trend over time, although improving on average, has limited investor confidence in the rental market, creating uncertainty for underwriters and developers. Perhaps that has been a positive occurrence if long-term market stability is the goal,” said Carter. Peter Scoville and Greg Phaneuf of Colorado Springs Commercial, a Cushman & Wakefield Alliance handled both sides of Xiotech’s longterm renewal. The firm renewed its 35,361- sf lease at Patriot at Interquest III, 9950 Federal Drive in Colorado Springs. The landlord is CV Patriot Springs LLC. NavPoint Real Estate Group executed several lease transactions in Colorado Springs, including Smith Duncan LLC’s lease of 7,082 sf of retail space. The tenant leased the space in Dublin Plaza at 1824-1828 Dominion Way for three years. Heather Taylor and John Witt of NavPoint represented the landlord