Colorado Real Estate Journal -

Rustic Hills Shopping Center sells in value-add play to Texas buyer

by Jennifer Hayes

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A Texas-based buyer acquired the Rustic Hills Shopping Center in a value-add play.

SpringsBon LLC paid an undisclosed amount for the retail center situated in eastern Colorado Springs at the southeast corner of North Academy and Palmer Park boulevards.

The four-building center comprises 234,015 square feet on a 17.28-acre site.

Prior to Rustic Hills falling into foreclosure, the center maintained a high occupancy and had notable national tenants, such as Hobby Lobby, Ross Dress For Less and Sports Authority, said Transwestern’s Larry Thiel. However, after the center went into foreclosure, a number of national tenants vacated the center, originally built in 1969 as the Springs’ first enclosed mall.

At the time of the sale, Rustic Hills was 62 percent leased to predominantly mom-and-pop tenants. Sports Authority is still open at Rustic Hills but is closing that location to open its new store at the Broadmoor Towne Center.

“It’s a very good value-add deal for the buyer,” said Thiel, who with Transwestern’s Brad Cohen represented the seller in the transaction, a special purpose entity controlled by special servicer LNR Partners.

“Rustic Hills Shopping Center is a fantastic opportunity for the buyer,” he continued.

“Positioned ideally in Colorado Springs, the buyer will reposition and re-lease the center to meet the needs of the submarket.” MiLa Properties Inc. represented the buyer, which owns other property in the Colorado Springs marketplace.

Other News

A Christian Brothers Automotive store in Monument was one of six Christian Brothers stores sold across the country.

The store is located at 16130 Jackson Creek Parkway.

In addition to the Monument facility, the stores also sold were in Lake Worth and Schertz, Texas, Collierville and Hendersonville, Tenn., and Grayson, Ga. The stores were acquired for a combined $11.9 million. The triple-net single tenant properties comprise more than 29,000 square feet of retail space.

Viera Commercial Properties Inc. represented the unnamed buyer in the portfolio purchase.

L-3 National Security Solutions renewed its 21,106-sf lease at 5575 Tech Center Drive in Colorado Springs.

The landlord is Wells Fargo Bank, as Trustee.

Greg Phaneuf of Cushman & Wakefield|Colorado Springs Commercial represented the tenant.

Colorado Springs’ office market prices are near the bottom and tenants are taking advantage, according to Quantum Commercial Group Inc.’s recent report on the city’s commercial real estate market.

Quantum Commercial reported that the result of discounted pricing and cautious optimism about the national and local economy has resulted in businesses more willing to commit themselves to longer-term leases and to the acquisition of office buildings to accommodate their operational requirements.

The firm anticipates market fundamentals (vacancy, absorption and rental rates) will be relatively flat for the remainder of the year. However, defense budget cuts could negatively affect the Colorado Springs office market, particularly submarkets with a large percentage of defense contractors, such as the southeast/airport submarket. This will impact lower quality buildings to a greater extent as Class A rates become more competitive and buildings purchased at discounted prices can then be marketed for lease at lower rates, which will continue to contribute to downward pressure on overall lease rates, according to the report.

During the first half of 2012, Class A and B office vacancy edged down while Class C vacancy rates rose as a number of tenants improved their leasehold situations by moving to higher-end properties with little or no cost increase.

Quantum Commercial Group also reported on the industrial, retail and investment markets in the city. Highlights from the reports include: the industrial market decreasing its vacancy rate to 10.3 percent, down from 10.5 percent; investors are expanding into secondary markets, which will bode well for markets like Colorado Springs; and retail construction picked up in the second quarter with 37,247 sf under way, including five gas/convenience stores.