Colorado Real Estate Journal - August 19, 2015
Griffis/Blessing Inc. is taking to new heights its newly acquired Colorado Springs apartment community. The firm paid $22 million, or $124.53 per square foot, for the Union Heights Apartments, a 220-unit property at 4770 Nightingale Drive, where it already has initiated capital and operational improvements. “Union Heights is poised for rent growth. Our proven value-add capital improvement plan will give us the opportunity to showcase the community’s potential,” said Gary Winegar, president of investment services for Griffis/Blessing. “Investors will benefit from these enhancements by seeing immediate cash flow while residents will begin to enjoy a higher quality of apartment living. “We’ve been doing value-add deals since 1985; it’s our forte, we know how to do it,” he continued. “Union Heights is right in our backyard; it is centrally located in a submarket that does well. There were a lot of things we liked about the asset.” Colorado Springs-based Griffis/Blessing plans to enhance building exteriors; upgrade the clubhouse and related amenities; improve landscaping; renovate the pool area; and revamp on-site management services to better meet residents’ expectations. Improvements are expected to be complete by year-end. Griffis/ Blessing also plans to improve unit interiors as apartments turn over. “The community offers potential residents an affordable place to live while situated in a highly desirable location, near the intersection of Academy and Union boulevards, allowing for convenient access to everyday needs from grocery shopping and education to retail shopping and entertainment,” added William J. Hybl Jr., president and chief operating officer of Griffis/Blessing. Constructed in 1984, Union Heights comprises one- and two-bedroom units that average 803 sf. Community amenities include a swimming pool, barbecue grilling station, clubhouse with a business center, theater room and fitness center, and views of Pikes Peak and the Front Range. At the time of sale, Union Heights was 94 percent occupied. David Potarf, Dan Woodward, Matt Barnett and Jake Young of CBRE listed the property for seller Holland Residential, part of the Holland Partner Group. Union Heights Apartments was part of a larger portfolio of properties in Colorado Springs and metro Denver that Holland is selling. Brady O’Donnell of CBRE arranged the financing. The acquisition of Union Heights Apartments represents Griffis/Blessing’s first multifamily purchase in Colorado Springs this year, as the company recently has been in disposition mode. However, the acquisition likely won’t be its last in 2015, as it currently is looking to go under contract on an apartment community in metro Denver and is working on another potential acquisition in Colorado Springs, added Winegar. “Our goal is to be buyers.” Griffis/Blessing, which also has offices in Denver and Boise, Idaho, currently manages more than 4 million sf of commercial space and more than 8,500 apartment units and owns upward of 3,000 apartment units. Molly Markel, district manager for Griffis/Blessing, will manage the community with day-to-day operations led by on-site property manager Christina Musell. Other News n Colorado Springs’ office market saw another positive quarter – a trend Quantum Commercial Group Inc. expects to continue for the balance of the year and into 2016. Net absorption for the overall Colorado Springs office market was 80,165 square feet – boosting a year-to-date total of 176,330 sf. By comparison, the total net absorption was a negative 25,571 sf for 2014. Quantum Commercial expects to see more positive absorption in the remainder of 2015 and 2016, according to the report. The office vacancy rate dropped to 11.6 percent at the end of the second quarter, down from 12.2 percent at the end of 2014. The vacancy rate has followed absorption closely and will continue to do so with limited new space being developed in the near term. Quantum Commercial noted in its report that although not yet fully reflected in its numbers, the amount of square footage being constructed and acquired for the “new corporate structure of medicine” is noteworthy. The firm pointed to the evolving dynamic medical practices that will be acquired and managed and will change the current model of medical office property acquisitions. Regional, national and global companies like Centura, DaVita and UCHealth are impacting the local medical office market while development companies like Boldt have expanded in the market and are working collaboratively with groups like the YMCA to create a hybridized wellness facility. The firm reported this rapidly changing landscape is having a positive effect on office market indicators, which will likely continue into the future. Quantum Commercial forecasts steady, moderate growth in the Colorado Springs office market in 2015 with stronger growth in the next couple of years; however, the addition of new jobs is what is needed to fuel positive absorption and occupancy rates. The office market report was part of Quantum Commercial’s overview of the Colorado Springs commercial real estate market in the second quarter and included reports on the retail, multifamily, industrial, investment and land sectors.