Page 20 —
COLORADO REAL ESTATE JOURNAL
— May 18-May 31, 2016
Colorado Springs/So. Front Range
by Jennifer Hayes
Abuyer quicklygrowing itsCol-
orado Springs multifamily portfo-
lio added to its holdings with its
acquisition of Foothills West.
Lavington Colorado Invest-
ments LLC out of California paid
$2.65 million, or $75,714 per unit
and $77.88 per square foot, for the
35-unit community at 720 Mela-
ny Lane. Lavington acquired the
community in an all-cash transac-
tion – it’s third purchase in the
Colorado Springs market in the
last six months, noted Saul Levy
of ARANewmark.
“It closed in less than 30 days,
really even before we could fully
go out to market,” said Levy. “It
speaks to the level of competi-
tion and activity for the Colorado
Springs apartment market. There
are a lot of aggressivebuyers enter-
ing this market pretty recently.”
Foothills West’s location on a
nearly 2-acre site attracted poten-
tial buyers, added Levy. The com-
munity comprises two- and three-
bedroom units, some of which
are larger than 1,000 sf and all of
which have in-unit washers and
dryers, which is rare for 1960s con-
struction.
Additionally, the “significant”
value-add potential of Foothills
West drew investors.
Foothills West Apartments LLP
sold the property and had made
some capital improvements to
the property, including paint and
work to entry stairways, however,
Lavington Colorado is anticipated
to focus more on renovations to
the units themselves. Improve-
ments planned include new floor-
ing and making units more mod-
ern. There also is the potential to
add common amenities, such as a
playground and carports.
“The rents were kind of below
market, so through a renova-
tion program, the buyer should
be able to increase them quite a
bit,” added Levy, who, with Kevin
McKenna ofARANewmark, han-
dled the sale.
Therewas a single vacant unit at
the time of sale.
“Last year, in the overall market,
there were around 47 apartment
transactions in Colorado Springs.
Half of them were to buyers who
didn’t own in Colorado Springs
previously,” explained Levy. “It’s
another example of a lot of new
money, newer groups coming into
thismarket. I think froma national
perspective, Colorado Springs is
starting to pick up traction and
we’re seeing more and more
investment groups take a harder
look at this market.”
Other News
n
The Colorado Springs office
market started 2016 strong with
a total net absorption of 119,532
square feet, according to a first-
quarter report by
Quantum Com-
mercial Group Inc.
Overall vacancy also dropped
in the first quarter to 11 percent,
down from 11.6 percent at the end
of 2015. The average quoted ask-
ing rental rate for available office
space, across all classes, was $16.54
per sf at the end of the first quarter
– a 3.7 percent decrease in quoted
rental rates from the end of the
fourth quarter of 2015.
During the first quarter, no new
space was completed in the Colo-
rado Springs office market. The
firm anticipates steady, moder-
ate growth for the remainder of
2016. It noted that the addition of
new jobs is what is needed to fuel
additional positive absorption and
higher occupancy rates.
Quantum Commercial Group
also reported on several other
sectors’ performance in the first
quarter.
The overall industrial vacancy
rate remained unchanged at 9.4
percent while rental rates dipped
slightly from $6.24 per sf triple net
to $6.22 per sf triple net at the end
of the first quarter. The warehouse
sector had the lowest vacancy rate
– 7.1 percent –while the flex sector
had amuch higher vacancy rate at
19.9 percent at the end of the first
quarter. The firm noted, however,
vacancy rates have stayed relative-
ly flat over the past four years and
it expects this trend to continue
through the year and may even
see slight decreases in vacancy
rates over the next few quarters.
Quantum Commercial antici-
pates that there may be a slight
decrease in industrial sales activity
this year due to the high number
of sales in 2015 (24 transactions)
and the limited number of avail-
able options on the market for
investors and owner-users. Addi-
tionally, it sees that demand for
new construction may kick-start
new projects later this year.
Colorado Springs’ retail market
continued to improve its funda-
mentals as vacancy continued its
downward trend to 5.6 percent at
the end of the first quarter while
asking rental rates increased to
$11.50 from $11.45 at the end of
2015.
Additionally, the retail market
saw positive net absorption of
182,786 sf, sublease space trended
downward and multiple large
tenants inked deals. Twenty retail
investment sales closed in the first
quarter, including the $12.98 mil-
lion sale of the Albertsons Center
at 6905-7095 Austin Bluffs Park-
way.
Quantum Commercial Group’s
quarterly reports also included
a look at the investment market,
which the firm expects to remain
strong throughout 2016 with no
projected increases in interest rates
in the near future.
The firmnoted that with the first
hints of overbuilding in Denver
surfacing, investors will focus on
Colorado Springs as a lower-cost
alternative for all market sectors,
including multifamily.
“The opportunity for higher
returns in smaller markets such as
Colorado Springs is capturing the
attentionof both local andnational
investors,” according to the firm.
n
Commonwealth
recently
released its first-quarter 2016
Apartment Sales Report, in which
it noted 782 units sold for a total of
$92.23 million.
Within the Class A market, a
single property, The Retreat at
Cheyenne Mountain, sold for
$49.6 million, or $179,100 per unit.
The sale is the second Class Asale
that closed in the $180,000 per-
door range.
During the quarter, there were
no Class B sales while there was
a single Class C sale. The 288-unit
Village at Lionstone sold for $28.1
million, or $97,569 per door.
Commonwealth reported that
the Class D market was the most
active with four closed sales. The
four complexes totaled 218 units
with a total sales volume of $14.53
million. The average price per unit
was $66,628 and the price per sf
was $90.
s
Foothills West sold for $2.65million to Lavington Colorado Investments LLC.
