Updated: October 5, 2012 at 12:00 am
The Springs Medical Center in central Colorado Springs, the former home of Doctor’s Hospital and Eisenhower Hospital years ago, has become one of the latest prominent commercial properties to fall into foreclosure.
A $5.9 million foreclosure notice was filed this week against Medical Center of Colorado Springs, a limited liability company based in suburban Chicago that has owned the property since 2004. The four-story Springs Medical Center and an attached, single-story wing, at 2502 E. Pikes Peak Ave., comprise nearly 77,000 square feet.
The building’s owner lost a significant tenant last year when the former Memorial Health System vacated about 26,000 square feet, said Brian Wagner, a broker with Sierra Commercial Real Estate in Colorado Springs who markets the property.
Next year, nonprofit Peak Vista Community Health Centers will vacate another 28,000 square feet when it moves its operations in the building to the former Penrose Community Hospital on Academy Boulevard, Wagner said.
“You combine those two things and you get a building that’s largely vacant,” he said.
The local and national recessions in recent years have been tough on the commercial real estate market, and Springs-area medical buildings have struggled as a result.
At the end of 2008, the vacancy rate for local medical buildings had risen to 16 percent, more than double that of the previous year, according to Turner Commercial Research of Colorado Springs. The vacancy rate has come down somewhat in recent years, and stood at 13.7 percent in the second quarter of 2012, according to Turner.
Wagner said the improvement in the medical building market, however, has come mostly on the north side of Colorado Springs.
“The central market where this building is located has been largely unchanged, maybe slightly negative,” he said. “There just hasn’t been much activity or velocity in that market. ”
The building’s owner is trying to work out a deal with its lender, and Wagner said there’s a chance the foreclosure will be resolved. A foreclosure notice like the one against the Springs Medical Center owner is the start of a legal process that could lead to the loss of the property.
Commercial loans differ from residential mortgages; commercial loans often are made for five years or so, and then renewed or extended. But as the economy nose-dived in recent years, many commercial building owners lost tenants and saw property values plummet, making it harder for them to extend their loans.
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