A two-building office complex on Colorado Springs’ far north side has become the latest high-profile commercial property to fall into foreclosure.
Owners of the nearly 168,000-square-foot Corporate Center at InterQuest, at 9910 and 9930 Federal Drive, southeast of Interstate 25 and InterQuest Parkway, were hit with an $8.6 million foreclosure notice this week, according to El Paso County Public Trustee’s Office records.
It’s one of the largest office properties in the Springs area in terms of square footage to have been served with a foreclosure notice in recent years, Public Trustee records show.
The foreclosure speaks to the ongoing tough sledding for Colorado Springs’ commercial real estate market. A poor economy in recent years led many employers to downsize, leading to a glut of commercial space, especially in some portions of town such as the north I-25 corridor.
The overall metro area’s office vacancy rate was 14.5 percent in the fourth quarter of last year, or about double from late 2006, according to Turner Commercial Research of Colorado Springs. But the fourth quarter vacancy rate was 21.4 percent for Class A — or top of the line — office properties such as the Corporate Center at InterQuest.
“It’s a victim of a difficult market, especially for larger users,” said broker Michael Palmer of Quantum Commercial Group, who markets the property. “We just haven’t seen many larger users in the last few years in this market at all.”
The 9910 Federal Drive building is empty, while the 9930 Federal Drive building is occupied by a Ford Motor Credit Co. customer service center. Ford Motor Credit is the automaker’s financing arm.
Ford previously occupied both buildings, employing about 1,000 people at its peak a decade ago. In recent years, the company dramatically cut its workforce, and now employs about 350 at the Springs center, Ford Motor Credit spokeswoman Margaret Mellott said Wednesday via email.
The property is owned by New Federal Drive LLC, a limited partnership composed of nine investors from around the country, Palmer said. A $10.9 million loan was taken out on the property in April 2001; $8.6 million was owed on the loan when the foreclosure notice was filed this week, records show.
Generally speaking, the owner of a home or commercial property that falls into foreclosure has several months to resolve the matter. If not, the property goes to a Public Trustee’s auction, where it can be purchased by the lender or a third-party investor.
A June 5 sale date has been set for the InterQuest property, according to Public Trustee records. However, Palmer predicted the foreclosure action won’t get that far.
He expects the property to be sold before June. Or, he said, additional partners could be brought in who would help the current owners resolve the debt.
“It’s highly unlikely the lender will take it over,” Palmer said.
Contact Rich Laden: 636-0228 Twitter @richladen
Facebook Rich Laden