The local commercial real estate market improved late last year, but it still has far to go to reach pre-recession levels, according to a report Tuesday by Turner Commercial Research of Colorado Springs.
The combined vacancy rate for the three major sectors of the commercial market - offices, shopping centers and industrial buildings - fell to 11.1 percent in the fourth quarter of 2013, down from 11.9 percent from the same period a year earlier.
The 11.1 percent rate was the lowest for any fourth quarter since 2008, when it was at 9.9 percent. But it still didn't come close to the rate of 6.7 percent in 2006, Turner's report showed.
The falling rate hasn't been enough to encourage speculative construction of commercial projects, the Turner report said, yet it appears to have allowed landlords and building owners to boost rents.
The average combined asking rent was $9.80 per square foot in the fourth quarter, up from $9.57 during the same period in 2012. The average had been nearly $11 per square foot in late 2008.
Among other positive trends in the commercial market, about two-thirds of all building purchases last year were made by out-of-town investors, Turner's report showed; those purchases hit a seven-year high of $443.2 million.
Such purchases don't directly result in new jobs for the area, said Paul Turner, president of the research firm. But being on the radar screen of national investors could translate into employers taking notice of the Springs and considering the area for new or expanded operations, he said.
Other highlights of Turner's report include:
- An additional 801,577 square feet of commercial space was occupied - or absorbed - in 2013, up sharply from 152,572 square feet in 2012.
- The area's office vacancy rate of 12.8 percent in the fourth quarter was down from 14.5 percent a year earlier; it was the lowest fourth-quarter rate since 12.3 percent in 2008. Average asking rents of $10.12 per square foot, however, fell from $10.27 in the fourth quarter of 2012.
- The local shopping center vacancy rate declined slightly to 11.8 percent in the fourth quarter from 12.2 percent for the same period in 2012. Average asking rents rose to $12.80 per square foot in the fourth quarter from $12.34 a year earlier.
- The fourth quarter industrial building vacancy rate dipped to 9.3 percent from 9.4 percent a year earlier. The average asking rent of $6.48 per square foot in the fourth quarter increased from $6.12during the same period in 2012.
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