Office vacancy rates lower downtown than outlying areas

The lights are staying on in a greater percentage of downtown Colorado Springs offices when compared with outlying ar1eas, where office buildings are emptying out at a higher rate because of the Pikes Peak region's battered economy, a new report suggests.

Office vacancies downtown stood at 8.3 percent in the first quarter of this year, down from 8.7 percent in the same period in 2008 and 8.6 percent in the fourth quarter of last year, according to Turner Commercial Research, a Colorado Springs firm that tracks the area's office, industrial and shopping center markets.

In contrast, office vacancies citywide rose to 13.3 percent in the first quarter of this year from 9.7 percent during the same period a year ago and 11.6 percent in the fourth quarter of 2008, Turner's report said.

Tenant mix is a key reason for the varying vacancies, experts said.

Owners and landlords of several buildings on the city's north side have watched as builders, mortgage companies, title companies and other businesses related to residential real estate have downsized or closed up shop, said Michael Palmer, a broker specializing in office properties with Grubb & Ellis/Quantum Commercial Group in Colorado Springs.

Downtown has large concentrations of attorneys, accountants and other professionals who haven't been hit quite as hard by the nation's recession, said Gary Feffer, a broker with Fountain Colony LLC in Colorado Springs. Downtown also is home to city and county governments and state and federal agencies, all of which continue to need space, Feffer said.

"Those types of users have made downtown more stable," Feffer said.

However, Feffer added, downtown office vacancies could be driven up by banks that are consolidating operations.

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