Land Sales Barometer Dropping

DENVER-Land sales in the Denver area fell to about $175 million in 2001 from about $225 million in 2000, shows a Grubb & Ellis Co. report by its Denver team. Meanwhile in Colorado Springs, it’s the worst year since 1998 for land sales despite Capital Pacific paying about $55 million for the 25,000-acre Banning Lewis Ranch in what may have been the largest single private land sale in the nation in 2001.

Denver’s land sales volume peaked in 1999 when developers and builders shelled out nearly $300 million. “Based on the slumping economy, it is not surprising that land acquisitions slowed in 2001 as lenders, developers and corporations alike scaled back their plans for future growth,” concludes the freshly released report. “In addition, it should also come as no surprise that for the most part land activity is expected to remain light through 2002.”

Acquiring land is one of the first steps toward fostering and promoting growth, the company points out. Currently, there’s a surplus of everything from single-family homes to class A office properties in the metro area, which “will have a profound impact on the land market over the next few years,” researchers say.

Colorado Springs should end 2001 with a shade under $150 million in land sales, whereas the two prior years ended slightly north of that amount. The record was set in 1996 when the dollar volume topped $200 million. The Banning Lewis Ranch, which was the largest single property sold by the now defunct Resolution Trust Corp., accounted for more than a third of the total land sales volume in the Springs this year.

Colorado Springs land prices are predicted to soften in 2002, especially for commercial, office and industrial property, where there are greater inventories. The best bet will be for “overlooked infill parcels located in established commercial areas,” the report says.

The Grubb & Ellis team says look for tougher scrutiny from lenders and equity partners as well as fewer build-to-suits as a result of a glut of existing supply. But, say the researchers, land sales won’t dry up next year. Users, developer and investors with the financial strength to “weather the storm,” will find buying opportunities for land in 2002, concludes the report.