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Albuquerque CRE Report 12.17.12

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Bob - Walt, what do you have for us today?

Walt - Good morning Bob, SIOR and CCIM are the acronyms for today. Both are designations that I have achieved during my career in commercial real estate. SIOR which stands for society of industrial and office realtors is the leading professional commercial and industrial real estate Association with only 3000 members worldwide in 630 cities in 33 countries.

The SIOR membership is a designation with the highest level of knowledge, production and ethics in the real estate industry.

The SIOR designation is really unchallenged for excellence and performance of real estate services. So Bob, if you’re looking for the best in commercial real estate, hire an SIOR for any of your commercial real estate requirements. You’ve made an excellent choice.

Bob - you also mention CCIM, tell us a little bit about that designation that you also have earned.

Walt - Thanks Bob a CCIM or certified commercial investment member is a recognized expert, having successfully completed a process that ensures that I am not only proficient in the theory of real estate but also in practice. Some of that skill set includes financial analysis, market analysis and investment analysis of commercial real estate.

Hiring a CCIM is an excellent choice for any commercial real estate needs.

Bob, I have put both of those organizations, SIOR and CCIM, to work for me and my clients to ensure that I offer my clients and customers the highest level of services in commercial real estate

Bob - Walt, how can people get a hold of you today to talk about commercial real estate?

Walt - Thanks Bob, give me a call, Walt Arnold with Sperry Van Ness, my direct line is 256-1255, and our website is waltarnold.com. Sperry Van Ness is a full-service commercial real estate company with expertise in all areas of commercial real estate. Sperry Van Ness is an 165 markets across the country with the thousand advisors.

Some of our skill set includes landlord or tenant representation, sales, leasing, property management, auction services and distressed assets. If you’re considering commercial real estate, let’s talk.

Bob thanks for the time today and I look forward to talking to you.

Albuquerque CRE Report 11.5.12

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Bob - Walt, our weekly talks focused mostly on the Albuquerque metro market, are there other commercial real estate developments going on in the rest of the state, that might be of interest or noteworthy?

Walt - Bob, good morning, the big story in development is happening in Santa Teresa on the southern border of New Mexico.

Union Pacific has a $400 million intermodal facility and they have already spent about $150 million in the project with a scheduled completion date in 2015 and 600 employees will be working at facility when it’s at full capacity.

The facility will be a refueling, crew change and intermodal facility with trucks, rail and air delivering products throughout the country.

This is a big investment in New Mexico by Union Pacific Railroad and it will spur growth in Santa Teresa and surrounding communities.

The project will also allow customers in the region to use Union Pacific’s intermodal ramp to load and unload cargo. This will be a big benefit to many companies throughout the region that need rail access.

Bob - I would imagine that there has been some development of commercial warehousing along with retail and residential projects around Union Pacific’s facility, is that taking place?

Walt - It is, there was strong development at Santa Teresa in the early 2000, but very little has been built since that time and this is causing for a shortage and industrial space.

So the space crunch along with products pouring out of Mexico’s maquiladoras increasing demand for industrial space. Several companies are building or beginning to start the process to build more warehouse space.

Bob your question is right on about residential housing. With new jobs being created, this creates demand for housing. Several developments are starting to come out of the ground and permits are being issued for new housing and the projections are over the next five years 1500 homes are planned in the Santa Teresa area.

So Union Pacific’s intermodal facility, along with strong demand to move product through Santa Teresa from Mexico is making a big impact in southern New Mexico. This project over time will provide thousands of jobs and homes, along with millions of square feet of commercial and industrial space.

Bob - Walt, how can people get a hold of you today to talk about commercial real estate?

Walt - Thanks Bob, give me a call, Walt Arnold with Sperry Van Ness, my direct line is 256-1255, and our website is waltarnold.com. If you’ve got questions regarding commercial real estate for a commercial real estate requirement, let’s talk.

Bob, have a great week and we’ll talk next Monday.

Albuquerque CRE Report 10.1.12

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Bob - Walt, what is going on with the gas stations that are “Out of Gas?”

Walt - Good morning Bob, yes, what is that all about with gas prices at such high levels?

There is a common misperception that major oil companies own and operate the majority of gas stations, but in fact only about 1% of stations nationwide are owned by the oil companies.

Most are owned by independent operators, subject to the whims of an extremely volatile market and they don’t share in the profits of big oil.

Bob – But why are the independents suffering so much now?

Walt - Bob, it’s a complex answer, including macroeconomic factors and micro economic trends. And while we pay more at the pump we think the gas station owners are flush with profit, yet there are many unexpected variables which can affect the profit margins of gas stations.

For the sake of time this morning I’ll go over the two main reasons for this current situation.

The first is that local operators have no control over the global politics of oil and most gas station owners find that higher prices mean fewer profits for them. As gas prices rise, owners must purchase increasingly expensive fuel, and depending on their fuel supply contracts, they are often forced to sometimes sell at a loss in order to stay competitive.

The number one factor in the downfall is higher gas prices, which means consumers spend less in the convenience store thereby reducing profits. Consumers are spending all their money on gas and bypassing the highest profit margins, which are in the store.

So we will continue to see local operators struggle and shut down stores, while “Big Oil” makes record profits. This will be an ongoing dilemma for local gas station and convenience store businesses.

Bob - What else do you have for us today and how can people reach you to discuss commercial real estate?

Walt - Thanks Bob, I want to plug the auction we are having October 23 through the 25th. Sperry Van Ness has three properties in the auction, a 62 lots subdivision in Edgewood, and two other properties, Bryan Ranch and the Ness Pumpkin Farm. We have complete websites on all three of these properties, so if you’re interested in finding out about the auctions, call me Walt Arnold at Sperry Van Ness for details. My direct line is 256-1255, our website is waltarnold.com. Bob thanks for the time today and have a great week.

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Albuquerque CRE Report 9.17.12

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Terrie – Walt you give us information every week on the commercial real estate market, can we talk little bit today about how you got to this place in your career and also, with football season starting now, you played eight years in the National Football League, how has that influenced you in your business career.

Walt - Thanks Terrie, yes, I played a lot of sports in my life starting in high school where he participated in football, basketball and baseball. I then received a scholarship to the University of New Mexico where he played football and baseball at the University of New Mexico and. I was fortunate enough to get a free-agent tryout with the Los Angeles Rams and played a couple years in Los Angeles and ended up playing eight years in the National Football League mostly with the Kansas City Chiefs.

Commercial real estate has a lot of similarities and I have to perform on a daily basis. I can be as good as I want and success is really unlimited, but it does require a lot of dedication, desire, focus and skill just like in football. In the NFL, you’re basically as good as your last play, so there’s a constant measurement of my skills against other player skills. And that’s a lot like the business world; you’re constantly being measured against your competitors.

So in that sense football taught me a lot winning and losing, about trying to constantly improve and get better each day, which is a good thing.

Terrie – And about the company, Sperry Van Ness, can you give us a little more information about it?

Walt – Sperry Van Ness is a national commercial real estate company with offices in 160 markets across the country. We have specialties in all aspects of commercial real estate. The company was built on the principle of splitting our fees 50-50 with the selling or leasing broker and creating an environment of creating maximum competition and exposure on a property, to create the maximum results in price.

Every Sperry Van Ness advisor commits to and supports our culture of collaboration, which breaks down traditional brokerage company barriers in order to maximize our clients time and return.

The best companies know why they do business the way they do, and we believe the WHY for Sperry Van Ness advisors is committing to what is in the client’s best interest and maximizing value for our clients.

Terrie – Walt how can people get a hold of you to talk about commercial real estate?

Walt – Thanks Terrie, call Walt Arnold at 256-1255, website is waltarnold.com. If you need to talk about commercial real estate, let’s talk. Thanks Terrie have a great week!

Albuquerque CRE Report 8.27.12

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Bob - Walt if I needed a commercial real estate loan what are some “financing fundamentals” I need to know in financing commercial real estate.

Walt - The mantra for commercial real estate is location, location, location but in financing its execution, execution, execution. The purse strings for financing are beginning to loosen in commercial real estate financing and there are some fundamentals to successfully get the loan funded.

The first thing you need to do is ask some questions of your lender and more importantly asked the right questions.

Some questions might include how long has a lender been in business, what’s their reputation in the marketplace, does the lender have the capacity to offer a variety of loans and also can the lender originate a large number of loans, are they well staffed and up-to-date on the changing market requirements.

Bob - Once you get past those questions, what else should a borrower look for in a commercial lender?

Walt - There are some other attributes to look for, one is creativity counts in this market and your lender needs to have some creativity if the transaction runs into some snags, the next is speed and execution, the loan process is bound by time constraints and the lender needs to be able to meet them.

In commercial real estate lending execution is a function of the process and each step needs to be executed to move onto the next step. The speed at which the loan process moves is becoming a more critical factor in the transaction timeline.

During the loan application stage the lender needs to be able to gather the preliminary information in a timely fashion.

Speed is also essential during the underwriting stage to ensure all third-party reports are obtained on a timely basis and the mortgage credit items are analyzed and lastly work with lenders that get the transactions closed and funded and keep proper communication between all those involved including, attorneys and the title company to resolve any outstanding issues and preparation of the documents that are required to close.

Bob - Walt, how can people get a hold of you today to talk about commercial real estate?

Walt - Thanks Bob, Walt Arnold, 256-1255, website Walt Arnold.com. Remember in the lending process, today’s borrowers need lenders who excel at listening to and understanding the borrowers needs. Being prepared to discuss these issues with the lender to help solve issues that might come up along the way and a good lender will find a way to get the deal closed and funded. Hey Bob, I want to wish everyone a great Labor Day weekend, be safe, and I’ll talk to you in a couple of weeks.

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Albuquerque CRE Report 8.20.12

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Bob - Walt, this commercial real estate market appears to be a good time for investors to consider commercial real estate, what are some thoughts investors should be thinking about when investing in commercial real estate?

Walt - This is a great time to consider investing in commercial real estate and there is everything right wanting to get into this market at this time. Whether you’re currently invested in commercial or a first timer, this market is an opportunity.

First thing is to get financing or cash in order. Know what the financing or cash required is before making an offer. You don’t want to get into a deal and not have the required cash to close the deal.

The second item is that there are a lot of low-price offers in this market, low-price offers are okay but be ready to justify how you got to the price. Have a detailed analysis of comparables and current investment returns.

Next, if you really want to have an impact, have the cash to close the transaction and close it quickly. Cash is king! Get some partners together and put up enough cash to close the transaction quickly, the chances of getting the transaction closed grow dramatically if you have the cash and can justify the price.

Bob - When there is a quick closing, does that give the buyer time to do all of their due diligence and inspections to make sure there are no issues with the property?

Walt - A quick closing requires that the buyer perform their due diligence and inspections in a short period of time. The buyer needs to make sure the major components are dealt with and inspected. There will always be repairs needed to the property, make sure the major issues are dealt with and be prepared to handle a few of the minor items after closing.

These are some simple points for investors, the most important is to be ready to perform and that will put you on the road to being a sought after investor. Put together a couple of deals with cash and quick closings and watch the properties start coming to you.

Bob - Walt how can people reach you to talk about commercial real estate.

Walt - Thanks Bob, call Walt Arnold, Sperry Van Ness, 256-1255, our website is waltarnold.com. There are opportunities in this market for individuals and partnerships to acquire commercial real estate, if you want to start the process, let’s talk about it. Bob have a great week.

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Albuquerque CRE Report 7.23.12

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Bob - Walt, what you have for us today?

Walt - Good morning Bob, I wanted to update the industrial market this morning and go over some second-quarter numbers.

The industrial market leased some space last quarter, about 100,000 ft.², with mostly smaller tenants. As with most of the markets these days the moves were just trading spaces from one building to another. Unicor moved out of space in the airport area and took 24,000 ft.² on Broadway. DirecTV vacated 15,000 ft.² in the North I-25 corridor and leased 18,000 ft.² in the Westside submarket.

The vacancy rate declined to 9%, which was down slightly from last quarter and up slightly from a year ago.

Any construction of speculative space remains on hold. There was only 30,000 ft.² of construction completions last quarter, which is a very low number.

Asking rates remain unchanged at $6.50 per square foot per year on a triple net basis, with the tenant paying all expenses in addition to rent.

Bob - Walt how does the current unemployment rate, in Albuquerque, of 7.4% impact the industrial market? Does this current unemployment rate transfer over to the vacancy numbers you’re talking about?

Walt - Bob it does, the current level of jobs in the industrial market is not supporting the amount of space available and therefore this creates a higher vacancy rate. Layoffs, closings, and consolidations all impact the square footage of the leased industrial space.

The current economic growth will leave an impact on industrial market for years to come, unless measures are taken to improve our vacancy for businesses.

Hopefully projects like Admiral Beverage’s 219,000 ft.² distribution center in the South I-25 market, which is expected to deliver in 2013 will impact the employment numbers a little bit, but that’s remains to be seen.

We are experiencing weak economic growth and this has slowed our recovery and consumers are less confident. We are affected by the national economy and will continue to be until some measures are put in place to help small businesses grow.

I don’t think we’ll see any prospective tenants move into the industrial market that will positively impact the vacancy and tenants have the opportunity in this market to take advantage of lower rents and upgrade their facilities by dealing with landlords that are willing to make the necessary enticements to attract tenants.

Bob - How can people contact you to talk about industrial real estate?

Walt - Thanks Bob call Walt Arnold at Sperry Van Ness 256-1255 is my direct line our website is Walt Arnold.com. If you have any questions about commercial state give us a call and let’s talk. Hey Bob, I appreciate the time have a great week and I will talk to next Monday.

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Albuquerque CRE Report 7.30.12

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Bob -  Walt, last week we talked about the industrial market, can you give us an update on the office market and if we have time, the retail market also?

Walt - Good morning Bob. The second quarter of 2012 had one significant transaction and that was the Lowes call center occupying 65,000 ft.² at 6301 Jefferson. Red Cross also moved into 10,000 ft.² on Pan-American.

The vacancy rate for Downtown is over 22%, North I-25 corridor is 16.6%, in the Uptown market the vacancy is a 21.4%. So there is still substantial vacancy in the office market. The total vacancy in all markets for office space is 18%.

Median asking lease rates are $22 per square foot per year on a full-service basis for class A space, $17.50 for class B and $14 for class C. The overall median asking rate for office space is just over $15.50 per square foot per year.

On the construction front, there is no construction underway in the office market at this time.

Bob - What about the retail market can you give us a quick update on that market?

Walt - The retail market is showing signs of life. Over 100,000 ft.² of retail space was absorbed in the second quarter of 2012.

The overall vacancy declined to 12.1%. A couple of notable movements were Savers, occupying 45,000 ft.² in the northeast heights and Albuquerque Youth Symphony occupying 24,000 ft.² on Menaul.

Activity is up in the retail market and another good sign was 25,000 ft.² of newly constructed retail space and add that to the ongoing construction of Targets 165,000 ft.² are good signs in the retail market.

The overall median asking rent is $13 per square foot per year on a triple net basis. Those asking rates include $12 per square foot per year for in-line strip retail centers and up to $43 per square foot for regional malls.

So summarizing these two markets, the office market continues to experience significant challenges including high vacancy rates and high unemployment numbers which continue to hamper any recovery in the office market.

On the other hand, the retail market appears to have headed toward a mild recovery; it appears this recovery will remain moderate until we get into 2013.

So for both the office and the retail markets, there still are opportunities for tenants to negotiate good rates, concessions, terms and tenant improvement dollars.

Bob - Walt, how can people contact you today to talk about commercial real estate?

Walt - Thanks Bob, Walt Arnold, Sperry Van Ness, my direct line is 256-1255 and our website is Walt Arnold.com. I know that was a quick summary of the office and retail market in the Metro area, give me a call and we can talk about these markets in more detail. Bob thanks for the time today, will talk again next Monday.

 

Albuquerque CRE Report 7.2.12

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Bob –  Walt, your topic today is the Letter of Intent. In residential real estate a buyer presents the purchase agreement to the seller, what’s different about using a Letter of Intent?

Walt - Good morning Bob, I’m not saying that a buyer or tenant won’t present a sales contract or lease to the seller or landlord, but in commercial real estate, the vehicle of choice, is a Letter of Intent or LOI. It’s a letter from one party to the other outlining the major components of the agreement, which could be either a sale contract or lease agreement.

Bob - So what’s in it?

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Walt -First, make sure the parties and address or premises is identified correctly, with contact information provided so that the responsible parties are correct on the document.Second, set out the key terms that are going to be presented in an outline format, for example, the address, rental rates, occupancy dates, landlord or tenant’s obligations, survey criteria and environmental issues.Next, establish a timeframe and if not met one party should confirm in writing to the other party that the LOI has expired.Another point, most LOI’s are nonbinding, but the agreement needs to state that clearly in writing.Lastly, the LOI should include language that it will be superseded by a signed definitive agreement, for example, an executed purchase contract or lease.Bob – Walt, you mentioned nonbinding; if it’s nonbinding why go through all the effort of negotiating the deal.

Walt - Yes, why an LOI? The LOI can save time and money.  Complex commercial transactions have documents that are extensive and very long. By reaching agreement on the key terms, before generating massive documents it’s a wise and worthwhile step. Negotiating the LOI brings major issues to the surface and if they are insurmountable it’s better to discover them sooner than later.

Bob - The LOI helps to identify the major points of the lease or sales contract, so by going through this process it helps the buyer, seller, landlord and tenant agree on the major issues and components of the lease. So when you’re working with a commercial broker and he/she says they’re going to go through the LOI process, hopefully it’ll take a complex commercial transaction to a simple workable agreement that outlines all the important parts of the document.

Once the LOI’s agreed to, the agreed-upon items in the LOI are then transferred to the lease document or the purchase contract to help facilitate the transaction and move towards closing.

 Bob –  How can people reach you today to talk about commercial real estate?

Walt - Thanks Bob, Walt Arnold, Sperry Van Ness, direct line 256-1255, our website is waltarnold.com. To summarize again, the LOI if used appropriately will help reduce the risk of failure in the transaction increase the prospects of success and save time and money. Bob have a great Fourth of July, be safe and we’ll talk to next week.

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Albuquerque CRE Report 6.25.12

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Bob – Walt last week you spoke about the office and industrial markets.

Can you give an update on the retail market?

Walt – Good morning Bob, The retail market remains robust, although a lot of the movement is a lateral move, meaning a tenant is relocating from another property in the metro area from one property to another. With virtually no new construction, if the market continues on its upswing of activity, the vacant space will get filled quickly and with little new construction on the horizon, the retail market could get very interesting as demands gets stronger. This might be a welcome site for landlords as they will be able increase rates.Chart pic

Bob – Target is building its property in Uptown. Are there any other “Big Box” projects planned in the metro area?

Walt – The target property is a 165,000 square feet building and will transform the intersection of Indian School and Louisiana, but as far as other “Big Box” users, we are probably unlikely to see any entering the market in 2012.

When I look at the retail numbers for the first quarter of 2012, the vacancy rate fell to 12.5%, down from last quarter and also down from a year ago. The overall median asking rate is $13.50, but that median number includes everything from small shop space to ABQ Uptown so location of the retail store is crucial when determining the lease rate. The rate could be from $5.00/SF/NNN in small community centers to $45.00/SF/NNN in ABQ Uptown. The rates are based on location, traffic and the condition of the center.

Some of the notable deals were Dick’s Sporting Goods, 49579 at Cottonwood, A 14,800 square foot strip center on the Paseo Corridor a 4,287 square foot freestanding restaurant at Montgomery Plaza.

So Bob, the retail market is slowly filling up the supply of vacant space, which will increase demand for retail space, which will create interest from developers to assess the possibilities of constructing new retail space and the demand will cause landlords to push the envelope on rates.

The real estate cycle continues.

Bob – Walt how can people get a hold of you to discuss Commercial Real Estate?

Walt – Thanks Bob, Call me 256-1255 my website is waltarnold.com follow me on twitter @waltarnold. If you’re looking to purchase office, industrial, or retail properties give me a call to discuss your real estate requirements.

Sperry Van Ness is a national commercial firm with 160 offices across the country. We position buyers, sellers, landlords and tenants to make great choices in commercial real estate. Give me a call to discuss the Sperry Van Difference. Thanks Bob, have a great week.

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