- Private Balconies
- Lots of Natural Light
- Located directly east of Olive Garden and just west of the
San Mateo and Academy intersection
- Easy access to 1-25
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.
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Bob - Walt, What’s going on in commercial real estate this week?
Walt – Good morning Bob, I want to go over the latest statistics in the office and industrial markets in Albuquerque.
The office market continues to struggle and vacancy is now 19%. Asking rates for office buildings are on average $15/sf/yr on a full service basis. Class A space is $22/sf/yr, class B space is $17.50 per square foot per year and class C is $14/sf/yr or whatever you can get. These are averages and some properties, based on age and location could be substantially less than these numbers.
There are some more headwinds in the future for the office market. PNM is vacating 200,000 square feet in downtown. Presbyterian will be moving out of around 200,000 square feet in the airport area as they will be relocating to properties that they own over the next couple of years.
And construction continues to remain non-existent, with virtually no new construction in the office arena.
Bob – More vacancy can’t be good news. What is this going to mean for the office market?
Walt – No it’s not good and it means the balance of negotiation in the office market is still strong on the tenant side, and tenants will continue to seek concessions from Landlords on new leases and renewals. However landlords are also strapped for cash as cash flow for owners continue to get squeezed. So for many owners of investment office properties it is difficult to keep tenants or attract new ones if all they can offer is concessions in the form of free rent. There is a lot of negotiations going on and landlords and tenants are trying alternative and creative means of trying to get deals done.
Bob - The industrial market? What’s the news with that market?
Walt - The industrial market, although not experiencing strong growth numbers appears to be maintaining. Vacancy is holding steady at 9.3% and the median asking rate is $6.50/sf/yr on a triple net basis. In our Sperry Van Ness office we have seen the activity for industrial properties increase over the past several months and the majority of our lease transactions have been in the office/warehouse market.
Outside of Admiral Beverages announcement that they are moving to the south valley and building a 200,000 square foot building there isn’t much news.
There are opportunities in the industrial/office/warehouse market as the vacancy rate at 9.3% remains at high levels over traditional vacancy numbers.
Bob - Walt, how can people get a hold of you to discuss commercial real estate?
Walt - Thanks Bob, call me, Walt Arnold, Sperry Van Ness, at 256-1255, our website is waltarnold.com. If you have questions regarding commercial real estate sales, leasing or property management, give me a call to discuss your commercial real estate possibilities. Thanks Bob, have a great week.
The office market continues to experience uncertainty as job growth remains weak in the Albuquerque metropolitan area. The government sectors are still working on budgeting and cost-cutting measures that include the reduction of office space costs. This had a trickledown effect on the private-sector ownership of office space as the government reduced its requirements for space.
Companies continue to rack up sublease space, which is forecast to be more than 250,000 square feet in 2012. When you combine the amount of subleased space with shadow space it becomes evident that a return to normal supply and demand for office lease space is not in the foreseeable future.
The current office vacancy rate is 18.6 percent for the overall market, creating options for tenants to relocate and achieve lower rates. They also have the power to renegotiate with current landlords, achieving concessions that could include “blend and extend” strategies.
Bob – Good morning Walt, What do you have for us today?
Walt – Bob, I know you’re not a big Paul McCartney fan, but I really enjoyed the Grammy’s last night and his performance at the end was awesome. But I digress, back to commercial real estate.
Today I wanted to give a year-end summary for office and industrial markets for the Albuquerque metro area,
The Albuquerque office vacancy was 18.7% which is slightly up from a year a year ago. Some notable construction completions were the U.S. Forest Service building and DEA both completed projects in 2011. REDW also occupied a 46,000 ft.² built to suit in December 2011.
Median asking rates for the market were at $15.50 per square foot down $.13 from a year ago.
Blend and extend strategies where the landlord gives the tenant some concessions now and extends the lease term for longer a longer period of time are still working in this market. Most landlords are doing all that they can to retain tenants.
Class B space is $17.73 per square foot per year
Class C space is $14.00 per square foot per yea
Bob – What about the industrial markets?
Walt – At the end of 2011 the vacancy rate in the industrial market was at 9.4%.
Some notables that happened in 2011: 609,000 ft.² of the former GE plant in the South Valley was removed from the market statistics when the building was demolished. CNM also moved about 82,000 ft.² out of the market vacancy numbers by occupying a building at Jefferson and Alameda; those two properties removed 1.7% of the industrial market from the vacancy statistics. That one way to improve the numbers is to remove supply from the market
Another notable was that US foods built a 134,000 ft.² building in the South Valley. Only 23,000 ft.² of speculative space was built in the Albuquerque market in 2011.
Median asking rates: $6.69/sf/yr on a triple net (NNN) basis down 16 cents from a year ago and R&D/Flex space vacancy was at 9.5%.
Bob – If you were handing out any awards for last year, do you have any winners?
Walt - Yes I do, it would have to go to Titan Development/Reid and Associates for completing the Forest Service Building in the Journal Center, also for selling both of those buildings for approximately 50 million dollars and also the completion of the REDW building in the Journal Center. If they were at the Grammys they would be like Adele, they would have won all the awards and been the star of the show, so congratulations to Titan Development and Reid and Associates for a great year.
Bob – Walt, how can people contact you for information on commercial real estate?
Walt – Thanks Bob, they can call Walt Arnold, 256-1255 or check us out on the web at waltarnold.com also follow me on Twitter of become a fan of Sperry Van Ness on Facebook. For all you guys and gals out there don’t forget tomorrow is Valentines Day. Make tomorrow a great day. See you next week!