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Monday, April 28, 2008

Metro Area Retail Space Market Vibrant

By Richard Metcalf
Of the Journal
    COMMERCIAL REAL ESTATE: The real estate market for retail space is holding up in the metro, despite all of the gloom and doom about the national economy.
    The retail vacancy rate was 8.1 percent in the first quarter, a slight increase from 8 percent at the end of 2007 and 7.9 percent a year earlier, according to Grubb & Ellis New Mexico.
    "While the mood of many retailers is not positive, the Albuquerque metro area is still viewed as a logical choice for growth," says the company's latest Retail Market Trends report.
    Despite all the new shopping centers and stores popping up in the metro area, the report notes, "during the last two years, strong population growth outpaced new retail space."
    The metro area had 40 square feet of retail space per person at the beginning of 2006, the report says. The ratio dropped to 37 square feet per person in the first quarter of this year, it says.
    Bob Feinberg of Grubb & Ellis noted that Albuquerque's Southwest Mesa has only 8 square feet of retail space per person, thus presenting an obvious area for development.
    "It's the most underserved (sub)market in the Albuquerque metro area," he said.
    Yet the metro area is not immune to the slowdown in the national economy. Retail construction, amounting to 189,000 square feet in the first quarter, is way down from any period in the past two years.
    In addition, the Retail Market Trends report says leasing activity has slowed from 2007 for new or planned shopping centers.
    The slowdown is a predictable part of the cycle, Feinberg said. "I think you'll see it pick up again in the next year," he added.
    MORE CONDOS ON THE WAY Site work is under way and the first commercial condos could be ready by June at Hanover Business Park.
    The condos have been for sale for nearly a year, with eight of nine in the first building presold. Asking prices range from about $95 to $107 a square foot, according to Erik Olson of SB Vegas Realty.
    In all, the project will consist of three buildings with a total of 29 units, encompassing about 63,000 square feet, at 6500 Hanover NW. The buildings will be built in phases, one after the other.
    Asking prices have increased for condos in the second and third buildings, currently ranging from $114 to $130 a square foot.
    "Because of the ever changing commercial market, we're staying flexible with our condo business plan," Olson said. "We're also leasing 2,200-square-foot spaces for $14.50 a square foot (plus expenses)."
    The asking lease rate includes an allowance for basic tenant improvements.
    Olson and partner Robert Thomas of Stonebridge Investment Group have teamed with Eddie Karam of El Paso-based W.F. Karam Inc. to develop the Hanover project.
    LOFTY RANKING CB Richard Ellis, which has a corporate office in Albuquerque, made it into the Fortune 500 last week.
    The Los Angeles-based commercial real estate services firm rose from 520 in 2007 to 404 this year in the annual Fortune magazine rankings, which are based on such factors as revenue, profit and market value.
    Only two other companies related to commercial real estate, ProLogis and Realogy, are in the Fortune 500.
    Also, CB Richard Ellis was No. 1 in Atlanta-based National Real Estate Investor magazine's recent rankings of the top 25 commercial real estate brokerages.
    Other brokerages with a local office or offices include NAI Global ranked at No. 8, Grubb & Ellis at 13, Coldwell Banker Commercial at 17 and Sperry Van Ness at 18.
    The investor magazine rankings were based on the total dollar value of leasing deals and investment sales in 2007.
    GREEN TOURS A "green" commercial building can look pretty much like any other new building, at least to the uninitiated.
    So the New Mexico chapter of the U.S. Green Building Council is offering a daylong guided tour of a variety of properties in its Leadership in Energy and Environmental Design program.
    The Green Built Tour is scheduled to be taken by bus from 8 a.m. to 5 p.m. May 15. Seating is limited to 30, and the cost, which includes lunch, is $50 a person.
    Buildings on the tour include Sigler Controls' 52,500-square-foot distribution center, Albuquerque Job Corps Center's new 27,000-square-foot dormitory, and McKee Wallwork Cleveland Advertising's 12,000-square-foot office.
    The tour will also visit several buildings related to Sandia National Laboratories.
    For more information or to sign up for the tour, call chapter executive director Chris Kerlin at 227-0474 or go online at www.greenbuilttour.net.
    LOWERED PRICES Larkspur, Calif.-based Venture Corp., has dropped its price again on 30 condos at Venture Commerce Center at 9664 Eagle Ranch NW.
    Asking prices now range from $139 to $194 a square foot, a discount of about 30 percent from the original prices.
    The company first dropped prices by 10 percent two weeks ago. The $20,000 credit, reported by the Journal last week, is gone.
    "They've bundled the incentive into the latest discount," said Tim With of Grubb & Ellis, who is marketing the condos.
    The metro area has seen a glut of new commercial condos at a time when buyer interest has slackened.
   

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    Metcalf covers commercial real estate for the Journal. You can reach him at 823-3972 or rmetcalf@abqjournal.com.