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Empty acres, room to grow

ALBUQUERQUE, N.M. — If your business involves warehousing, light or heavy manufacturing or data center activity, know this: Developers of business parks in the Albuquerque area are eager to be your landlords.

Thousands of empty acres zoned for industrial use are envisioned as future hubs of economic activity. The owners, both public and private, are working to make them shovel ready for future tenants – ranging from humble startups looking to expand to those of the caliber of social-media giant Facebook, which is building a $250 million data center in Los Lunas.

The wide-open high desert real estate at Sunport South Business Park holds the promise of new jobs. (Jim Thompson/Albuquerque Journal)

Industrial real estate matters because it is a major driver of employment, say economic development officials and brokers, though success of the developments is predicated on economic growth in the region. Four ambitious industrial developments have hit the market in the past couple of years: Sunport South Business Park; the Central New Mexico Rail Park; the Aviation Center for Excellence at Albuquerque International Sunport; and a new development partnership recently announced by Kirtland Air Force Base.

They are casting a wide net, pitching to site selectors at industry gatherings and other referral sources, and emphasizing their various logistical advantages, such as access to major highways, an airport and rail lines.

Gary Tonjes

It’s good for prospects to have many choices, but serious buildouts will take time, said Gary Tonjes, president of Albuquerque Economic Development Inc. The private, nonprofit membership organization keeps an inventory of sites for selection consultants scouting the metro area, nurtures the relationships and connects prospective businesses to brokers. “This (marketing) process is a two- to three-year” undertaking, said Tonjes, taking a long view on business park development that could be populated by e-commerce, distribution and manufacturing facilities.

“It’s also about making sure we’ve got sufficient inventory of functional, flexible modern buildings available so we can attract good prospects who create jobs and contribute” to our tax base, Tonjes said.

But prospects are not just looking for a piece of land. “That piece of land has to be ready to go,” said Bill Robertson of Colliers International’s Albuquerque office, which is marketing the Sunport South business park. “Not having enough built sites available is the biggest deterrent” to attracting clients to the region, said Robertson,

Sunport South

The long-term success of the industrial park south of Albuquerque International Airport will be its access to the city’s freeway system – with companies located there “that are running trucks all day,” according to Robertson. He said a large retailer already has been scouting the park for a shovel-ready space to house 100,000 square feet geared to warehouse/distribution activity.

Commodities that need to be transported need warehouse space. Flagship Food Group, producer of 505 Southwestern chile products, is expanding to this facility at 530 Airport Drive NW. (Roberto E. Rosales/Albuquerque Journal)

Sunport South is targeting owner-builders with the money to build their own facilities or teaming on build-to-suit projects. Robertson hopes to broker transactions and make tenant announcements by the first quarter of 2018. “Once there’s activity at the site, one deal will lead to another,” he said.

Phoenix-based owner/developer Horne-Stewart LLC hired Colliers to drum up interest in the park, where lot sizes range from 10 to 69 acres, said Robertson. Horne-Stewart is spending a couple million dollars on infrastructure, which includes soil compacting, grading, water pumping, and road and bridge improvements. The business park has 408 acre-feet of ground water rights, which would be ideal for users needing water for cooling equipment, process uses, cleaning and steam generation. The 550-acre park also is equipped with natural–gas lines, electricity, water and sewer lines. About 200 acres will be devoted to bike trails and walking paths.

Central New Mexico Rail Park

A new industrial park served by rail is proposed for a 1,400-acre site west of Los Lunas by project developer Rio Real Estate Investment Opportunities. The Central New Mexico Rail Park is designed for large land users, such as third-party logistics operations, as well as sites for manufacturing, warehouse and distribution opportunities, said Rob Dyche, owner-broker for Rio Real Estate. To enhance its marketability, Bernalillo County provided a $400,00 grant to help pay for a rail spur to the Burlington Northern Santa Fe main line.

Dyche said the rail park is primarily marketing to large-scale manufacturer such as Niagara, a water bottling business that now calls the Rail Park home. Niagara took over 160,000 square feet of the former Merrilat cabinet factory. The rail-reliant company, which employs about 50 people, invested about $20 million in tenant improvements, including bottling equipment and water pumping costs, said Dyche. Niagara ships its bottled water out on milelong trains headed for customers at Walmart stores.

Aviation Center for Excellence

This conceptual rendering shows the potential layout slated for a former Albuquerque International Sunport runway. (Courtesy of City Of Albuquerque)

The city of Albuquerque has started work on an 80-acre commercial Albuquerque International Sunport. The goal is to transform a decommissioned runway into space for aviation and aerospace industry tenants. The conceptual plan also addresses retail use along the plot’s Gibson Boulevard SE frontage.

The center is getting about $8 million in improvements, such as asphalt and concrete removal, enhanced access from Gibson and Girard, interior roadways and utility extensions, said airport spokesman Dan Jiron. “We should be ready for tenants in late November or early December,” said Jiron. Jiron said the ideal businesses would be those needing access to an airport runway system, proximity to a military base or both.

Thunderbird Kirtland

Another contributor to the airport submarket is a recently announced venture between Kirtland Air Force Base and a company called Thunderbird Kirtland Development Ltd. The two entities are hashing out a long-term lease for 100 acres along Gibson Boulevard, which is expected to be concluded in the next six months.

In July, the Air Force announced that it had retained Thunderbird Kirtland to develop a research park with office, industrial, retail and hospitality facilities.

Thunderbird consists of Albuquerque-based Yearout Companies, Dekker/Perich/Sabatini architects and IDP Development out of San Antonio, a business with expertise in enhanced use leases at military installations, said Kevin Yearout, CEO of the Yearout Companies. Thunderbird is putting together a business development plan that targets defense contractors and vendors complementing the mission sets at Kirtland, said Yearout.

Existing space

Commodities that need to be transported need warehouse space. Flagship Food Group, producer of 505 Southwestern chile products, is expanding to this facility at 530 Airport Drive NW. (Roberto E. Rosales/Albuquerque Journal)

When suitable existing industrial buildings come on they market, they do get snapped up. One example is the nearly 80,000 square-foot warehouse in the Meridian Business Park at 530 Airport Drive NW that Flagship Food Group recently announced it would occupy. The company makes frozen Mexican-style frozen entrees and salsas under the 505 Southwestern banner.

As the company grows, the new location helps Flagship meet its need for better logistics. That’s because the production plant, which Flagship opened three years ago at Desert Surf Circle NE, no longer has enough room for dry and cold storage prior to shipment via truck, said Carlos Angulo, Flagship’s chief operating officer.

He said Flagship was competing for the space with other potential tenants.

The new warehouse, near I-40, is an ideal way-station between production plant and customers, mostly chain grocers in other states, said Angulo. Tenant improvements at the warehouse will total $3 million, including a massive subzero temperature freezer – about 36,000 square feet in size.

Not only will the landlord profit from a ten-year lease, but Flagship will add 200 new manufacturing and distribution jobs company wide.

The state is provide $550,000 for Flagship’s expansion through the closing fund established by the Local Economic Development Act.