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.
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.
News from SIOR, NAIOP, and Urban Land Institute conferences.
Bob – Walt, what do you have for us today?
Walt – Well, I went to the Society of Industrial and Office Realtors (SIOR) market review and outlook at the NAIOP meeting on Monday and the Urban Land Institute meeting on Friday so I got some great info last week and wanted to pass some of it along.
The key factor at both meetings appears to be the need for jobs to start to get us back on a road to recovery. New Mexico could see more job losses in government sectors as all levels of government are feeling the pinch of cutbacks.
Another topic was the office market vacancy which is 18.3% and one of the reasons is emerging technologies, as workers are working more effectively with technology. Workers are able to connect to the internet wirelessly almost anywhere. This trend will continue to have an effect on the office market.
Bob – Walt, that trend of working from home has been around for some time, but hasn’t really caught on. What’s different this time around?
Walt – This time it also involves all those 20 and 30 year olds that multitask and can work from anywhere at any time. So working from wherever will continue to grow stronger and will have some negative impacts on office space.
Bob – You also mentioned the Urban Land Institute, what was the discussion at that meeting?
Walt – One interesting point from Mark Lautman was that all the states around New Mexico are winning the site selection battle for new companies and are gaining jobs; unfortunately, New Mexico is not really in the game at this time. So we need to do something to get out of this scenario and start making New Mexico “the place” to relocate.
Todd Clarke also spoke about the strength of the apartment market and the need for at least 4,600 more apartments in Rio Rancho and 1,300 more apartments needed in Albuquerque. There was also discussion on how the youngest of the adult population, the millineals, they have a desire for less space and less things and that will affect how apartments will be built in the future and also where. There is a much greater demand for housing to be on transportation corridors and in developments that minimize driving.
Bob – Anything else for today and how can people contact you to talk about commercial real estate?
Walt – There were a couple of quotes that came out of the meetings, one that I would like to quote was regarding how Landlords need to make vacant space as appealing to tenants as possible. Debbie Harms,SIOR, quote was,” You aren’t going to have to buy a prom dress for that pig yet, but you are going to have to put some more lipstick on it.” So get those vacant spaces ready to lease, it will help!
If you want to talk about commercial real estate. Give me a call, Walt Arnold, 256-1255, website waltarnold.com you can also follow me on Twitter of find me on Facebook for up to date news on all things CRE. Talk to you next week.
Bob – Walt, I wanted to ask you a question, how should a Tenant deal with their lease as it approaches the expiration date. In this market should they begin to have some discussions with their landlords prior to the lease expiring or just wait until the lease comes to an end and then try to negotiate?
Walt – Good morning Bob! Yes the lease is expiring soon, what are your options? One thing to do is to do nothing. When the lease expires it usually goes to a month to month agreement and that leaves the tenant with no protection, the landlord can give the tenant 30 days’ notice to move out.
Another thing that happens at the end of the lease is if a tenant stays past the expiration date, there might be “hold over” provision that could be 125% to 200% of the current lease and that is a big increase in monthly expenses especially in this environment.
Both of these scenarios allow the owners to dictate the terms, if they so choose.
Bob – Say I’m a tenant, and my lease is expiring, and I’m thinking I want to handle this lease negotiation thing by myself, what are some of those issues?
Walt – I know you’re a sharp guy, even though you did go to NMSU, there are some things you need to be aware of: you might risk overpaying your rent if you don’t know everything that is happening in the market and also you need to be aware of market incentives are currently being offered. There’s also the potential to make some harmful commitments within the lease document that might cause some financial issues and, it takes time to do all this lease negotiation stuff and that is going to take you away from focusing on your business, which is the top priority.
Bob – Ok Walt, tell me what I need to do so I get the right space, at the right price and terms.
Walt – First I would say hire a Broker that understands the Tenant Representation process fully, for example, Sperry Van Ness. We have handled thousands of real estate transactions and have the valuable experience to get the best results. Tenant Rep services are usually at no charge to the tenant, the cost for leasing the space is paid by the Landlord, you can know that you are getting relevant, up to date information to make the best decision, we will explain the process so you know where you stand throughout the transaction, and you can then focus on your business, which is what you do best, and we can focus on all the details, which is what we do best.
Bob – All right, I feel better already, how can people get a hold of you today?
Walt – Thanks Bob call Walt Arnold @ Sperry Van Ness my direct line is 256-1255, website waltarnold.com. I’m glad I could help you today, have a great week
Bob – Walt, you wanted to talk about the retail market today. What do you have for us?
Walt – Good Morning Bob. I was just reviewing the 2nd quarter retail numbers from CoStar and here are some of those numbers. The overall retail vacancy rate has increased slightly to 6.8%. Average quoted rental rates decreased from the first quarter to $13.58 per square foot per year. 86,000 square feet of space was still under construction at the end of the quarter. Bob – Can you give us some details on Tenants in the market, who’s moving out and who’s moving into spaces?
Walt– There hasn’t been a lot of movement. Murray Billiards moved out of 8,820 square feet at 10020 Coors Bypass, Elyte ATM vacated 7,600 square feet at 8900 Menaul.
Some tenants moving in were Firestone into 17,362 square feet at 2631 Coors, ATI moving into 14,640 square feet at Montgomery Plaza and El Mezquite occupying just over 14,000 square feet on Southern. Tomato Café signed a lease for 6,000 sf at the Shops at Montano and Aaron Rents leased 5,600 sf at Guadalupe Plaza.
Bob – We usually talk about construction on these quarterly reports, are there any new projects coming out of the ground?
Walt – There was 117,000 square feet of new construction; some notable construction deliveries include the Premier Cinema, 86,000 square feet in Rio Rancho and the Firestone on Coors.
Just a few trivia numbers for you, CoStar tracks the Albuquerque market with 56 million square feet of retail space in about 5,300 buildings, including 359 shopping centers. You just never know when you might need that information!
Bob – Walt, what is your crystal ball projecting for the retail market in the near future and what are the prospects for retailers this Holiday Season, which is approaching quickly?
Walt – It appears the retail market forecasters are saying the retail market will be rockier than expected for recovery over the next 12 months. Statistics are pointing to a gradual recovery but; weak hiring, a flat housing market and sagging consumer and investor confidence are hampering the retail recovery.
Bob – Walt, how can people get a hold of you to talk about commercial real estate?
Walt – Thanks Bob, Walt Arnold at 256-1255, our website is waltarnold.com. If you’re considering buying, selling, leasing, tenant representation or property management in today’s commercial real estate market, give us a call at Sperry Van Ness. We know how to navigate this difficult market. We do it every day and we do it very well. Let’s get together and discuss the Sperry Van Ness Difference in commercial real estate.
Who needs a loan sale advisor? Great question, as my attorney says of loan sales, “it’s not exactly rocket surgery.” In addition there has never been more capital available for the purchase of distressed debt. Problem banks with problem loans make the headlines in newspapers every day. Bankers are inundated with calls from prospective loan buyers or “vultures” as my banker friends call them.
So “who” does need a loan advisor?
Not banks who are unconcerned about creating an arms length transaction;
Not sellers that personally know several hundred qualified buyers;
Not banks with workout departments experienced in file assimilation for due diligence; conversion of paper files to electronic files; development of relevant loan data spreadsheets; and creation of a marketable loan summary
Not sellers with special asset departments prepared to obtain confidentiality statements from scores of curious potential bidders; with sufficient staff to police the actions of those people receiving such confidential information; with the ability to evaluate and understand indicative bids, letters of intent, loan sale agreements, buy back provisions, eleventh hour re-trading and closing documents;
Not banks that have executive staff well versed in dealing with sophisticated loan buyers that have been involved in hundreds of millions, if not billions, of dollars in previous distressed loan purchases;
Not lenders that don’t have to answer to a board of directors regarding lender liability; did we get a “fair” price, much less the “best” price; do we have ongoing liability; who is this company or person that is now out collecting, or trying to collect, on our documents with our bank name plastered all over them;
And certainly NOT banks with a proven, written business plan in place of how they will price loans, market them efficiently, sell them without recourse and maximize their collection efforts.
Come to think of it “who needs a loan sale advisor?”
For More Information on Patrick Blount and Benewolf’s services visit Patrick’s blog here
For more info on Walt Arnold/Sperry Van Ness Visit my website www.waltarnold.com
Every Monday Morning Walt Arnold, Managing Director of Sperry Van Ness/Walt Arnold Commercial Brokerage in Albuquerque, NM sits down with 770 KKOB raido host Bob Clark to discuss commercial real estate. I this episode Walt give property owners a maintenance tips to help prevent any costly repairs. Also Walt talks about a few bank owned property listings in the Albuquerque area.
Bob – Walt, as we head into springtime, are their some spring cleaning details commercial properties owners should be thinking about?
Walt – Good morning Bob, yes there are and it is a good time to think about some preventive maintenance items. As the weather starts to warm up and with the time change it is time for maintenance and here are a few items to consider.
1.Check the timer for outside lighting so it is coming on and going off at the correct times.
2.Change batteries in any systems that require it, for example smoke detectors, backup batteries for lighting interior lighting and any other critical systems that require batteries.
3.Many events are scheduled throughout the year, but use the time change for fire inspection, alarm inspections, elevator inspections, and parking lot inspection for restriping or sealing.
4.It’s also time to service the refrigeration equipment for air conditioners and coolers for the upcoming warm up. Make sure filters and evaporative coolers are serviced and for refrigerated air conditioning it is important to clean the coils and change the filters. The systems will run much more efficiently with regular maintenance.
Bob – So the saying an ounce of prevention….
Walt – Yes it really is amazing, if an owner will spend a few dollars on periodic maintenance how much it will save in the long run. One area this is very evident is on roofs. During the spring and fall when we don’t get much rain it gives the roofer time to inspect the roof and do the preventative maintenance required. Maintaining roofs twice a year will save thousands of dollars over the life of the roof. Don’t forget to inspect the roof or gutters for leaves or any debris that might clog up a roof drain or canale.
Bob – Anything else for us today?
Walt – I would like to mention that we manage almost 600,000 square feet of commercial space and if anyone is thinking about a need in commercial real estate property management services, give me a call and we can set up a meeting to discuss our services.
Bob, I also want to talk about some bank owned properties we are selling. The first is 3701 San Mateo a 12,000 square foot office building for $1,200,000. The second is 521 Rankin an industrial property just south of Comanche, west of I-25 7,800 sf for $544,000 and we also have a 3,000 square foot restaurant on Zuni just east of San Pedro. Call me for details.
Bob – How can people reach you today?
Walt – Thanks Bob, call Walt Arnold with Sperry Van Ness, my direct line is 256-1255, website is waltarnold.com, you can also follow me on twitter @waltarnold. We know commercial real estate we do it all day, every day, and very well, give us a call. Go Lobos. Bob, have a great week!
Walt – Good Morning Bob. Fortunately, I haven’t had a major earnest money dispute, at least not yet. In a commercial transaction there can be a significant amount of money in a deposit. In a residential transaction the consumer protection laws will help to enforce the contract. But in a commercial transaction a judge in court usually decides the ambiguous language. Let’s talk about some things to help protect the earnest money deposit.
1. Make the contract terms clearly spell out what happens to the earnest money upon termination of the contract.
2. Get good counsel. If there is any doubt of the language get an attorney to review the document and make sure it has language that will work for all parties and situations that might come up.
3. Termination notices should be broadly worded, for example if there is specific termination language in the contract the court might find the specific language to be invalid, but then rule that a purchaser might still be bound to the rest of the contract, so make terminations broadly worded.
4. Make sure the person holding the money is an unbiased third party. A good idea is to put the money in a title company and not one party’s agent or attorney.
Bob – What else is going on in the commercial real estate world?
Walt – I think an interesting project to watch will be the redevelopment of the rail yard buildings and land just south of downtown. This is a very unique property abutting the Barelas neighborhood. Mayor Berry called it a Diamond in the Rough and it really is, if they do it right it could be an outstanding project. It is a joint venture between Samitaur and Build NM.
Samitaur is known for re-development of urban blighted areas such as Conjunctive Points, a mixed use project in Culver City which is located next to Los Angeles. So I wish the best of luck to Samitaur and Build NM in redeveloping the rail yard project.
Bob – How can people get a hold of you today to talk about commercial real estate?
Walt – Thanks Bob, call me Walt Arnold at 256-1255, website waltarnold.com also follow me on Twitter @waltarnold. Check us out! Sperry Van Ness is a national commercial real estate company with 160 offices across the country. We help people make wise real estate decisions with specialists in commercial sale, leasing, property management, tenant representation, auctions and loan sales, if it involves commercial real estate call us we can help. Thanks Bob have a great week.
Bob – Walt I know this is the commercial real estate report, but I have to ask if you watched the Oscars last night?
Walt – Bob I did, and I love watching the Oscars. It is always exciting to watch people perform at exceptional levels and to watch actors be rewarded for outstanding performances.
Congratulations to all the winners and also congratulations to Tom Hooper, The King’s Speech, for winning best director. A director has to coordinate a myriad of events to put together a movie. Bob we’ve talked before about how a commercial real estate broker helps put together all the pieces of the puzzle in a real estate transaction including coordinating landlords, tenants, attorneys, CPAs , architects, environmental issues and title concerns all resulting in the finished product of a successful real estate transaction, similar to the multi tasking ability a director must have to create a successful movie.
It takes a lot of work and it is important to have a professional to help in that process. At Sperry Van Ness we have the skills to produce great work.
Bob – Let’s get back to the commercial real estate. What is happening in the commercial markets?
Walt – I would like to quickly focus on the year-end numbers for the office and industrial markets.
The office market continues to struggle but there are some signs of stabilizing. Median asking rates are up, but when you factor in concessions from landlords the effective rates are down slightly, vacancy rates continue to edge up and there were some employment increases in temporary staffing which was a good sign. However we will need to see significant improvement in jobs for the office market to show strong recovery signs.
In the industrial market the vacancy decreased for the first time since 2009, construction again was the lowest in recorded history. The owner user market or owner occupied real estate remains strong although price expectations are still difficult between buyers and sellers. And like office, employment in certain sectors will have to increase for the leasing activity to get stronger.
Bob – Walt, what happening with Coronado Shopping Center, are they getting some new tenants?
Walt – They are, Bob you will be happy to know that Coach, Joppa and Rue21 will be moving in to Coronado. 3 national retailers, that’s good news. Coronado is also going to demolish an 8,400 square foot building on the east end, which was a former Gateway computer store. The demolition will provide a pad site for a national restaurant hopefully like the Cheesecake Factory or something similar.
Bob – Walt, how can people contact you today about commercial real estate?
Thanks Bob, call Walt Arnold at 256-1255, website is waltarnold.com. You can also find me on Facebook.com/waltarnold, or on Twitter @waltarnold. Give me a call to discuss your commercial real estate needs.
Sperry Van Ness®/Walt Arnold Commercial Brokerage, Inc.
Today's real estate industry is more demanding and challenging than ever, yet at the same time filled with opportunity. Sperry Van Ness®/Walt Arnold Commercial Brokerage, Inc. of Albuquerque NM would enjoy helping you with those challenges and opportunities.
Walt Arnold is a member of the Society of Industrial and Office Realtors (SIOR), member of CCIM-Certified Commercial Investment Member past President of the Commercial Association of Realtors of New Mexico (CARNM), past CARNM Realtor of the year, and former professional football player with the L.A. Rams, Houston Oilers and Kansas City Chiefs.
Albuquerque Commercial Real Estate News 