Archives for April 2014

Falling retail vacancies were assisted by new businesses such as Duke City Harley-Davidson, BuyBuy Baby (shown) and the Stumbling Steer.
The year started well for commercial real estate in the Albuquerque metro area, with vacancy rates dropping to a two-year low for the beleaguered office market and a four-year low for the industrial market, according to Colliers International.
At a vacancy rate of 7.5 percent in the first quarter, the metro’s retail market continued to be the only commercial property type in the metro to outperform the national average of 9.8 percent as of the fourth quarter.
“We’ve had very patient absorption of commercial space,” said Steve Maestas of NAI Maestas & Ward, a commercial real estate services firm in Albuquerque.
“If you think about it, in broad brush strokes, we haven’t put any new product on the market since pre-crisis. Now we’re five, six years out. We’re getting to the point where growth will dictate new projects being built, particularly for top-tier tenants.”
The retail market, which appears fully recovered from the recession, may be hitting a wall because of the lack of significant new projects scheduled for opening this year, the Colliers’ retail report observes. There’s also a shortage of anchor store spaces in growing locations, it says.
“The end result is national retailers who need to open stores before the next holiday season have to target other cities in the region,” the report says.
More Renovations
The lack of significant new construction is generating more renovations and remodels of existing shopping centers at good locations, said Ken Schaefer, research director at Colliers’ Albuquerque office.
Albuquerque’s office vacancy rate dropped to 18.4 percent from a roughly 25-year high of 21.2 percent in the first quarter of 2013. In its just-released office research report, Colliers attributed the decline in part to more lease deals involving moderately large amounts of space.
“Starting to recover is the appropriate way to put it,” said Scott Whitefield of Colliers. “It’s encouraging to see, but we’re in a fragile state right now. There’s a lot of moving parts out there.”
The metro saw the positive absorption of 80,547 square feet of office space in the first quarter, the largest amount since the fourth quarter of 2009, Colliers data show. Positive absorption means that more space was occupied than went vacant.
“If we did 80,000 square feet every quarter, we’d make some headway,” said Scott Throckmorton of Argus Investment Realty in Albuquerque.
At an absorption rate of 80,000 square feet a quarter, it would take just over 3½ years to get the office vacancy rate down to 10 percent.
North I-25 Recovery

Reconstruction of the I-25/Paseo del Norte interchange progresses in the North I-25 submarket. (Journal File)
The first quarter’s 18.4 percent vacancy is where it was in the first of quarter of 2012, but still substantially higher than the average quarterly rate of 15.4 percent from 2004 through 2013. The average vacancy rate nationwide was 14 percent in the fourth quarter, the latest period where it’s available, Colliers reported.
Leading the way in the early recovery is the North I-25 submarket, which is the metro’s biggest office submarket straddling Interstate 25, north of the Big I. The area’s office vacancy rate was 13.4 percent in the first quarter, the lowest it’s been since mid-2009.
“When you’re out touring with prospective corporate tenants, that’s the area they’re looking at most closely,” Throckmorton said.
With a 27.7 percent vacancy rate – the highest of any major office submarket in the metro – Downtown has improved from the first half of 2013, when its 31.5 percent rate was the highest of any central business district in the country.
Downtown traditionally carries a high vacancy rate: 18-20 percent was typical in the mid-to-late 2000s, while the metro’s overall rate generally was running in the 11-14 percent range. Downtown’s vacancy rate averaged a low of 13.8 percent in 2001, before a mass exodus of federal agencies to more suburban locations.
A Downtown Positive
By another measure – availability rate – Downtown is not the worst office submarket in the metro. Availability rate includes more than just vacant space. It also factors in available sublease space and, to a lesser extent, other types of space in transition.
Downtown’s availability rate was 26.4 percent in the first quarter, lower than the 36.3 percent for the Airport submarket and 27.1 percent in Uptown.
A contributor to Downtown’s lower availability rate was the state’s first-quarter purchase of 62,280-square-foot Plaza Maya, empty for 10 years, for use by agencies within the Corrections Department, Schaefer said. The purchase removed the building from the inventory of available office properties.
Concentrated in a roughly one-square-mile area north of the Louisiana NE and Interstate 40 interchange, the Uptown office submarket’s vacancy rate was 20 percent in the first quarter. Uptown’s vacancy rate has been upward of 18 percent for three years.
“You’ve got a concentration of vacancies in four or five buildings,” Throckmorton said. “Most of the rest are 95 percent (occupied) or higher.”
But enough of Uptown’s occupied space is available for sublease due to corporate downsizings that the submarket’s availability rate is 27.1 percent, which is surprisingly high given that Uptown, at 9.3 percent, had the metro’s lowest average office vacancy rate during 2006-08 boom years.
Airport Area Rates

Presbyterian Healthcare Services is relocating to this campus near Balloon Fiesta Park.
The metro’s fourth-largest office submarket, the Airport area’s high availability rate is based largely on the planned relocation of Presbyterian Healthcare Services’ administrative offices from 323,541 square feet of leased space near the airport to a corporate-owned campus near Balloon Fiesta Park.
Not including Presbyterian’s soon-to-be-vacated space, the Airport submarket’s vacancy rate is a low 13 percent.
The local industrial vacancy rate dropped from 10.2 percent in the first quarter of 2013 to 8.9 percent this year, dead on with its 10-year average of 8.9 percent from 2004 through 2013. The average industrial vacancy rate nationwide was 8.1 percent as of the fourth quarter, according to Colliers.
The pace and median size of lease deals in the industrial market has held steady for the past four quarters, said Jim Smith of CBRE, a commercial real estate services firm in Albuquerque.
“We’re kind of status quo,” he said. “There’s positive activity, but it’s not going great guns.”
The first-quarter drop in the industrial vacancy rate was attributable to several larger-than-usual lease transactions and one purchase, Schaefer said. He said the transactions included:
• Gastonia, N.C.-based U.S. Cotton, a manufacturer and distributor of cotton products, leased 63,428 square feet at the Fulcrum Building, 4321 Fulcrum Way NE in Rio Rancho.
• Locally owned Rogers Plumbing & Heating Inc. purchased the 50,234-square-foot former Fox Manufacturing plant at 5105 Williams SE in the South Valley.
• Nexius Solutions Inc. of Allen, Texas, which provides wireless and software services to businesses, leased 46,028 square feet at 1 Claremont NW.
• Corrales International School, a charter school opened in 2008, leased with an option to buy the 23,500-square-foot former Direct Buy building at 5500 Wilshire NE.
• The University of St. Francis, which offers two health-care programs and is currently in the Highland High area, leased 19,380 square feet at 1500 Renaissance NE.
By: Richard Metcalf (Albuquerque Journal)
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The prospective new owners of the local country club promise a far better product, although prices will go up, after they close on the sale May 1.
Local businessmen Jhett Browne and Robert Gallagher explained their plans at a meeting with members Thursday night at Chamisa Hills Country Club.
Most of their announcements were met with applause. A heated exchange arose over the proposed rates, but a member of the audience suggested a solution that all parties seemed to like.
Outside of “some act of God,” Browne said, he will close on the sale of the club in two weeks.
He expects to start renovations May 2.
He’s buying the assets, not the Chamisa Hills Country Club corporation. That means all lifetime and corporate memberships will have to be renegotiated with the new business, Club Rio Rancho, in which Gallagher will be a minority shareholder.
“It’s not just a golf course,” Browne said. “I think of it more as an event center.”
Gallagher, who’s been a member of the club for 14 years, said the club would be open seven days a week.
“There’s no doubt there’s revenue that needs to be produced here,” he said.
The golf course
Members will have reserved tee times, but the public can play, too.
Browne said he has hired John King, “arguably the best greenskeeper in the state of New Mexico,” to take over restoration of the golf course May 1. King will develop a program for the current groundskeeper to follow.
In addition to restoring the grass, Browne plans for decreased turf areas to save water.
Browne and Gallagher have a development agreement in the city manager’s office for consideration and expect to irrigate with well water instead of the reused water used on the course now. The recycled water is too high in salt, chlorine and pH for really lush grass, Browne said.
As for the north golf course, Browne said about 100 neighboring homeowners have committed to buying memberships and trying to recruit other members to generate about $35,000 a month in needed revenue. He said he thinks the club will need the north nine holes eventually, and it may become an executive course.
The clubhouse
Under Browne and Gallagher’s plan, the banquet room will become a restaurant, complete with seating on the adjacent patio and open to the public. Members will get priority seating, although Browne requested they make reservations and realize unreserved tables would have to go to the public at some point.
Members will have access to an exclusive restaurant and bar, and another bar will be open to the public.
Browne and Gallagher don’t plan to find new cooking staff. Browne said menu prices would change to match the cost of ingredients, so at least some prices would be higher.
Each month, social and golf members would have to buy a minimum of $50 in food and beverages for individuals and $75 for families. If they didn’t meet the minimum, it would be added to their membership bill.
“We’re in such a huge deficit, and we hope to turn it around every quickly,” Browne said.
He has arranged for his mother to set up a “mini-gallery” of art in the clubhouse. He’s also planning monthly members-only cocktail receptions and wine and cheese receptions, with live jazz at the wine and cheese receptions.
Browne is looking for pianists to play every night in the lounge, and live entertainment and dancing on the weekends in the public restaurant. People will be able to take dance lessons during the week.
“This will kind of turn it into a little weekend night club,” he said.
The facilities will be non-smoking except for a cigar bar off the lounge.
The pool
Browne said he hoped to open the swimming pool by May 15. The swim season will run into September, possibly until October, he said.
Gallagher said the club would host pool parties, some of which would be open to the public.
“This pool at this point stays private,” he said.
People would have to buy pool privileges separately from other memberships. Social, golf or tennis members could pay per visit for occasional pool use, but the public couldn’t use the pool unless they rented it for a party.
Browne said he would rebuild the bar at the pool, re-install the grill and get all-new furniture. Next week, workers will power-wash, paint and seal the pool.
“It’s going to look Caribbean,” he said.
Tennis
For tennis, another members-only feature, Browne has hired two talented former Lobo players, Johnny Parker and Ben Dunbar, as full-time pros. He said they will run a variety of tennis activities starting in July.
Browne expects to start refurbishing the tennis courts at the end of May.
“This will become, if you will, the mecca of tennis in the Albuquerque area,” Gallagher said.
Pricing
Two or three men became angry after learning golf memberships wouldn’t include pool or tennis court access, as the arrangement is now, because they would have to pay higher prices for the same privileges.
“If we don’t go up, there won’t be a club,” Browne said.
Later, an audience member suggested that if members spent above the minimum on food and beverages, they could be given credit toward tennis or pool memberships.
“I could see how that could work very well,” Browne said.
He said he would find an acceptable ratio of food and beverage expenditures to tennis or pool credit.

Chamisa Hills Country Club will soon become Club Rio Rancho, if all goes according to the plans of two local businessmen. They hope to offer a high-quality tennis program, weekend dancing, a revamped pool and more
By: Argen Duncan (Rio Rancho Observer)
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Construction is close to starting on the Rio Rancho Walmart Neighborhood Market on the south side of the Rio Rancho Shopping Center near NM 528 and Southern Boulevard.
Walmart spokeswoman Delia Garcia said the construction contract has been awarded to Roche Constructors Inc. of Colorado.
“Construction is imminent,” she said. “We would expect construction to start within the next few weeks.”
The 42,039-square-foot store will sit on a four-acre site between Grande Boulevard and an existing office building, south of the shopping center that houses Samon’s, O’Hare’s Grille and Pub, Laura’s Laundry and other businesses.
According to the Roche website, the work will include demolition of an existing parking lot, overlot grading, utilities, parking lot paving, site lighting, landscape, some off-site infrastructure and roadway work. A construction trailer has already been moved to the site.
Garcia said Walmart anticipates an opening of the store late this year. Hiring will likely start in early fall, she said.
“We will be hiring for about 65 positions, full- and part-time,” she said. “We’re always seeking strong talent that’s customer-focused and excited about serving our customers in Rio Rancho.”
Walmart, which touts the neighborhood market as a “convenient grocery-shopping experience,” has four other markets in New Mexico. The stores are about a fifth the size of its superstores.
Roche was founded in Greeley, Colo., in 1971 and has regional offices in Las Vegas, Nev., and Westminister, Colo., according to its website.
Coronado Wrecking & Salvage recently completed razing a former movie theater and office building in anticipation of the Walmart project. Coronado is also under contract to demolish the old City Hall building at the west end of the Rio Rancho Shopping Center in the near future.

Nancy Chavez illustration
This illustration shows the location of the planned Walmart Neighborhood Market.
By: Mike Hartranft (Rio Rancho Observer)
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