Archives for November 2014

Approved by the NAR Board of Directors November 10, 2014
The National Association of REALTORS® advises members that the use of unmanned aerial vehicles for real estate marketing is currently prohibited by the Federal Aviation Administration. Such prohibited use of unmanned aerial vehicles may lead to the assessment of substantial fines and penalties.
The National Association of REALTORS® supports efforts to create new federal regulations to allow for the future commercial use of unmanned aerial vehicle technology by the real estate industry.
The National Association of REALTORS® is committed to working with the Federal Aviation Administration, and any other relevant federal agencies, during the regulatory approval process. The National Association of REALTORS® will continue its ongoing efforts to educate REALTORS® about the current and future regulatory structure for the safe and responsible operation of unmanned aerial vehicles.
By: National Association of REALTORS®
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The prospect of new commercial construction looks pretty dim in the Albuquerque metro area’s office and industrial real estate markets, which continue to sputter along in step with the stagnant local economy, according a panel of local experts at a NAIOP luncheon on Monday.

For that to change, Debbie Harms of NAI Maestas & Ward said, “Something is going to have to happen.”

Harms was one of three speakers at the annual analysis of office and industrial property by the New Mexico chapter of the Society of Industrial and Office Realtors. Their update sounded a lot like the one the society gave last year at the commercial real estate development association’s November luncheon.

After three straight quarters of improvement, the local industrial market “is showing increased stability with fewer tenants downsizing and closing,” said panel moderator Dan Newman of CBRE.

The theme in the industrial market, where the biggest parts of the building inventory are warehouses and distribution centers, is that finding modern space larger than 10,000 square feet is becoming harder, said panelist Erick Johnson of Johnson Commercial.

The average asking lease rate for a warehouse is $5.88 a square feet, roughly where it’s been for four straight years. The average asking rate is too low to cover the cost of building a new warehouse, Johnson said. The rate will have to increase 25 percent to 30 percent before new construction is justified, he said.

At a 22 percent vacancy rate, Albuquerque’s office market is clearly in the doldrums, Harms said. In a typical pre-recession year, about 700,000 square feet of office space would be leased annually, she said. That threshold has been reached only twice in the past six years.

There is activity in the office market, but Harms described it as companies that are already here “trading spaces.” As with the industrial market, demand for office space is focused on well-maintained buildings with modern amenities at good locations, she said.

The society’s market update is an annual event at NAIOP. Membership in the society is based largely on experience and performance, rather than completion of an education curriculum. There are only 21 members in New Mexico.

By: Richard Metcalf (Albuquerque Journal)

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Planning is moving forward for what could be Rio Rancho’s next major development — a 150-acre site in Unit 10 proposed to have 450 home sites and a large business park that could bring 3,000 jobs to the city.
The development, known as Los Diamantes, or “The Diamonds,” is nearly in the middle of Unit 10, which is bounded by Unser, Southern and Rainbow boulevards in Rio Rancho, and on the south, the city of Albuquerque boundary.
The property would be bisected by an extension of Westside Boulevard, with the 60-acre business park on the north side of the road.
“Our goal is to develop out the business park, then sell off the residential,” said Mike Skolnick, qualifying broker and a principal in Excalibur Realty who assembled the property for AB Southwest LLC of California, a real estate investor.
He said 100 acres were acquired from Cabezon developer Curb Inc. and the balance assembled from 63 landowners.
The project has just entered a 10- to 12-month “entitlement process,” which entails completing studies required by various federal and state regulatory agencies and the city, and getting zoning and a development agreement with the city, according to Skolnick, who has been involved in assembling about 600 other acres around Rio Rancho for development projects.
Skolnick said Los Diamantes originally was planned to be all residential. But being a member of the board of the newly formed Sandia Economic Alliance, whose goal is to attract economic-base jobs to the county, he said he had an “epiphany” and called his principal, who agreed with the idea of turning the north section into a business center.
The city desperately needs shovel-ready business centers so companies considering relocating here have somewhere to go if they want to open in a large finished building in six to nine months, he said.
“We hope to bring 3,000 new jobs, just in the business park alone,” he said.
Amendments are proposed to the city’s land use map for Unit 10, which were subject of a public input meeting Thursday.
“For final approval, if the comprehensive plan already shows what the proposed use for that land is, obviously it will be a lot easier process,” Skolnick said of the potential impact of the comprehensive plan amendment process on Los Diamantes.
He said there already has been public input on the plan, noting a committee involved in Unit 10 planning meetings organized up by City Councilor Chuck Wilkins consisted of members of the public, landowners and homeowners.
“This is not something he (Wilkins) sat down with the staff and drew up,” Skolnick said. “This was all done with input from the community already.”
He added, “Understand, where we’re doing our development, everything out there is coyotes, rabbits and rattlesnakes. That’s it.”
The project could break ground in 2016.
“That would be the ultimate goal,” he said.
By: Mike Hartranft (Rio Rancho Observer)
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LAS CRUCES >> What’s to become of Spaceport America in the wake of the crash of Virgin Galactic’s experimental rocket-powered spaceship that broke apart over the California desert?

In true New Mexico fashion, local leaders say they will press on, even if the crash, which claimed the life of the co-pilot and badly injured the pilot who parachuted out of the ship as it fell to the Mojave desert after an early, and as-yet unexplained, deployment of the feathering system that slows the craft as it returns to earth after a brief sojourn into suborbital space, sets back development of southern New Mexcico space tourism.

“People need to realize this is tough,” said Rick Holdridge, chairman of the New Mexico Spaceport Authority board, of the loss of Virgin Galactic’s SpaceShipTwo during testing by Scaled Composites. “I’ve seen this happen myself. In some ways, I hate to say normal, but this is very difficult technology.”
While there is little of a silver lining, the fact the default has not been traced to the engine on SpaceShipTwo, which is carried aloft by the specially designed jet WhiteKnightTwo before firing into a low orbit, is promising, he said.
Virgin Galactic was roughly 60 percent complete in designing SpaceShipTwo Serial No. 2, intended to be a replacement for the lost vessel, and the problem can be corrected, Holdridge said.
“They will have time to fix the problem, retrofit and fix the next model,” he said.
Virgin Galactic CEO George Whitesides said there is still much work to be done, with the first priority being supporting the National Transportation Safety Board investigation into the accident and supporting the families of the injured and killed pilots.
“While I wish we weren’t in this situation, we are in a situation where we can move forward,” he said.
WhiteKnightTwo, pictured in front of Spaceport America, is the vessel that takes SpaceShipTwo into low orbit. Virgin Galactic hopes to resume test flights for the next spaceship within six months.
That move will require completion of the new rocket and continued testing in Mojave, which Virgin Galactic officials expect to resume in spring of 2015.
It’s possible that test flights for the next spaceship could begin within six months, before the investigation is expected to conclude, Whitesides said.
Scaled Composites, which is developing the spacecraft for Virgin Galactic, has an experimental permit from the Federal Aviation Administration to test the crafts. Just last month, the company had received approval from the agency to resume rocket-powered flights.
When the new ship is ready next year, the FAA said it will conduct a more extensive review to ensure whatever caused the crash has been addressed before allowing test flights to resume.

New Mexico space tourism

Speculation continues about how far the accident will push back the day when Virgin Galactic’s paying customers can routinely rocket dozens of miles from the spaceport in the New Mexico desert toward the edge of space for a fleeting feeling of weightlessness and a breathtaking view.
Whitesides said the crash has been tough on many levels, but he refused to see it as a roadblock and said the company does not have to start from scratch.
“There was no question it was a tragic setback, but it’s one from which we can recover,” he said. “With Serial No. 2, we’ll be putting a stronger, even better ship into initial commercial service and I think we’ll be able to get back into test flights soon and carry forward.”
Virgin Galactic has hopes of one day being able to manufacture at least one new ship a year. It envisions flights with six passengers climbing more than 62 miles above Earth.
Seats sell for $250,000 and the company says it has booked passengers including celebrities Justin Bieber, Ashton Kutcher and Russell Brand. A few more passengers signed on this week, Whitesides said.
In the meantime, Virgin Galactic will be the anchor tenant at the taxpayer-financed Spaceport America and will remain as the primary customer for the port. Before the accident, the company planned to begin moving operations to New Mexico early next year. As the company recovers from the accident, they will continue to pay “a lot of money” to honor their existing contract, Holdridge said.
While the company is still considering the new timeline, spaceport officials are pushing forward and expanding their marketing efforts to make the best use of the facility, said Christine Anderson, executive director of the spaceport authority.

Continuing the mission

“It was a tragedy, but Virgin Galactic is moving forward,” she said. Hopefully in a year they will be out here.”
Virgin Galactic has not yet commented on how the accident will impact the deployment of more staff from Mojave to Las Cruces, a process that was underway prior to the crash.
But, Anderson notes, the spaceport has other clients, including UP Aerospace and SpaceX, which use it as a test facility. Spaceport officials are looking to hire an additional staff member to increase marketing efforts which will focus on diversifying the client base to ensure the state’s investment as well as taxpayer money from Doña Ana and Sierra counties, were not spent recklessly.
Still, some planned “ramping up” of activity in anticipation of Virgin Galactic’s arrival will be slowed.
“It is important to remember we are a spaceport, not Virgin Galactic Spaceport,” she said. “They are our anchor tenant. We are moving forward.”
She said some non-spaceflight events have been held at the spaceport, generating an additional, if smaller, stream of income. And that’s something the marketing efforts will focus on as the spaceport transitions from the building phase to the operational phase, she said. The increased focus on marketing began even before the accident, she said.
“We’ve been talking about concerts, photo shoots with numerous companies, fashion photo shoots,” she said. “That’s actually been a surprise for us. It’s such a beautiful venue.”
While she declined to disclose which potential customers had expressed an interest in using the facility, she said discussions were ongoing with at least five future customers and tenants.
“All of that is coming,” she added. People are inquiring and we are pursuing that aggressively. No matter how successful you are as a spaceport or airport you have to have a diversified revenue stream.”
Another potential use is to take advantage of the entire facility, which encompasses 18,000 acres and a 12,000-foot runway, for aircraft testing or other non-spaceflight uses.

Return on investment

One concern that has permeated the spaceport discussion since it began during the Bill Richardson administration, is that it is using taxpayer dollars that might not pay a solid return, at least not in the foreseeable future. The arguments were compounded when Sierra and Doña Ana county voters agreed to a gross receipts tax to fund development and operations.
In addition to the state investment, since it was imposed in 2009, the GRT tax – which cannot be eliminated until the bonds are paid off in 2029 – has generated $13.7 million from Doña Ana County transactions and an additional $2.6 million from Sierra County, according to county officials.
Anderson noted the spaceport generated $12 million in GRT to the state, although the bulk of that was during building and the early stages of operation.
But some want to see a more aggressive approach to maximize the use of the spaceport and the return on the state’s investment.
“Seven years in and (Spaceport America) has generated $12 million. That’s $960,000 a year,” said Pay Hynes, director of the New Mexico Space Grant Consortium. As the state retires the bond debt “every transaction is paying for that spaceport to stay empty. It is not acceptable to go with the status-quo.”
And, she said, Virgin Galactic has a role to play in ensuring the future success of the spaceport to which they and the state have committed enormous resources.
“We all have to come together and work on a plan. We don’t have a choice. We have to,” she added. “Virgin has to be aware of what is possible so we can be partners in a way we never thought we’d have to be. We have a 12,000-foot runway out there. We need to use it. It is state property. We need to be talking about it as a community. Virgin does not own that runway … we just have to begin that dialogue.
“If we had experienced management there, things would be different. But we don’t” she added. “We have facilities we bought that will deteriorate over time for lack of use. There’s a lot of discussions we need to have. There are a lot of things we have to look at.”
In the meantime, the southern road to the spaceport must be built, a project Doña Ana county officials have vowed to support. Other work needs to be completed at the main gate, Anderson said. That will take local and state officials continued commitment to make it happen.
“I believe strongly we are going to get our investment back. It is just going to take a while longer,” Holdridge said. “We’re going to press on, stay tight with our (anchor) tenant and our other tenants and make this a success.”
By: Jason Gibbs (Las Cruces Sun-News)
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