Archives for October 2015

Occidental Petroleum Corp. (NYSE: OXY) has officially completed the first phase of its $500 million carbon dioxide flooding project in Hobbs.

Announced in 2013, the project involves flooding the oil field in South Hobbs with carbon dioxide in order to increase oil production substantially. According to company representatives, when the company — also known as Oxy Permian — began CO2 flooding in Hobbs more than a decade ago, oil production doubled as a result.

Grant Taylor, president and CEO of the Hobbs Chamber of Commerce, said that Oxy’s investment in the South Hobbs field has “decades-long outlook” and could extend the life of the oil field there by as much as 30 years.

Two years ago, Hobbs’ oil operations involved primary and water recovery alone — methods of recovering oil through drilling new wells first and then injecting water to recover more oil after primary recovery wanes. Oil recovery through CO2 flooding is considered a third stage oil recovery method; Oxy Permian’s South Hobbs project replaces water-only recovery with CO2 flooding.

Grant Taylor, president and CEO of the Hobbs Chamber of Commerce, said that Oxy’s investment in the South Hobbs field has a “decades-long outlook” and could extend the life of the oil field there by as much as 30 years.

“Oxy’s South Hobbs project is a great example of the billions in capital expenditures we’ve seen over the last decade in the Permian Basin. Aside from exploration and production, we’ve also seen major investments in infrastructure like pipeline and rail,” he said.
Oil prices have largely remained at $50 or less per barrel over the last year. While many in the industry are struggling, the project will likely increase oil production and bring more jobs to the area. Taylor said that those in Hobbs “remain optimistic about the long-term outlook for oil and natural gas production.”
One of the largest carbon dioxide injectors in the Permian Basin, Occidental Petroleum is a leader in what’s known as enhanced oil recovery (EOR) technology and operated more than two dozen carbon dioxide flooding projects in 2014 alone. The company plans to invest a total of $740 million in Hobbs over the coming years via flooding projects and expansions.
New Mexico is one of the top states for onshore oil production and is the fourth-largest net energy supplier in the country.
By: Sal Christ (Albuquerque Business First)
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From a real estate perspective, Innovate ABQ is all about site work. What buildings will stay or be demolished at the site on the northwest corner of Central Avenue and Broadway. How architects and planners propose to transform the former First Baptist Church site into incubator labs or residential units. And what users from retail stores to restaurants will open in the project.

But Jessica Eaves Mathews, a member of Innovate ABQ’s board and founder and CEO of Leverage Legal Group, said the highly anticipated Innovate ABQ is not just a real estate development. And Innovate ABQ is not just for techies, as has been assumed by the public.

Jessica Eaves-Matthews, who serves on the board for Innovate ABQ, said the board is closer to hiring a CEO for the site.

Business First asked Mathews to explain what the project is all about, who it’s for and what’s next in the site’s development process.

Describe how the real estate aspect of Innovate ABQ is supposed to encourage innovation.

In short, Innovate ABQ will be a work-live-play mixed-use community for entrepreneurs, bringing together talented, driven people, assembled in close quarters, who exchange ideas and knowledge in a way that advances innovation, builds businesses and bolsters a stronger, more inclusive economy in Albuquerque and New Mexico. Work-live-play communities such as Innovate ABQ attract entrepreneurial talent, capital and business activity.

It seems Innovate ABQ is focused on tech startups and research. Who else can use or move into Innovate ABQ in the future?

It will be a place for all entrepreneurial ideas and innovation, and it will be open to everyone, not just UNM students or the tech or science community. I care about this because my work involves supporting women entrepreneurs, who often launch other types of companies than tech, especially consumer products, food-based businesses and service-based companies. Some may have a tech component, such as an app or online presence, but most would not consider themselves tech founders. And I also look to the food and beverage entrepreneurial communities that are springing up around Albuquerque and the state — we will have a place for them on the site also to help them launch and grow their ideas, including everything from food trucks and food manufacturers, to bakeries and restaurants, to breweries and distilleries.

The board chose the development team Dekker/Perich/Sabatini, Goodman Realty Group and Signet Development to develop the site. Where are they at in the process and what else is the board working on?

The Signet group is in active due diligence activities currently, and we expect to have a proposal on the first phase site plan from them by November or December.

As for the CEO search… We have stopped taking any new applicants as we have a very strong pool of applicants whom we are moving forward to the next stage of the interview process. There is a mix of both [in-state and out-of-state applicants]. While we want someone with ties to or a passion for Albuquerque and New Mexico, we also want the right person for the job. So we extended our search to a national level.

We deliberately do not have a deadline for [hiring], as having the right person to lead this ambitious effort is critical to the success of the project.

By: Stephanie Guzman (Albuquerque Business First)

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Because infrastructure quality and property value growth so often go hand in hand, it stands to reason that improved infrastructure including energy, water, transportation and communications technology, is an economic challenge the commercial property industry has a great interest in. But rolling out new technologies without testing can cause chaos of all kinds.  How can new ideas in infrastructure be tested without putting life, limb and property value at risk?
Across the globe, the tricky problem of testing new infrastructure outside of computer simulations has been attacked from a few different angles, producing three giant projects that will amaze anyone familiar with the real estate development process. Catch up with the state of the “smart city”:
CITE City, Lea County, NM
To facilitate end-to-end testing of technologies such as smart cars, you can always put hundreds of millions into building a testing laboratory the size of a small city. That’s exactly what an investment group is planning in the desert outside of Hobbs, New Mexico.  Conceived as a laboratory modeled somewhat on Rock Hill, SC (the state’s fifth largest city), CITE City is a smart city project that leaves out the population on purpose. The design can hold 35,000 people, but by design, never will.
Watch video – The Brand New $1 Billion Ghost in New Mexico Where NOBODY Will Ever Live
PlanIT Valley, Portugal
Technology CEO Steve Lewis has taken a page from legendary Chicago developer Daniel Burnham’s book.  “Make no small plans,” intoned Burnham, and Lewis has obliged. Moving a step beyond CITE City’s laboratory-at-scale, zero population approach, Lewis envisions PlanIT Valley as a bona fide city.  The venture included major technology vendors including internetworking giant Cisco, Microsoft and Phillips. Located outside of Porto in northern Portugal, the built-from-scratch smart city project is aimed at housing a population between 150,000 and 225,000 people.
Watch video – Living Plan IT Smart Travel
Masdar City, United Arab Emirates
The eldest and most-built of the three projects, Masdar City is named for its developer, a sustainable energy company based in Abu Dhabi. Sporting a population in the thousands, Masdar City’s expansion plan has as its cornerstone attraction of business, promising immediately available office space and “nonexistent import tariffs and taxes”.  Striking architecture that finds harmony with the harsh desert conditions rises above a fully modern smart transportation grid and vibrant, if modest in size, urban fabric.
Watch video – Masdar City Welcome Video
These megaprojects are here to be studied as economic, technologic and social laboratories.  It’s up to the commercial real estate industry to update its best practices by including what these projects can teach.
Learn about smart growth and infrastructure by attending selected sessions at Urban Land Institute’s (ULI) Spring Meeting, CCIM Thrive Conference October 27-28 or IREM Fall Leadership Conference.
By: Wayne Grohl (The Source)
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When making the leap from residential to commercial real estate, one thing that becomes clear is that assigning a price to commercial property uses a very different process than is used in residential. While reading up on appraisal techniques, I had the thought that the difference between commercial and residential appraisal can be well described as similar to the difference between a snapshot and a movie.
Putting a dollar value onto a residential property generally places a lot of emphasis on comparitive valuation. Appraisals or pricing talks referencing “comps” are very common in residential because location, size and amenities can be somewhat easy to compare.
Commercial is more complex in part because it deals in cash flows. One of the reasons you can compare residential properties more easily is because the sale of that property is like a single, well-understood cash flow from the buyer to the seller. And that single flow – the purchase – can be likened to a snapshot of that property’s history.
But in the commercial property world, the flow of cash into and out of a building is usually a monthly event at least. Rent is one such example, but maintenance and other flows exist in a series of payments or debits.
This string of events can be thought of as frames in a movie, telling the story of value of the property with more detail, more variables, and less capacity for easy comparison among properties. Another way of imagining the difference is to see residential property as stationary pricing target and commercial property as a moving target. It’s harder to hit a moving target.
Formal Approaches To Commercial Appraisal Include Business Valuation
When the broker opportunity touches a small business, business valuation techniques can loom large in commercial property appraisals. The techniques vary as much as the spectrum of different enterprises does. To access an excellent library of titles on the topic of business valuation, REALTORS® can access the NAR Field Guide To Business Value, after the link.  It’s packed with books, audio books, videos, reports and research that will deliver perspectives on commercial appraisal.
(Note that the inclusion of links on an NAR field guide does not imply endorsement by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this field guide complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.)
By: Wayne Grohl (The Source: A Commercial Real Estate Blog by NAR)
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