Archives for December 2016

On February 3, 2015, Governor Walker officially introduced his 2015-17 State Budget. The budget proposal consists of a $35.9 billion operating budget in the fiscal year 2015-16 and a $32.3 billion budget in fiscal year 2016-17. This includes all major funding sources (general purpose revenue – GPR, segregated revenue – SEG, federal revenue – FED, and program revenue – PR). The governor’s GPR budget is $15.8 billion and $16.9 billion in fiscal year 2015-16 and 2016-17, respectively. This is a 0.3% decrease in state spending for fiscal year 2015-16 over the 2014-15 base budget, and a 6.7 % increase in spending in fiscal year 2016-17.

– Property Taxes
– Government Structure & Agency Reform
– Economic Development
– Transportation & Infrastructure
– Environment & Land Use

Click here for the Summary Document

1. The Changing Global Economy
   GDP growth has been revised downward for much of the globe, as economic uncertainties continue. Currency issues and soft energy prices have added to the volatility. Politics and conflict undermine stability, leading to the potential for deceleration, weakening exports and softening investment in real estate and other assets. The U.S.should remain highly attractive for global capital inflows-even if economies weaken further.
2. Debt Capital Market Retrenchment
   Regulators are telling regional banks to pull back on commercial real estate lending; Basel III reserve requirements for construction and development loans rise to 150%; and CMBS issuance slows, as Dodd-Frank risk-retention rules go into effect in 2016. Insurance companies are approaching their allocation limits. The search for commercial real estate debt capital will become more intense, as will competition for capital. This presents risks for those seeking debt, and opportunities for alternative lenders, including crowd funding sources, and equity investors to enter the market.
3. Demographic Shifts
   Millennials have overtaken the Baby Boomers in sheer numbers. Boomers are retiring at a rate of approximately 10,000 per day, and America’s population of persons aged 90-and-older is expected to increase to over 7.6 million over the next 40 years. Baby Boomers prefer to age in place, driving opportunities for medical, assisted living and memory care facilities. Look for a rise in renting over home ownership. Multi-family development remains strong.
4. Densification/Urbanization
   Transportation options, walkability, extensive work/live/ play options favor close-in “urbanized” areas. Densification continues, as job growth and dynamic urban centers attract new residents and businesses. There is a growing trend in high-density mixed-use centers. “Innovation centers” and “education centers,” in dynamic economies emerge, and cultural environments grow. Suburbs are becoming more “urban.”
5. The Political Environment
   The U.S. elections are over, but the political environment remains acrimonious at all levels. Communities that demonstrate political stability and investment in infrastructure, transit, schools, etc., will attract residents, visitors, and businesses.
6. Housing Affordability and Credit Constraints
   The global housing market is at a critical juncture, as affordability and credit constraints challenge both owner and renter markets. Limited for-sale inventory and income stagnation are affecting affordability. Stringent credit requirements prevent many households from homeownership, increasing demand for rental property. The Counselors of Real Estate® annually releases the CRE® Top Then Issues Affecting Real Estate, sharing the most critical factors impacting real property. Multifamily development continues but rents outstrip incomes in many communities. Questions arise about housing newly formed households and the workforce. We expect strong demand for rental housing and a slowdown in rent growth. Single-family builders are beginning to target “starter homes.”
7. The Disappearing Middle Class
   Median middle-class household income fell five percent between 2000 and 2014, and median wealth has declined by 28 percent since the recession. Rising costs affect middle-class families. Millennials are falling behind in assets and income. Stagnant purchasing power affects where people can live, driving a rise in high-density multi-family and affordable housing. Luxury development continues to do well. While middle-market retailers (e.g., Sears, Macy’s) contract, new opportunities arise (i.e., Wal-Mart and Dollar General at the low end of the spectrum vs. luxury retailers such as Nordstrom and Neiman Marcus).
8. Energy
   Energy price instability threatens global economic security and US regional economies. Recently booming towns are busting, and a $ 2 trillion clean tech market is driving regional growth in other markets. A natural gas boom in the US, combined with a drastic reduction in renewables pricing, make it difficult for oil to compete– suggesting continuing dislocation in many markets regardless of political changes.
9. The Sharing/Virtual Economy
   New enterprises, such as Airbnb, Uber and bicycle-sharing companies (e.g., Divvy) have become alternatives to traditional lodging and transportation, offering alternatives for employment. Shared office spaces are rapidly becoming more widespread; “virtual” offices offer office amenities to small businesses. Crowdfunding has become an alternative source of capital for new enterprises and investment, including real estate. These enterprises will continue to change the economy and their traditional counterparts.
10. The Rise of “Experiential” Retail
    Retail is adapting, as stores close or downsize physical footprints, adding more online options. As retailers retrench and reimagine their models, online retailers thrive. Amazon is now the biggest retailer in terms of dollars. “Destination” retail development is emerging, with malls becoming “experiential” – providing services and “showroom” spaces, while actual purchases are made online, and are redefining the concept of ‘anchor’ stores. New retail concepts, including local and regional shops and fewer chains create new shopping experiences.

By: National Association of REALTORS®
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Titan Development and Maestas Development Group will break ground on an upscale apartment community north of Central Avenue near Presbyterian Hospital next summer.

Dubbed The Broadstone Highlands, the 74-unit multi-family project features a mix of studio, one- and two-bedroom apartments.

With approval from the city planning commission on Thursday, the applicants can pull permits to begin construction on 2.2 acres at Tijeras Avenue and Cedar Street. At full buildout of the 10-acre mixed-use development, two multifamily communities are envisioned, as well as a Marriott Springhill Suites Hotel and multiple retail and restaurant establishments, according to a city staff report.

The development team declined to divulge construction costs estimated to complete the first phase of the three-story project.

Alliance Residential will serve as contractor and leasing agent for the apartment construction, which will feature controlled access, resort pool, garages and a fitness center. Construction should commence in July and be finished within a year, according to a Titan spokeswoman.

Titan Development and Maestas Development Group will break ground next July on the 74-unit Broadstone Highlands apartments. COURTESY OF TITAN DEVELOPMENT

The Highlands name was chosen based on the name of the original neighborhood that was created in 1886. Back then, it was marketed as Albuquerque’s “Highlands,” because the land was on a 60-foot high bluff  — literally the high lands — east of the railroad tracks. The Highlands name was replaced in the 1930s, with The Heights, which eventually disappeared as the city developed further north and east. By paying homage to the historical naming of the area, the developers hope The Highlands will become a commonplace name like Nob Hill and EdO.

“The Broadstone Highlands is replacing some of the most blighted property in the city,” said Titan Development CEO Ben Spencer. “We expect The Highlands will be one of the most desirable live-work-play areas in ABQ. In addition to all the amenities, our residents and visitors will have access to an Albuquerque Rapid Transit station, and The Highlands will be a walkable and pedestrian-friendly community.”

The Highlands will serve housing demand generated by nearby job centers, such as Presbyterian, the new Innovation District, Downtown employers and the University of New Mexico, according to the staff report. The site is one block north of the Albuquerque Rapid Transit Project.

Presbyterian is a minority partner in the urban infill development on five city blocks, company officials said in an earlier Journal article.

Presbyterian officials said the land was acquired over a 25-year span. The health care system had considered it for hospital operations, but was able to build on the hospital’s existing campus and at Presbyterian Rust Medical Center in Rio Rancho.

By: Steve Sinovic (Albuquerque Journal)

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FedEx Ground is moving dirt around on a 215,000-square-foot distribution center at Santa Teresas newest industrial development, Westpark. The 20 million center is expected to be up and running in the middle of next year. Picture by Lauren Villagran

Work is under way on a new refrigerated warehouse in Santa Teresa that is under construction by a Las Cruces cold storage company.

Valley Cold Storage & Transportation provides refrigerated warehousing and distribution for southern New Mexico’s agriculture businesses. The company announced last summer that it would build a $13.7 million, 105,000-square-foot cold storage facility at Westpark Logistics Center; the final footprint for the project is closer to 91,000 square feet.

Gov. Susana Martinez celebrated the groundbreaking on Monday.

The company’s new unit will create 14 jobs, ramping up to an estimated 33 jobs over the next three years, said Jerry Pacheco, president of the Santa Teresa-based Border Industrial Association.

At Westpark, Valley Cold Storage & Transportation joins MCS Industries Inc., a maker of frames and home décor and FedEx Ground, which is building a $20 million, 215,000-square-foot distribution center in the park.

“Santa Teresa’s Westpark is a little over a year old and we will have close to 600,000 square feet, which is really good momentum,” Pacheco said.

The new industrial park is close to the U.S.-Mexico border and the Santa Teresa port of entry. The region has been a magnet for cross-border logistics companies.

Pacheco said he expects Valley’s arrival to draw other cold storage facilities to the industrial hub.

By: Lauren Villagran (The Albuquerque Journal)

Click here to view source article.