Archives for 2019

October 2019 Commercial Market Trends

November 1, 2019 by mcarristo

View a New Mexico Market Trends Summary Report, which includes October 2019 Commercial Market Trends. This report includes the total number of listings, asking lease rates, asking sales prices, days on the market and total square feet available.

Disclaimer: All statistics have been gathered from user-loaded listings and user-reported transactions. We have not verified accuracy and make no guarantees. By using the information, the user acknowledges that the data may contain errors or other nonconformities. Brokers should diligently and independently verify the specifics of the information you are using.

Does Negative Absorption in One of the Nation’s Largest Lab Space Markets Signal an Oncoming Downturn?

November 1, 2019 by CARNM

Occupancy of office and life sciences space in the Boston-Cambridge market has declined for the first time since the recession in the third quarter.

For the first time since the Great Recession, occupancy levels for both office space and lab space in the Boston-Cambridge metro markets declined at the same time in the third quarter, according Aaron Jodka, Boston director of research with real estate services firm Colliers International. Historically, when Boston, Cambridge and surrounding suburban submarkets have experienced negative absorption at the same time, a recession followed, Jodka notes. However, negative absorption in each of the above markets totaled only about 150,000 sq. ft. each in the third quarter, he adds.
“While there’s negative absorption, it doesn’t feel like the sky is falling, as conditions here are quite strong,” Jodka says, noting that if there is a correction coming, it will be quite mild compared 2009, when negative absorption dipped to 1 million sq. ft. or more in all three local markets.
Lab space vacancy in the Boston metro increased to 6.2 percent year-over-year from 4.5 percent, due mostly to new construction, according to the third quarter 2019 metro office report from Colliers.
At the same time, vacancy in the Cambridge submarket is in subzero territory and asking rents are averaging above $100 per sq. ft., Jodka says. The overall office-lab market experienced negative absorption totaling 479,230 sq. ft. during the quarter.
In predicting the potential for a recession, Jodka also considered current economic conditions, including slowing job growth, the trade war with China, an inverted yield curve, the ISM manufacturing index, which is at its lowest level since 2009, and the oil price spike following an attack on Saudi Arabia’s production facilities. The last two of these factors are, historically, leading indicators of recession. Add to that a potential impeachment process, and the fact that U.S. consumers, who drive 70 percent of the economy, could pull back on spending, Jodka adds.
Meanwhile, Gerry Trainor, executive vice president, capital markets with real estate services firm Transwestern in the Washington, D.C. metro area, says that the local office market is strong, with overall vacancy between 11.0 and 12.0 percent. But, he notes that economists predict a 50-50 chance for recession in 2020 if the trade war continues.
Ian Anderson, director of director of research and analysis for Philadelphia and director of life sciences research for the Americas with real estate services firm CBRE, says that trade tensions are affecting business sentiment, but disagrees that a recession or even a correction is coming within the next year.
“Our analysis of the data, coupled with the sentiment of office brokers nationally, points to no recession over the next 12 months, as there are more jobs available than people unemployed,” Anderson notes. “From our house view of the underlying economic fundamentals, there’s no compelling reason to believe there is material trouble on the horizon. Even in less buoyant markets, like Houston and D.C., job growth and office demand are improving.”
The Fed predicts that U.S. GDP growth will slow to 1.7 percent in the second half of 2019 due to the trade war and slowing job growth, which may take the edge off Boston’s office boom, Jodka says. But no decline is expected in the life sciences sector, which has continued to see large infusions of venture capital funding and strong demand from tenants.
By: Patricia Kirk (NREI)
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Where Are All The Retail-to-Industrial Conversions?

November 1, 2019 by CARNM

While the idea of these projects has been hyped, the reality is that they are scarce, says Cushman & Wakefield.

A Sam’s Club warehouse store in the Chicago submarket of Matteson shuttered a year or so ago when Wal-Mart pruned its locations of this brand. But the facility is still active—it now operates as an e-commerce fulfillment center for the retailer.
This facility’s second life is part of what has been hyped to be a wave of retail-to-industrial conversions that would save some of the struggling class B and class C retail malls.
In reality, though, these projects have been scarce for various reasons. A data point by Cushman & Wakefield shows that retail-to-industrial conversions makeup less than one-tenth of one percent (0.073%) of the total industrial inventory. Of the success stories that do exist, such as the Sam’s Club in Chicago, they tend to be the simpler cases such as a big box transformation into a warehouse, as opposed to a two-story retail mall.
There are a range of reasons why retail-to-industrial conversions remain so nascent, Tray Anderson, C&W’s logistics and industrial lead for the Americas, tells GlobeSt.com.
These include the difficulty in gaining community acceptance, the location of these projects, which tend to be close to densely populated areas, go-dark prohibitions and building design.
Of these, gaining community buy-in is probably the hardest challenge to overcome, Anderson says, especially if the retail center or property has only been vacant for a short period of time. “A community will likely want to keep the retail presence. It will have a hard time believing that it cannot come back or recover.”
Or if the community does accept that retail is no longer a good fit for a location, it will likely prefer some type of mixed-use project, especially if it is an urban infill project, he says. Industrial is usually last on a community’s wish list of projects.
Because there are so few actual case studies on these types of projects, Anderson adds, it is hard to quantify what works and what doesn’t for community buy-in. For example, it is hard to pinpoint when exactly will a community accept that a retailer or retail mall is not coming back. Is that number 10 years? Five? Eighteen months?

What We Do Know

There are, however, some retail-to-industrial conversion projects underway and even though they are few in number they do offer some anecdotal evidence in they might make traction in the future. A report earlier this year from CBRE looked at 24 retail-to-industrial conversion projects across the US.
It found various types of retail-to-warehouse conversions, including demolition of obsolete malls to be rebuilt as warehouses in Baltimore, Atlanta, Chicago, Detroit and several markets in Ohio. Other retail structures were left standing and repurposed for industrial uses, including a former Toys ‘R’ Us in Milwaukee now occupied by a business that remanufactures transmissions, and Sam’s Club’s conversions of several of its stores to distribution centers.
CBRE acknowledged that these projects are a challenge and that community buy-in is a particular concern. But there are some commonalities among the successful projects that are worth examining.
Among these are location—are they sitting at a busy intersection or highway interchange? Another advantage: Site access. Standalone big-box stores, in particular, offer backend docks and easy access for trucks. They also have the high ceilings needed for distribution uses.
“These types of conversions were once unthinkable, and now they’re not only happening, they’re gaining traction,” said Adam Mullen, Americas leader of CBRE’s industrial and logistics business, in prepared remarks when the report was issued.
By: Erika Morphy (GlobeSt)
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Stay Informed & Get Out to Vote!

October 28, 2019 by CARNM

Use Viante as a tool to become an informed voter!

Viante is a nonprofit funded by you for you. Only individuals can join, ensuring that special interests do not have an influence in their work. Their goal is to empower using information about which legislators are enhancing or eroding common ground principles that everyone can agree on.
Become a member of Viante and get access to their 2019 Legislative Scorecard and become an informed voter. Learn more about how your representatives are voting on issues that matter to you.

CARNM encourages you to get out & vote!

Early Voting:

Early voting begins October 19, 2019 and ends November 2, 2019.

Monday – Saturday from 8:00 a.m. to 8:00 p.m.

View early voting locations here.

Election Day:

Election Day is November 5, 2019 from 7:00 a.m. – 7:00 p.m.

View election day voting locations here.