Archives for January 2020

3 Questions with CARNM’s New President

January 31, 2020 by CARNM

Longtime Albuquerque commercial real estate broker Clay Azar will be CARNM’s president in 2020.

Azar, a broker with local firm Metro Commercial Realty, recently represented local aerospace manufacturer Sun Country Industries signing a lease to occupy 40,000 square feet at 7601 Los Volcanoes Road NW, the site of a former FedEx Freight building.

CARNM’s mission is to provide its 500-plus members across New Mexico commercial services, information exchange and educational opportunities while being a voice and resource for its membership, Azar said. CBRE’s Debbie Dupes holds the title of president-elect for CARNM. Azar spoke with Business First on what led him to become CARNM’s president and the organization’s priorities in 2020.

Metro Commercial Realty Inc. ranked No. 14 on Business First’s list of largest commercial real estate firms with $18.78 million in commercial transaction volume in 2018.

When did the opportunity to lead CARNM present itself? What attracted you to the position?

I was asked at the end of 2018 by the now past president Sean McMullan. I was honored and attracted to the position because I truly love the industry and the people involved. Our commercial brokerage community here in New Mexico is very special and different from other markets. We are a very close, cooperative group where 99% of us play nice and just want to get a deal done.

What are some of the goals and priorities you see for CARNM this year? What influence do you hope to have on the organization?

Growing CARNM’s involvement in advocacy statewide and locally, on pro-business and pro-employment growth issues while helping our members stay informed. There is no better economic developer than a commercial real estate broker as our very livelihood depends on the success and growth of businesses. So, when government slows that down, we need to be more proactive instead of reactive, while trying to work with our community to change what needs to be changed and stop efforts that will damage our local economy.

Are there any unique opportunities that are presenting themselves now? What challenges exist?

We need to find better ways to work with our local governments to make the planning and development processes quicker and more efficient. The overall process takes longer than it needs to and there are a lot of uncertainties on both sides when working through the current system. We also need to inform not only our clients but also our community of what is going on behind the scenes and what is in the pipeline of local politics. This is one of our key focuses for not only this year but going forward in the future. We currently plan to grow an effort of teaming up with business owners and other members of the business community to strategize this effort. If we truly care about our community, we need to get more involved proactively, instead of only reacting to issues as they come up.

By: Ron Davis (ABQ Business First)
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January 2020 LIN Properties

January 29, 2020 by CARNM

At the January 2020 LIN Meeting held on January 22, 2020, 11 excellent properties were presented.
Thank you for presenting properties and attending the meeting!
Thank you to Ed Anlian and Anne Apicella who hosted:
Granada Square | 4101-4273 Montgomery Blvd. NE | Print Flyer
View January 2020 LIN properties here.

Multifamily Faces a Packed Development Pipeline

January 29, 2020 by CARNM

The sector is expected to add 330,000 new units in 2020, up from 304,000 a year ago.

Apartment developers have not been shy about bringing new product to market in recent years. And early indications are that 2020 will be another boffo year. The question is after several big years of hefty additions whether the market can digest the units that are in the works.
“The volume of apartments on the way in 2020 certainly could test the market’s ability to absorb a big block of additional units in a short time frame,” says Greg Willett, chief economist at real estate technology and analytics firm RealPage, Inc.

This late in the real estate cycle—after more than a decade of economic growth—many investors are making conservative choices, wary of a potential downtown. But apartment developers plan to make 2020 one the busiest years in the last decade for new construction. They continue to focus on the largest metro areas—especially “gateway” cities—where strong local economies can help fill new apartments. The amount of construction is being facilitated by the fact that lenders remain willing to provide construction financing even with so many projects on the books.
The number of new apartments likely to open would be even higher in not for widespread delays that are likely to force thousands of apartments to open in 2021 rather than 2020. “Construction labor is reportedly tight,” says Andrew Rybczynski, managing consultant for CoStar Group. “That powers those delays.”

Including these delays, developers are expected to open 330,000 new apartments in 2020, according to data firm CoStar Group. That’s up from 304,000 in 2019. It is also more new apartments than any other year in past decade, except for the peak years of 2017, when developers opened 352,000 new units and 2018 when they opened 332,000.
That number would be even higher if not for widespread construction delays. “Builders give us optimistic time frames on how long it will take buildings to complete,” says Andrew Rybczynski, managing consultant for CoStar Group. “If we look at our raw data, we find that we have been told that well over 400,000 units will deliver in 2020.” CoStar expects that thousands of those apartments won’t really open until 2021.
Rising material costs are another factor affecting development, but not enough to slow construction.
Other research companies expect even more new apartments than CoStar—ReaPage estimates the number of units opening as 370,942 in 2020. That’s up 50 percent from 246,779 counted by the firm in 2019. Both years are a substantial increase from the rate developers opened new apartments over the last decade of roughly 200,000 a year.
Construction delays pushed thousands of apartments that had been scheduled to open in 2019 into 2020. “While that will happen again in 2020 to some degree, current expected delivery timing is heaviest in the first half of the year,” says Willett.
Their enthusiasm to build appears to have faded somewhat for projects scheduled to open further in the future. The number of unit now under construction that will open in 2021 is less than the number likely to open in 2020. “It currently looks like the completion volume will cool substantially in 2021,” says Willett.

Big cities draw developers

Developers continue to concentrate on the largest 50 metropolitan areas. In 2020, developers will again open 85 percent of their new apartment in these places, compared with just 15 percent opening in the next 100 largest markets in size, according to RealPage. Within the top 50 metro areas, about 25 percent of the apartments scheduled to open in 2020 are in the urban core and 75 percent are in other parts of the metro area.
Developers sharply increased the number of apartments they plan to open in gateway markets in 2020 compared to 2019. For example, the completions scheduled for the three San Francisco Bay Area metros by more than 158 percent, according to RealPage. The number of scheduled completions for 2020 is also more than double the number in 2019 in Los Angeles and Boston and nearly double in Washington, D.C.
“It takes longer to get product from the drawing board to actual completion in those markets than it does in the Sun Belt,” says Willett. “Thus, many of this year’s new supply in gateway metros was initiated back when U.S. rent growth peaked in late 2014 through early 2016.”
By: Bendix Anderson (NREI)
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CBRE Research Points to Steady Demand for Large Warehouses

January 27, 2020 by CARNM

In an analysis of the largest 100 U.S. industrial & logistics leases by square footage for 2019, Los Angeles-based industrial real estate firm CBRE reported this week leases inked in the food & beverage industry, as well as in e-commerce and logistics led the pack, with some varying shifts.

In an analysis of the largest 100 U.S. industrial & logistics leases by square footage for 2019, Los Angeles-based industrial real estate firm CBRE reported this week leases inked in the food & beverage industry, as well as in e-commerce and logistics led the pack, with some varying shifts.
CBRE’s research paper, entitled “Dealmakers: E-Commerce & Logistics Firms Drive Demand for Large Warehouses in 2019″ found that e-commerce and logistics companies represented 52% of the 100 largest warehouse leases by square footage in 2019, coming in at more than 45 million square feet and ranging from 598,000-to-2.5 million square feet.
The firm observed that even though “major players dominated most of the deals by e-commerce companies in 2019, growth also came from traditional retailers that implemented omnichannel strategies to satisfy the rise in U.S. online sales.”
While e-commerce and logistics represented 52% of the 100 largest warehouse leases by square footage in 2019, it was down from 61% in 2018, CBRE stated. But even with that 9% annual decline the firm said that e-commerce and logistics represented more leases—54—and square footage—45 million—within the top 100 than the next closest category, which was wholesalers, at 18 leases for 15.2 million square feet.
CBRE’s Associate Director of Industrial & Logistics Research Matt Walaszek said in an interview it was not surprising to see the volume of deals decline slightly in the e-commerce category because new supply was down 5% from 2018.
“So it’s consistent with the overall slower growth we’re seeing in the market,” he explained. “With that said, there still is a lot of activity in this category as large retailers and e-tailers cater to their customers with shorter delivery times. We expect this trend to continue in 2020, given that consumer sentiment in the U.S. is still quite strong.”
As for the biggest climber by sector in CBRE’s report, the food & beverage sector, spurred on by the ongoing expansion in grocery delivery, significantly upped its share from 2018 to 2019, with 13 of the top 18 industrial leases, accounting for a total of 13 million square feet. This is up from 2018’s nine leases for 8.8 million square feet, an increase of more than 30%.
Walaszek said that food & beverage users are extremely active, which is reflected in the aforementioned numbers.
“As the grocery industry continues to evolve and modernize, we expect demand for freezer and cooler space to accelerate in the foreseeable future,” he said.
CBRE’s research also noted that 50 of the top 100 leases were for warehouses of 800,000 square-feet or more, which it said reflects continued demand for large, tall, modern buildings, adding that these transactions were allocated over 35 markets and the Inland Empire, PA I-78/81 Corridor, Memphis, Dallas/Ft. Worth, and Atlanta representing the largest volume of transactions by square footage.
From a supply chain perspective, Walaszek noted that the move towards large, tall, modern buildings is indicative of companies ramping up their distribution network to service customers more efficiently.
“This type of product helps entities like e-tailers, home goods companies and logistics operators fulfill orders as rapidly as possible,” he said. “Keep in mind that, although there is still a demand for big box distribution, we are still seeing robust demand for smaller facilities strategically located in major metro areas. These two trends support each other in an evolved ‘hub-and-spoke’ model.”
By: Jeff Berman (Supply Chain)
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