Archives for May 2022

From the outside, the facility looks as if it can fit a small town into it. And it probably can.

Amazon’s newest fulfillment center, which opened on Albuquerque’s West Side last fall, spans about 2.5 million square feet. Located at 12945 Ladera NW, the facility was built using about 20,000 tons of steel – equivalent to the amount of steel in three Eiffel Towers, said Dan Monson, assistant general manager for the fulfillment center.

The facility also has about 10 miles of conveyance and over 4,000 robotics drives, which “serve to make the lives and jobs of our associates easier and safer,” Monson said. That ease in work from the help of technology allows the facility to process 10 packages per second.

Media members and city and state officials joined Amazon on Wednesday to tour the fulfillment center – the first official tour, Amazon officials said – to get a look into how the company that employs more than 3,500 in the state operates at its largest facility. The company also presented to the Economic Forum of Albuquerque at Hotel Albuquerque Wednesday morning, giving an update on the company’s happenings in the state.

“We’re bullish on New Mexico,” said Amazon economic development policy manager for the Mountain West region, Sam Bailey, whose company also has nearby facilities for sorting and delivery. The company is also planning another massive fulfillment center in Los Lunas.

Local impact

Amazon officials said Wednesday that the company has invested more than $250 million in the state since first expanding into New Mexico.

Bailey said the company typically gravitates toward states that it can create a “synergy” with so that it can become a “hyperlocal company.” He said there is room to invest more into New Mexico but that there are no plans yet outside of finishing the fulfillment center in Los Lunas.

“When we start to evaluate where customer demand is coming from, we want to be able to service them as quickly as possible,” Bailey said. “And so, with New Mexico, we’ve validated this as a strong market for customers, and the sites that we choose connect us to our customers and logistics supply chain so we can do that in an efficient manner.”

The company currently has a fulfillment center, sortation center and delivery center on Albuquerque’s West Side and is planning another 1 million-square-foot facility in Los Lunas.

Bailey told the Journal that the new fulfillment center south of Albuquerque will employ about 600 workers when all is said and done. He declined to comment on a launch date for the new facility and said Amazon has yet to hire employees for it but said that supply chain issues have affected the timeline of the build-out.

The fulfillment center in Los Lunas will deal with non-sortable items – typically larger products such as televisions.

Asked if Amazon sees any opportunities for expansion in New Mexico, Bailey said “our great experience in New Mexico allows us to see future opportunities.”

Benefits for employees

While hiring has been a challenge for many New Mexico employers, Bailey said Amazon has had no trouble bringing on local workers.

Amazon, whose goal is to be the most “employee-friendly” company, offers up a variety of incentives to its workforce, including benefits for its full-time employees, Amazon officials said, on top of pay that starts at $15.50 for entry-level positions.

The West Side facility offers a wellness center for employees, helping them maintain a healthy life in and outside of work.

The facility includes vending machines that have items such as Tylenol, ibuprofen, Tums and cough drops – all available free of charge with a swipe of an employee badge. And, if an employee forgets their vest for work, well, they can get one from a vending machine, too.

Amazon says it offers paid maternity and paternity leave and, as of last September, began offering employees who have stayed with the company more than 90 days a full-ride scholarship to pursue an associate’s or bachelor’s degree.

“That benefit is not a reimbursement. … It’s Amazon paying with you as you go to ensure that you’re not taking on that financial burden,” Bailey said. “Some may see that as a fool’s errand. We see this as a great opportunity where we invest in résumé building (and) transferable job skills. Our hope is that they stay with us.”

Source: “Robotics, Medical Vending Machines, and 20K Tons of Steel: A Look Inside Amazon’s ABQ Center“

Rise in Land Sales, Prices Outpaces Commercial and Residential Growth

Land sales rose an average of 6% in 2021, surpassing the sales growth of other commercial and real estate sectors, while land prices rose nearly 7%, second only to the price growth of single-family rental properties, according to the latest Land Market Survey from the Realtors^® Land Institute (RLI) and the National Association of Realtors^® Research Group.

The survey results show that as some economic effects of the COVID-19 pandemic began to abate during 2021, the land market continued to thrive as a vibrant part of real estate buying and selling.

“Land continues to shine as a vital asset, a sound investment, and a key part of the overall real estate landscape,” said RLI 2022 National President Dean Saunders, ALC, CCIM. “The upward path of growth we saw in sales and value over the past year demonstrates that land remains of paramount importance for landowners, sellers and buyers alike.”

Lawrence Yun, PhD, Chief Economist and Senior Vice President, Research for the National Association of REALTORS^®, said, “Even with rising interest rates, I expect sustained growth in land sale and prices this year, driven particularly by the demand for multifamily and single-family housing needs. The shift from just-in-time to just-in-case inventory management amid supply chain issues will continue to drive the demand for land for new warehouses. Moreover, agricultural grain prices will remain elevated due to the war in Ukraine and thereby boost demand for farmland.”

The annual Land Market Survey is a tool for landowners and land real estate professionals in all sectors of the business to use for benchmarking and as an informational resource when conducting business. This year marks the eighth consecutive year that the survey has been conducted to reveal current trends and the ever-changing state of land markets within the industry. The Realtors^® Land Institute has made the full survey results available for free to the public on their website at rliland.com/about-realtors-land-institute/land-markets-survey.

Source: “Land Real Estate On Upward Curve“

More funds are investing in this space.

Self-storage owner and manager Storage Post is receiving $500 million in capital from a fund sponsored by Almanac Realty Investors, a business unit of Neuberger Berman.

The company will use the funds to accelerate its acquisition of self-storage assets in the most attractive markets in the US.

Storage Post’s vertically integrated investment strategy involves acquisitions, repositioning, and development.

Redimere Advisors LLC was exclusive advisor to Storage Post. Ankh Real Estate Inc. acted as a subadvisor to Redimere.

‘Horsepower and Momentum’ Driving Interest

Dana Summers, Senior Director at Stan Johnson Company, tells GlobeSt.com that this capital infusion “further exemplifies the horsepower and momentum we’re seeing in the self-storage space. It’s just another example of institutional capital making a big bet on the self-storage sector and putting $500 million behind a proven industry-leading storage owner in an effort to grow their portfolio and solidify their position in the industry.

“Furthermore, this shows how the storage industry has become much more mainstream and much more sophisticated with institutional players and capital. There is large income potential in the industry with very low overhead, and this has caused the largest of institutional investors to look at this space if they aren’t already in it.”

Smaller investors are interested in the space as well, says Steven Weinstock, national director with Marcus & Millichap’s Self-Storage Division. “We continue to work with an influx of private clients looking to expand their footprint in the self-storage space as they grow from small to high-net-worth organizations through the acquisition and management of these institutional-quality assets,” he tells GlobeSt.com.

An ‘Extremely Resilient’ Asset Class

Cory Sylvester, Principal at DXD Capital, tells GlobeSt.com that institutional capital is looking for an opportunity in self-storage “as it has shown to be an extremely recession resilient asset class, along with seeing unprecedented growth since the onset of the pandemic.”

Because the equity checks on a deal-by-deal basis tend to be much smaller than traditional real estate asset classes, these institutional players are looking for partners who can execute at scale, Sylvester said.

“We are seeing that trend in our business, and it has become evident with the recent string of announcements that institutional capital is aggressively seeking a partner in the space.”

Source: “Capital Continues to Flood the Self-Storage Sector“

The Kansas City Fed team says slower population growth, immigration curbs and Boomers dropping out have created a labor force gap.

According to a new report from an economic research team at the Federal Reserve Bank of Kansas City, an estimated 2 million workers are “missing” from the US workforce, compared to pre-pandemic participation rates, despite strong demand in the labor market.

The share of the US population that is working or actively looking for a job—known as the “participation rate”—was 62.2% in April, which is one percentage point below pre-pandemic levels, the report said.

The KC Fed report said the actual US labor force is an estimated 3.6 million smaller than it was before the pandemic, but only about 1.6 million of the shortfall can be attributed to demographics including an aging population and declining populations levels, leaving about 2 million workers in the “missing” category.

The research suggested that two-thirds of the missing workers are Baby Boomers who have dropped out of the workforce, while a third are under the age of 55. It said the 55-64 age group demographic is approaching pre-pandemic levels in its participation in the workforce.

“Increases in the size of the aggregate labor force in the near term will depend on the pace of recovery in the labor-force participation rates of older groups and further increase in the prime-age labor force participation rates,” the report said.

The KC Fed report was accompanied by a chart that illustrated steady growth in the US labor force between 2015 and the beginning of 2020, increasing from 156 million workers to more than 164 million, then plunging back to 156M in Q1 2020.

Based on the trend between 2015 and the outbreak of the pandemic, the chart projected that the US workforce was on a track to hit 168M by 2022; currently totals about 164M.

Although the US population (age 16 and older) grew by 3.8 million between 2020 and 2022, the pace of population growth was slower than its pre-pandemic trend, the report said.

“Had the US population continued to grow at its 2015-2019 pace after February 2020, an additional 1.8 million people would be living in the US, many of whom would have joined the labor force,” the report noted.

The KC Fed report said immigration restrictions imposed at the US border during the pandemic resulted in 2M fewer working-age immigrants living in the US.

Source: “Shortfall of US Workforce Estimated at 2 Million“