Archives for 2023

Rigorous risk management needs to be the watchword for lenders in the world of commercial real estate amid the uncertainties afflicting most segments of the market, according to CoStar. “The rapidly changing market conditions underscore the importance of monitoring market trends and LTV [loan to value] with live data as an essential factor in managing credit risk effectively,” advised CoStar’s November 2023 update.

In the retail sector, smaller seems to be better. The average size of a new retail lease in the first 10 months of 2023 was 3,265 SF – the lowest level since 2007, and below the 10-year average of 3,500 SF. Yet even though leases for spaces of less than 2,000 SF held relatively stable compared to 2022 with more spaces available, that is not expected to continue.

CoStar predicts demand for such spaces will fall 2% year over year with an even larger drop of 7% for spaces over 2,000 SF in the same period. Meanwhile, a lack of available supply has hurt leasing of large and mid-sized spaces over 10,000 SF along with a drop-off in new construction starts.

The hospitality sector has 146,000 rooms under construction and a further 40% planned. This would bring the total to 242,000. About one-third of all rooms under construction are in the top 25 largest markets “with possible supply pressures mounting in New York, Phoenix, Tampa, and more,” CoStar commented. Investors are looking into attractive markets like Atlanta, Houston and Dallas as demand recovers.

However, while room demand is rising again in most hotel segments, economy hotels are seeing a continuation of the decline that began in April 2022 as inflation hits. Rooms sold in the economy segment have slumped from 285 million in 2020 to 265 million this summer.

Nationally, new apartment supply caused a 0.4% decline in October 2023 rents compared to September, when they fell 0.5%. However, on a year-over-year basis, rents rose 0.7% in October “illustrating the continued slowing trend seen over the past year,” CoStar reported. The worst hit markets were in the West and South, where rents fell 0.6% and 0.5% respectively. Indeed, rents fell in all but six of the top 50 markets in October.

As for offices, “five years into the current downturn, 84% of markets will still be at least 10% down from their recent peak, making loan workouts challenging,” CoStar projected. The outlook for industrial properties is brighter. CoStar expects them to remain near peak values and recover at a much faster pace than during the Global Financial Crisis of 2008.

Source: “A Snapshot of Changing Market Trends“

Popular fast food chain In-N-Out Burger, which recently announced it was coming to Albuquerque in 2027, has purchased a 2-acre plot for $2 million from the University of New Mexico.

The land, located at the corner of Gibson Boulevard and Interstate 25, is part of the South Campus Tax Increment Development District (TIDD), a 340-acre area pitched as a place poised to offer research buildings, retail and other amenities.

“This addition marks a significant step in our ongoing development and growth, contributing to job opportunities and the enhancement of our community,” Teresa Costantinidis, vice president for Finance and Administration at UNM, said in a statement. “It aligns perfectly with UNM’s commitment to advancing New Mexico, including promoting sustainability, economic development, and community engagement.”

David Campbell, executive director of Lobo Development Corp., the nonprofit responsible for overseeing the TIDD, said as of today, In-N-Out has not given any update in terms of construction or a general timeline.

Campbell also said talks surrounding the land deal started “several months” ago, but did not know the exact timeline due to him entering his position after it was in motion.

In-N-Out is the second fast-food chain to buy land with the intention to build a new location at the TIDD, following Raising Cane’s in October.

The popular California-based burger chain announced Nov. 7 it was coming to New Mexico for the first time in 2027. The location will be service by a distribution facility in Colorado Springs, Colorado.

Source: “In-N-Out buys land from University of New Mexico for $2 million in South Campus TIDD“

Former principal of Colliers New Mexico-El Paso joins CBRE as the firm’s new vice president.

Now in his second stint with the firm, Scott Whitefield is specializing in office landlord and tenant representation with CBRE. Whitefield previously served as the company’s vice president in 2007 before pursuing a nine-year career at Colliers International. During that time, Whitefield leased more than 3 million square feet in transactions for landlords and tenants across 37 cities.

Prior to immersing himself in the world of management and brokerage, Whitefield served in the Canadian Armed Forces and was an executive protection agent for high-profile clientele. During his time in the military, Whitefield taught effective speaking, instructional techniques and leadership.

In addition, Whitefield is a registered instructor on letters of intent for the Commercial Association of Realtors New Mexico (CARNM). Whitefield said he enjoys teaching because it allows him to express himself and mentor others.

A self-proclaimed problem solver, Whitefield said he is looking forward to diving into his new role. Currently, he serves on the board of directors for the National Association for Industrial and Office Parks.

Albuquerque Business First sat down with Whitefield to hear about recent trends in the real estate market and the importance of community.

This interview was edited for brevity and clarity.

Albuquerque Business First: What was your experience at Colliers like? 

Scott Whitefield: I was there for 10 years. It was like working with a bunch of friends. It was very good and very rewarding. I had a leadership role in that particular company and I enjoyed every minute of it. I just did not want to be in a leadership role anymore and wanted to return back to just pure brokerage. So, that’s what I did.

What are your overall career goals moving forward? I want to establish my team as the forefront of office brokers in New Mexico, specifically, because we’re not just doing deals in Albuquerque, we’re doing deals in Santa Fe, El Paso, Los Lunas and Las Cruces. We’re not just anchoring ourselves to one city. This is a fabulous state and a great region, and we want to be a part of whatever we can be a part of moving forward.

Do you have any advice when brokers are doing deals or trying to negotiate these transactions? It really does rely a lot on things like patience. It relies a lot on the interaction with other people. The skill of listening is so valuable in what we do that I think sometimes it is missed.

How do you relax when you’re not in the office? I love playing golf at different golf courses. UNM South is one of my favorites. It’s the first golf course I played in New Mexico. My wife and I also travel quite a bit. We have been married for almost 32 years and we enjoy traveling, so we do that whenever we can. Our next big trip is probably going to be Scotland.

What are some of the tasks and responsibilities you’re kind of now tasked with? Since the pandemic, it’s a lot of right-sizing. So, you run into a situation where somebody’s in too much space, or not enough space based on their business model and we try to make that work for them. My No. 1 role in the grand scheme of things is a problem solver. If you come to me with an issue, me and my team will work to solve the problem.

Source: “New Mexicans to Know: Scott Whitefield becomes CBRE vice president, again“