Softening rents and the slow pace of construction has helped the commercial office market in Santa Fe, and the vacancy rate now is below 10 percent, according to Allen Branch.
Branch, who recently published his 2014 commercial real estate reports, pegs the overall commercial vacancy rate at 9.28 percent, while the retail vacancy rate citywide is below 5 percent for the first time since the start of the Great Recession.
In both markets, lower prices have helped boost lease renewals and new activity.
Branch notes that the vacancy rate for downtown retail stands at 4.8 percent in part because rents have come down from a peak of $29 per square foot in 2007 to $23.89 per square foot today.
“Due to confidence not seen since 2006, investors and tenants are once again willing to buy and lease,” Branch writes. “In fact a flurry of commercial activity has taken over the City Different despite headwinds of a lagging overall job market.”
With regards to downtown office space, Branch notes: “The several contiguous blocks that were available downtown have been slowly broken up and are being absorbed. Downtown’s 2014 vacancy rate plummeted to 8.48 percent [for office space] as rental rates dropped across the city.”
He said the market benefited when “several leases were restructured to reflect the new market realities.”
The area in the city with the lowest vacancy rate for office property remains the South Capitol neighborhood, which includes the area around St. Francis Drive and Cordova Road, which has less than 3 percent vacancy.
For retail space, the lowest vacancy rate is on the city’s west side (under 1 percent), where land available for new growth is very limited.
Other highlights:
• Office space in the medical district around Christus St. Vincent Regional Regional Medical Center is expected to grow by 25 percent come 2021, and the neighborhood now has a vacancy rate of just 4 percent.
• The south side still has the highest office vacancy rate (about 19 percent), and the area remains plagued by large empty buildings and the slowdown in government spending, Branch says.
• Retail on the south side remains strong even though square footage has doubled since 1990. Rents on the south side average $15.50 per square foot, and the vacancy rate is just above 4 percent.
Going forward, Branch forecasts stable rents as vacancy rates decline and new construction starts to take hold in many areas with an uptick in the economy and the construction industry.
By: Bruce Krasnow (Santa Fe New Mexican)
Click here for source article.
By: Bruce Krasnow (Santa Fe New Mexican)
Click here for source article.
