From Walt Arnold, CCIM, SIOR - Albuquerque, NM
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Bob Clark, News Radio 770 KKOB: Walt you wanted to talk about the commercial real estate outlook from the National Association of REALTORS.
Good morning Bob. Yes I wanted to briefly review some numbers from a national perspective for commercial real estate. The economy has sign of gaining some strength with industrial production and manufacturing employment showing some slight increases, at the same time commercial real estate is showing mixed results. Fundamentals still remain weak, investments are down and the volume of distressed assets has increased. The consensus is that commercial real estate will likely lag in the economic recovery. In general, vacancy rates will be up, net absorption of space will be down, completion of construction projects will be down and rent growth is mixed but mostly down.
On a local note Albuquerque has a vacancy rate of 19.5% in office, 14.8% in industrial, 10.6% in retail and 6.6% in multifamily.
Bob Clark: You mentioned that the Society of Industrial and Office Realtors also had some input, what did they have to say?
86% of SIOR’s have continued to report that prices are below replacement costs. That is an opportunity for buyers looking for properties. Development activity is virtually non-existent. Discounts and even deep discount exist from landlords and leasing activity remains below historic levels with vacancies high and rents low.
SIOR has an index which measures performance of the office and industrial markets. Equilibrium is 100 points and the current index is 35.5. That is significantly off the highest level in 2007 . SIOR’s also looked at cap rates. Office and industrial cap rates were 8.5% and retail was 7.4%. In summary, the markets are still in turmoil but as this year progresses we will hopefully see an easing in the credit industry as we begin to pull out of this recession.
Bob Clark: Walt what else do you have for us and how can people contact you?
Thanks Bob, I would like to mention a property that is under replacement costs and that is 9920-10000 Trumbull SE, just south of Central and west of Eubank, a 19,000 square foot industrial building on just over one acre for $720,000. The other is Corrales Overlook in Rio Rancho, an office condo building shell at $129/square foot. That project is on Jackie Rd, near Southern and 528. This is a great opportunity in Rio Rancho.
For further details call Walt Arnold at (505) 256-1255 or check us out at WaltArnold.com. Sperry Van Ness is a full service commercial real estate company able to assist in commercial sales, leasing, property management, tenant representation and site selection. Call us for a free market analysis of market information. Thanks Bob and have a great week!
If you have comments or questions about the local or national commercial real estate outlook, or any of our services or listings, please contact me by leaving a comment below, or emailing me at walt@waltarnold.com. Give us your feedback.
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