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Icon Cinemas to take over former Montgomery Plaza theater

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By Ron Davis – Reporter, Albuquerque Business First
September 15, 2021

The show will go on at Montgomery Plaza.

More than a year after Cinemark Movies 8 announced it was closing at Albuquerque’s Northeast Heights shopping center, Icon Cinemas will take over the space at 4591 San Mateo Blvd. NE later this year.

Scott Goodman, a vice president at Goodman Realty Group, which is the landlord of Montgomery Plaza, confirmed the deal to Business First.

“When the word was that this [property might be coming back on the market], [Icon] jumped on it immediately … because how many times does a vacant movie theater come on the market for sale when you’re trying to expand a movie theater?” Goodman said.

Goodman anticipates Icon will open in late November or early December as some minor renovations are completed.

NAI SunVista’s Keith Meyer, Alex Pulliam and Jim Wible were the listing brokers and represented Goodman Realty in the transaction. Pulliam confirmed to Business First that Icon closed on its deal earlier this month.

Click here for the rest of the Albuquerque Business First story.

 

NAI SunVista advisors Keith Meyer, Jim Wible and Alex Pulliam were the listing brokers and have this to say about the project:

Keith: “This was a challenging opportunity in that the location, zoning and parking were very desirable, but the special purpose building with the sloping floors to facilitate the cinema use made it difficult to determine if the property could cost effectively be redeveloped or if it should be torn down. Ultimately that decision didn’t have to be made as the Buyer was looking to expand with their novel cinema offering. The good news is that the Buyer and Seller and the consumer will all be beneficiaries of this opportunity. “

NAI SunVista is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.

Spatial Awareness: How post-pandemic office spaces are evolving

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by Shelly Branscom, CCIM 

As we approach the height of summer, I am thrilled to honor all dads this Father’s Day.  Moreover, my soul is content to celebrate the freedoms our founding fathers fought so hard to get for all citizens of these great United States.  Happy 4th of July!  For me, gathering with family and friends, children giggling, and pets napping are all components of both of these celebrations.  They define freedom, love and satisfaction in my life.

The commercial real estate industry continues to be robust.  As New Mexico reaches our goal of 60% vaccinated, more and more employees are returning to the office.  You might be asking, what is the outlook for office space?  Shrink or expand?  In the short term, we do not expect big pendulum swings in either direction.  In fact, business travel is rebounding ever so slowly continuing to require the need for Zoom or Microsoft Teams meeting platforms.  In Albuquerque, we will not really realize the effect of the pandemic and whether businesses will shrink or expand until the end of Tenants’ existing lease terms.  Landlords are grateful those Lease Terms will expire at varying dates versus all at the same time.

One thing we do know about office is the amount of space employers are leasing per employee is raising as employers enlarge the amenities and flexibility being provided in an effort to attract talent and create their desired culture.  Rick D’Amato, design director of workplace at LPA Design Studios says they are “designing spaces to be completely flexible from a technology and infrastructure standpoint and anchoring that design around how companies and their employees operate.  This allows everyone to work exactly the way they want at any given time in a seamless way.  Giving employees the freedom to choose an optimal workspace for any given task results in immense user satisfaction.  This is an important lesson we’ve learned from the pandemic and it’s critical that companies take advantage of it.”  D’Amato went on to say he “expects that companies will need to increase shared spaces and common areas to accommodate hybrid work models as there is going to be a lot more shared usage of space as people return to the office in our new hybrid working environments.”  Flexibility is key.  What works today may not be the same as what works months or years from now.

Here in the Albuquerque metro area, there are a number of industrial developments in the planning stages and working their way through the City and County approval processes.   The lack of industrial inventory has caused a tremendous amount of pent up demand.  As such, we are noting that some larger retail vacancies are being converted to industrial uses.

Residential housing “on market” inventory is at an all-time low.  The median asking price in the Albuquerque metro area has increased from +/- $240,000 to +/-$270,000.  Several members of the residential real estate community have indicated homes are selling over asking price due to the number of multiple offers received.  Talk about a seller’s market!  Nationally, home sales are up 11% over May of 2020 indicating continued strength in the housing market.  However, reports indicate nationally home sales were down 3% between April and May, 2021.  Might this be the start of a turning tide?  Perhaps nationally; albeit in New Mexico, I believe it will be a number of months before we see our tide turn.

As you celebrate this Independence Day, will you be one of the thousands who are numbers of leisurely traveling?  Family gatherings are on the rise.  Take time to enjoy every minute with your family, friends, children, grandchildren and 4 legged friends this Independence Day!

Shelly Branscom, CCIM is an NAI SunVista commercial real estate specialist who provides substantial long-term strategies and business planning services to her clients.  She prides herself on thinking outside the box, enabling her to contribute unique solutions and outcomes specific to each of her clients.  Learn more about Shelly and her listings.   

NAI SunVista is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.

More Evidence That Reducing Office Space Is Losing Its Appeal

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By Les Shaver
June 14, 2021

Add yet another survey to mix that attempts to decipher how office tenants are thinking about space after the pandemic.

In a survey of 3,115 US office space decision-makers and influencers, BOMA International (in conjunction with Brightline Strategies and supported by a grant from Yardi), 55% of tenants said they were reassessing space needs. That was a decline from 61% in BOMA’s Q4 2020 survey.

Click here for the rest of the Globe St story.

The Linneman Letter, Summer 2021

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The Linneman Letter is a highly regarded “one-stop-shop” quarterly publication for commercial real estate investors, as well as anybody seeking to understand today’s ever-changing economic and geo-political environment. Dr. Linneman, the founding chairman of the Wharton Real Estate Department, taught real estate and finance at the Wharton School of Business for over three decades. The Linneman Letter is an extension of his lectures and teaching style. While there is an extensive depth and breadth of content in The Linneman Letter, it is written in an easy-to-read style, as if “Professor Linneman” is speaking to our readers.

The preview of the Summer 2021 issue is available here.

NAI SunVista is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.

Q2 2021 Retail Market Report

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Affordable real estate prices, a low cost of living and doing business, and a great quality of life are making Albuquerque a key destination for money makers and commercial property investors in the second quarter of 2021.
And the market shows no signs of slowing down, with homes going for record high prices and newly-listed property going under contract in less than 30 days which means more rooftops to fuel needs for retail city wide

To view the full Q2 2021 Retail Market Review, click here

 

The Retail Team Q2 market research and data is compiled by NAI Sun Vista’s Information Strategist, Frankie Hermosillo. Frankie assists in the identification, evaluation, and monitoring of investments as well as researches and maintains databases of economic and real asset-specific market data/metrics.

Is CRE Becoming More Inclusive?

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By Therese Fitzgerald , Commercial Property Executive
July 23, 2021

NAI Global’s Diversity Equity & Inclusion Council held a webinar on the status of progress in the commercial brokerage field.

 

In Atlanta’s biggest lease of 2020, T. Dallas Smith & Co. helped Microsoft Corp. lease 523,000 square feet at Atlantic Yards. T. Dallas Smith is a boutique brokerage firm and Microsoft is the second-largest corporation in the world. But the assignment was noteworthy for another reason as well. T. Dallas Smith is a Black-owned firm, and Black people are still vastly underrepresented in commercial real estate brokerage.

Click here for the rest of the Commercial Property Executive story.

Genieve Posen, representing the Land & Industrial Team at NAI SunVista, is featured in this article. In addition to Genieve’s professional insights, she is known for her ability to connect people to the right location. With a background in commercial site planning, master planning and urban development, she brings vision to value for her clients. For more information on land development opportunities, industrial/warehouse space and other asset classes, contact Genieve Posen.

NAI SunVista is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.

Unstoppable Forces, Immovable Objects

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By Riley McKee, NAI SunVista Land and Industrial Advisor

What happens when an unstoppable force meets an immovable object?

This long-debated paradox is nothing more than a mind game, but occasionally, real-world circumstances align that present a similar conundrum.

The industrial real estate market in Albuquerque, New Mexico is a good example.

The seemingly unstoppable force of declining vacancy rates is rapidly approaching a showdown with the heretofore immovable object that is the near total lack of new construction. Pressure between the two has been mounting for years with relief—in the form of higher lease rates or lower construction costs—long awaited.

That wait will continue until a developer comes along who is able to recalibrate the balance between lease rates and construction costs. Successfully doing so will require breaking from entrenched attitudes about the market’s capacity for higher rents and bold action in spite of an unpredictable cost environment.

Lease Rates

The fundamental driver of new construction in a given market is lease rate growth. During periods of economic expansion, the supply of immediately available space decreases which, by the enduring law of supply and demand, applies upward pressure on the cost to rent space. Tenants active in such a market are often willing to pay these higher rates in exchange for the growth potential, access to markets, or efficiency gains a new facility offers.

Unfortunately, this is not the story in Albuquerque’ industrial real estate market, where rent increases have been nominal and far from compelling enough to capture the attention of developers. In a market with less than 2% vacancy, this runs contrary to the demand curve and suggests that landlords may not be charging enough.

Construction Costs

Tepid lease rate growth is not the only factor limiting new development—construction costs have also been a significant hurdle. Historically higher in New Mexico relative to the rest of the country, they have increased further since the pandemic disrupted supply chains across the globe.

Materials costs are expected to be up for some time as the post pandemic economy reorients itself while the supply of labor is constrained by issues on several fronts. Long-term construction projects in the Albuquerque MSA, including the Facebook data center and Amazon fulfillment center, have pulled large concentrations of tradesmen to a few jobsites while supplemental unemployment insurance has slowed what should have been a rapid recovery in the labor market.

With the competing problems that are low lease rates and high construction costs bringing new industrial real estate to the market is a difficult task. Development is risky, involving a host of tradeoffs with outcomes that are never a sure thing.

There is, however, undeniable opportunity—opportunity that can be seized by abandoning the safe approach many landlords have fallen into through not challenging the lease market with higher asking rates. Investment performance metrics like quick absorption and high occupancy seem to be rated higher today than what should be an investor’s primary target: financial return. Increasing—and realizing—lease rates in response to the obvious demand a sub 2% vacancy market presents will open the door to the new construction that is sorely needed, despite the high-cost environment.

At a certain point, the unstoppable force of declining vacancy rates could effectively meet an immovable object: the prospect of no space available. Should that happen, it would be evidence of the worst assumptions about our market—that growth is anemic.

Hopefully well before then an astute developer will initiate a new phase of growth and be richly rewarded as a result.

Albuquerque needs more industrial space—who is going to fill the void?

Riley McKee is a Senior Advisor in our Office Division. For more information on his properties click here. 

NAI SunVista is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.

The “Growing” Market: Cannabis legalization in NM and how it applies to commercial real estate

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by Shelly Branscom, CCIM 

Generally speaking, July is vacation month.  Where did you go or where are you planning to go on your summer vacation?  My husband and I enjoyed a trip to my home state of Minnesota over the 4th of July to see family and celebrate 2 of our grandchildren’s summer birthdays!  The ability to gather with family, dear friends, and hear our granddaughters calling us Grandma & Grandpa filled me to the brim with joy!  I hope your summer vacation did/does the same for you!!  After all, APS school starts August 11, 2021!

Some big news in the commercial real estate industry the past month was the State of New Mexico legalized cannabis possession.  After years of debate, New Mexico became the 17th state to legalize recreational cannabis for user 21 and over.  With the new law in effect, New Mexico now allows for possession of up to 2 ounces of cannabis – or equivalent amounts of cannabis extract – and personal production of no more than six mature and six immature marijuana plants per adult.  The deadline for beginning commercial sales is not until April 2022, to give state officials time to craft rules that will govern the cannabis industry and begin issuing licenses for legal pot production and sales. Key dates:  September 1, 2021 – New state agency begins accepting and processing license applications for cannabis producers and microbusinesses.  January, 2022 – State begins issuing cannabis server permits and processing all types of license applications AND Department of Public Safety must review criminal records for automatic expungement of cannabis possession-related convictions.  April, 2022 – Retails sales of commercial cannabis begin.

Landlords have been maneuvering the waters of the cannabis industry for several years now.  Since the federal government has not yet legalized cannabis, there are some complexities around New Mexican Landlords accepting lease payments, processing them and paying their mortgage payments.  New Mexico’s Commercial Association of Realtors New Mexico (CARNM) is planning to host a Continuing Education course later this year to explain the benefits and pitfalls of the State’s new legalization.  I will report back once the State of New Mexico has crafted the rules that will govern the industry.

Although we have heard of an uptick in the Delta variant of COVID, we are still seeing high levels of consumer confidence, high balances in consumer savings accounts and the Federal Reserve has kept our interest rates low.  These factors coupled with continued growth in governmental spending bodes well for continued strong performance in our consumer-driven economy.  Mark Fawer, partner at Greenspon Marder indicated “absent any new governmental restrictions, there really should not be any noticeable impact on commercial real estate.  However, if case numbers increase, it could inhibit international travel which will impact the recovery of the hospitality industry.”  Fawer also points out “a certain amount of Covid fatigue” and that “people are becoming a bit more inured to it.”  He found evidence short term construction work really will not be impacted with projects in the works, other than simple construction delays.  However, he thinks “the bigger impact on commercial real estate will be the long-term changing markets after the Covid experience like desk sharing or people working from home.”

Employers are finding “flexibility” is key when allowing employees to work from home.  Many are considering “Hoteling.”  Although we may not see as much “hoteling” in Albuquerque as in larger markets, the concept is causing larger national employers to take another look at their bottom line and downsize their space.   Hoteling is the concept where employees no longer have defined workstations.  Rather, employees share desks while alternating hours they are in the office.  The most successful employers have discovered if they get feedback from their employees and allow them to provide input in the hoteling process, production has not suffered.  Desk sharing is a deeply personal issue employers are challenged to overcome as 1/3 of employees do not care about having their own desk, 1/3 have their own desk and 1/3 say personal desks are nice to have, but not a necessity.  There is not a magic ratio for companies to determine how many workstations they need per employee.  Rather, companies need to determine the maximum number of employees who need workstations on any given day while taking into account company future growth.  There is a definite correlation between appetite for hoteling and frequency in the office a concept that is not a prevalent in tertiary markets such as Albuquerque as it is larger metropolitan areas.

Here in Albuquerque, the lack of inventory has owner/user buyer frustrated with the lack of product available to purchase.  As we have seen with the residential inventory, commercial “For Sale” inventory has been picked over due to our long run of low interest rates.  Consequently, owner/user buyers are looking for space to lease versus own.  This has our local leasing activity on the rise for all sizes of office space.  Additionally, there have been a tremendous number of small tenants in the market seeking to lease space which has caused lack of inventory in the lower range sizes.  Finally, our market is enjoying several looks from contact/call centers seeking to enter our market desiring 15,000 SF and above.  This is promising giving these employers closed their doors and sent their employees home at the onset of Covid.

If you are still looking for a great summer vacation guide, check out these free vacation tours in Washington DC. https://www.nomadicmatt.com/travel-blogs/free-things-to-do-in-washington-dc/

Shelly Branscom, CCIM is an NAI SunVista commercial real estate specialist who provides substantial long-term strategies and business planning services to her clients.  She prides herself on thinking outside the box, enabling her to contribute unique solutions and outcomes specific to each of her clients.  Learn more about Shelly and her listings.   

NAI SunVista is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.

Q2 2021 Santa Fe Market Review

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The second quarter of this year made three things clear to us: 1. Good opportunities have to be taken advantage of immediately; 2. Businesses must renew or they will not be in business; and 3. Life and business goes on after COVID-19.

Click in here to find out why we believe the City Different will continue to be much different with great commercial & residential projects in the pipeline for the third quarter.

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