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Emerging from Covid-19; Commercial Real Estate Predictions 2020
by Shelly Branscom, CCIM
As we began the 2020 year, none of us could have predicted the halting effects COVID-19 would have on the world’s social and economic landscape. As current stay-at-home orders are shifted into economic phasing plans, it is important to take a closer look at what major factors will impact the Commercial Real Estate Market in 2020.
Return to business – communities will begin re-opening businesses; albeit with procedures, including wearing masks, social spacing and extra cleaning in place
Downturn – We are experiencing a downturn in CRE activity caused both by social distancing and by small business owners’ need to furlough and/or layoff significant portions of their workforce.
Recession – Remember recessions do not typically occur until 18 months after they’re seen. In other words, the economy is not falling apart. Trust me, in about 18 months, we will all be back to “normal.”
Owner/User Opportunities – Every downturn creates real estate transactions; subleases, Tenant relocations, foreclosures and dispositions. Be ready to buy!
Cash Flow – Landlords should review their rent rolls and develop a strategy to maintain cash flow even through Tenant requests for rent forgiveness, reduction or abatement. Consider trimming expenses wherever possible to minimize asset devaluation.
Banker Conversations – Property owners should be in contact with their lenders. Keeping the lines of communication open during the COVID-19 cycle will enhance your ability to negotiate forbearance options should you not be able to make your payment.
Refinance – Investors who are seeking to hold their assets should consider refinancing during this low-interest-rate environment. At the very least, talk to your lender. There are more options available to you now than ever before. Refinance/consolidate into non-recourse loans.
Capital Improvements – If you are experiencing flush cash flow, now is the time to invest in capital improvements.
Investor Opportunities – Some investors may want to move off the coasts and into the south-central United States to take advantage of more favorable capitalization rates; jump on these opportunities.
Technology – Expect mergers and acquisitions around the world, particularly in the tech sector.
Social gatherings – The methods of attending sporting events, shopping and even dining will shift and will likely include occupancy loads at unprecedented low percentages. Our family gatherings, elderly visits and birthday celebrations will look different as well.
Local Impact – Find comforting in knowing, New Mexico, and Albuquerque in particular, often do not fall as low or peak as high as other states and cities across the United States. We are cushioned by the federal government’s impact on our State via the National Laboratories and our three Air Force Bases. In addition, we do not have nearly the amount of speculative construction in our community as other communities do, resulting in less of an increase in vacancy.
We will Recover – Finally, a survey of women who sit on boards of directors found that most believe it will take six months or more to recover from the effects of COVID-19 coronavirus pandemic; however, we will recover. Call me and I can help you navigate your way through the next six months and beyond.
Our industry is very much alive and I believe opportunity still awaits. We must be patient, resourceful and smart in our approach to commercial real estate during these times. Contact me today and let me help you navigate your way through the next six months and beyond. Your success is my mission!
Shelly Branscom, CCIM is an NAI Maestas & Ward commercial real estate specialist that 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 Maestas & Ward 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.
Navigating coronavirus’ impact on commercial real estate
A Whitepaper by Riley Mckee
Between 2007 and 2009, the commercial real estate industry was dealt a heavy blow by what is now referred to as “The Great Recession”. Property values and sale volumes collapsed when businesses began prioritizing survival overgrowth. In the years that followed, real estate transactions required extreme deference on the part of sellers, as buyers capitalized on this dramatic shift in economic circumstances.
In the last few years though, the market had notably improved in response to steady economic gains and a corresponding growth in demand—demand that seemed unassailable until just over two weeks ago.
The unexpected surge of COVID-19 and the drastic measures put in place to slow it have undoubtedly shaken things up. Shelter in place orders, strict limits on public gatherings, forced closures to restaurants, movie theaters, and other businesses deemed “non-essential” have limited productivity and stunted activity market-wide. Uncertainty and concern abound as we grapple with finding and implementing effective solutions.
Yet in the midst of these unsettling times, it’s vital we recognize the “black swan” nature of a pandemic. The roots of our current predicament bear little resemblance to those of the economic collapse in 2007, which was caused by structural deficiencies in the financial system. COVID-19 aside, our economy is healthy: steady and sustainable growth had resulted in low unemployment, high consumer confidence, and a sense of optimism about New Mexico’s future that had been lacking for some time. While these very recent circumstances may change in the short term, an energetic recovery once the virus is contained is by no means out of the question.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act recently passed by Congress and signed into law by President Trump on Saturday (March 28) is a noteworthy step in that direction. The bill provides a healthy measure of relief to businesses and individuals alike, buying time to flatten the curve while keeping our nation’s powerful economic engine primed for a quick restart. Similarly, governmental agencies in New Mexico have made a slew of resources available to help businesses weather the storm.
To our clients, we advocate taking full advantage of these resources to help stabilize operations and lay the groundwork for a return to normal economic circumstances. Coronavirus, just like the Great Recession, will one day be relegated to the status of a bad memory. Until then, let’s remain patient and persevere toward the prosperous future we know is on the horizon.
For more information on resources made available through the CARES Act or from The State of New Mexico please reach out to Riley McKee and Alex Pulliam
To download this Whitepaper, click here
Riley McKee is an NAI Maestas & Ward commercial real estate specialist that advises industrial and logistics real estate owners and occupiers on leasing, acquisitions, and dispositions. Learn more about Riley, his properties and his insights to market shifts in commercial real estate here.
NAI Maestas & Ward 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.
It’s Not Just Amazon’s Fault | A Review
It’s Not Just Amazon’s Fault by Vitaliy Katsenelson | An Article Review
We sat down with Retail and Multifamily Specialist, Isaac Romero who provides market and knowledge insight to all things financial in the Commercial Real Estate World for a review of the Retail Sector to provide an additional perspective.
To download and read the White Paper and Amazon Article Review, click here
Isaac comes to Commercial Real Estate after working with the New Mexico’s top budget agency—the Legislative Finance Committee—where he was responsible for nearly $500 million in state agency budget recommendations. Using the knowledge, experience, and relationships gained from his time with the legislature, Isaac intends to share his vision for a more prosperous New Mexico through brokering commercial real estate and promoting economic development in our state.
As an investor in Commercial Real Estate, Isaac specializes in multifamily investments. As a promoter of business, Isaac is growing his expertise in retail, including leasing, acquisition, and disposition.
To read the article It’s Not Just Amazon’s Fault, by Vitaliy Katsenelson, click here
For more on Isaac Romero, click here
Construction begins on new shipping container project
By Christopher Ortiz, Managing Editor, Albuquerque Business First | June 11th, 2019
Seven months after its groundbreaking ceremony, construction has begun on Albuquerque’s second shipping container project.
Crews are set to begin pouring foundation at Tin Can Alley at the corner of San Pedro and Alameda, reports KOB.
Developer Roy Solomon, who also developed Green Jeans Farmery, originally eyed a July opening but now construction is expected to be completed in early 2020, reports KOB.
Solomon told Business First in November that Tin Can Alley will be 11,000 square feet and tenants include Santa Fe Brewing Co., Amore Neapolitan Pizzeria, Rustic Star Burgers and a Vietnamese restaurant. Restaurateur Erin Wade announced she is planning a new Vinaigrette location and another restaurant concept on adjacent lots. Stone Age Climbing Gym also announced plans for a new location next to Tin Can Alley.
Albuquerque-based Snyder Construction is the general contractor and Joe Slagle is the architect. Nusenda Credit Union is providing the financing, Solomon said in November. The project’s price tag wasn’t immediately available. Like at Green Jeans, Santa Fe Brewing Co. will have a taproom and serve as one of the project’s anchors, Brian Lock, president of Santa Fe Brewing, confirmed with Business First in the fall.
“We’re looking to take a beautiful site and create a heartbeat,” Solomon said back in November.
Solomon said the development will provide around 300 jobs and said he hopes it will see $14 million in annual revenue.
Brett Hills, NAI Maestas & Ward Partner, represented developer, Roy Soloman, and Jim Hakeem, NAI Maestas & Ward Director, represented the landowners in this landmark project at San Pedro and Alameda in the NE Heights.
Rise of the West Side retail
Green Jeans developer launching new project
ALBUQUERQUE, N.M. — The guy behind the Green Jeans Farmery, the innovative shipping-container development near Carlisle NE and Interstate 40, is on to his next commercial project, which he describes as a future destination spot featuring noteworthy players from the town’s restaurant and brewing community.
Citing nearby businesses and residential communities as the potential customer base, Green Jeans owner Roy Solomon recently purchased five acres at Alameda and San Pedro for a development that will have a strong food focus. Already committed to the project is restaurateur Erin Wade of Vinaigrette and Modern General fame, who will set up shop with a “new concept” at the site, as well as restaurateurs expanding to second stores beyond their current Green Jeans location. Opened nearly four years ago, Green Jeans is a multiple-option destination of eateries, confectioneries, adult drinkeries, shops, plazas and places to hang out, said Solomon.
He said he’ll subdivide the Alameda project into four parcels. One is earmarked for Wade to open a standalone eatery and another will house a Stone Age climbing gym.
Smack in the middle will be Solomon’s baby called Tin Can Alley, anchored by Santa Fe Brewing Co., which also has a location at Green Jeans.
With suds in hand from Santa Fe Brewing, customers can then purchase grub from eight to 12 purveyors Solomon expects to recruit for an indoor food market, which he said will be about 11,000 square feet in size. There, they can dine at communal tables inside, on several patios or on Tin Can Alley’s rooftop, another 8,000 square feet, which will be handicap accessible. Some of the construction materials also will feature recycled shipping containers.
Tenants coming to Tin Can Alley include Green Jeans alums Amore Pizzeria, Rustic on the Green Burgers and Nitro Creamery, according to Solomon. Also doing business at the food emporium will be a Vietnamese-style eatery called Pho Cup, Guava Tree Cafe and “something incredibly cool which I can’t announce yet,” Solomon added.
“We’ll have double the amount of parking than we did at Green Jeans,” said Solomon, referring to 330 parking spots projected for the site.
He said all the food-oriented spots should prove popular with the lunch crowd near the Alameda corridor, folks grabbing food on the way home to the West Side or neighbors wanting to hang out on the weekends. Other than fast-food joints, there’s very little in the way of “quality” food providers in the area or recreation-oriented outfits like the climbing gym, said Solomon.
Solomon, who said Tin Can Alley still is in the conceptual phase, was unable to estimate final construction costs.
A groundbreaking at the site is scheduled for Oct. 22, when more details about development partners, tenants, and the build-outs will be announced.
By: Steve Sinovic – Albuquerque Journal
Brett Hills, NAI Maestas & Ward Senior Director, on the development project, “The Roy Solomon’s recent land acquisition will pave the way for a landmark project at San Pedro and Alameda in the NE Heights. The project will include Solomon’s second shipping container project along with Stone Age Climbing Gym and Vinaigrette”
