concerns growing market indicators - colliers international · forecast report albuquerque, nm q4...

Research & Forecast Report

ALBUQUERQUE, NMQ4 2015 | Retail

Key Takeaways > Banner year ends flat

> Strip centers showing weakness

> Insatiable appetite for triple net retail investments

After three strong quarters the retail market lost momentum during the fourth quarter. The final numbers were basically flat with virtually no absorption of space and vacancy remaining unchanged. Activity was strong in both gains and losses of space which essentially held everything even. The delivery of a 47,000 square-foot Carmike Cinemas movie theatre in the South Valley was the biggest positive of the quarter. This was almost entirely negated by an Office Max shuttering a 23,500 square-foot store in the Far Northeast Heights and El Mesquite closing a 14,000 square-foot store in Rio Rancho.

Shop space below 2,500 square feet, in both anchored and un-anchored centers, accounted for the balance of losses. For every space that became occupied there were almost three that vacated. Almost all were locally based tenants. It appears many local retailers are opting to close their stores upon the completion of their leases. Tenants occupying shop spaces typically included food service, medical and national hard-good retailers.

The supply of existing available anchor spaces remains one of the biggest challenges. The number of vacant anchor spaces in white box condition and ready to build out can be counted on one hand. Many of the existing availabilities are poor condition and will require major renovations not only to the anchor space but the overall center as well.

Pad site developments for quick-serve, and fast-casual restaurants have maintained strong activity. This growth is feeding demand for single-tenant retail investments. Typically, these are for the brand new construction a free-standing restaurant, on a pad site, with twenty year terms. The capitalization rates for these investments are trending in the low to mid sixes.

Concerns Growing

Summary Statistics, Q4 2015

OVERALL NEIGHBORHOOD STRIP

Vacancy Rate 6.1% 10.5% 8.1%

Change from Q3 2015 (Basis Points) -30 -180 -20

Absorption(Square Feet) 2,632 (50,173) 11,543

ASKING RENTS Annual Per Square-Foot

$14.85 $12.09

Quarterly Change -0.5% -0.9%

Year-Over-Year Change 0.4% -1.1%

Market IndicatorsRelative to prior period

Q4 2015FORECASTQ1 2016*

VACANCY

NET ABSORPTIONRENTAL RATE

* Projected, relative to prior period

2 Research & Forecast Report | Q4 2015 | Albuquerque Retail | Colliers International2

RECENT TRANSACTIONS

LEASING ACTIVITY

LESSEE/BUYER TYPE LESSOR/SELLER PROPERTY SIZE SF

Napa Auto Parts leased Gallery RVT 1201 Juan Tabo Blvd NE 22,750

Staples renewed LF II Cottonwood, LP 10260 Coors Bypass 17,229

Columbus Pacific Properties purchased Kimco Plaza Pase Del Norte - 9227 - 9331 Coors Blvd NW 183,718

Highlander New Mexico Investmetns Two, LLC

pruchased Private Investor Enchanted Hills Plaza, 7800 Carr Way 17,000

Forecast Growth opportunities in the retail market will be muted in 2016 by a lack of new supply actively moving through the development process. Most of the new projects currently under construction are almost entirely leased up. Many of the new centers being planned will not break ground until a majority of the space is pre-leased. This shortage should spark more renovation projects in existing centers. New centers being planned will not get started until 2017.

Overall vacancy is expected to remain flat for the next two quarters. The remaining anchor spaces that get absorbed will likely be offset by tenants shuttering shops in older strip centers as leases expire. Recent deliveries of new strip centers in the Southeast Heights and North I-25 will provide some buoyancy but they are likely to experience slower than expected lease periods. Tenant demand should remain stronger for larger, well-anchored centers over older unanchored strip centers. Landlords of older centers should remain aggressive by reducing asking rates aggressively as interest trends downward.

Existing availabilities of anchor spaces are expected to get tighter as the last viable spaces get absorbed over the next two quarters. The new construction pipeline will not be able to provide any quick relief. Most new projects are still in pre-leasing phases and will likely not get started for at least one year. Several major renovations are underway at the two of the former K-Mart anchored centers in Rio Rancho and the South Valley. The former K-mart in the South Valley has already leased up the anchor spaces.

Demand for restaurant spaces should remain vibrant for both national and local concepts. To meet the shortage of available spaces look for increased developments on pad sites in existing centers especially for new national concepts. Local restaurateurs may experience declining business volumes as a result of new national concepts taking market share. Strong growth in brew pubs will also likely take some market share.

*** - Q4-14 data displayed.


VACANCYQuarterly

5%

6%

7%

8%

9%

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

$10

$12

$14

$16

$18

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

-100

0

100

200

300

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

0%

5%

10%

15%

20%

25%

30%

Cot

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ood

Dow

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Far N

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COMPLETION VS. ABSORPTIONYearly (in Thousands of SF)

RATESYearly (per SF, Triple Net)

VACANCY BY SUBMARKET

5%

6%

7%

8%

9%

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

$10

$12

$14

$16

$18

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

-100

0

100

200

300

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

0%

5%

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15%

20%

25%

30%

Cot

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Far N

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Nor

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SE

Hei

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Sou

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own

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Ove

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5%

6%

7%

8%

9%

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

$10

$12

$14

$16

$18

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

-100

0

100

200

300

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

0%

5%

10%

15%

20%

25%

30%

Cot

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Far

NE

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5%

6%

7%

8%

9%

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

$10

$12

$14

$16

$18

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

-100

0

100

200

300

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

0%

5%

10%

15%

20%

25%

30%

Cot

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Vacancy

Absorption Completions

CommunityNeighborhood Strip

NET ABSORPTION ASKING RENT

ASKING RENT

SUBMARKET TOTAL SF VACANT SF VACANCY AVAILABLE % CURRENT QTR YEAR TO DATE CONSTRUCTION SF NEIGHBORHOOD POWER

Cottonwood 4,116,871 122,448 3.0% 2.6% (14,228) 26,881 - $14.35 $20.00

Downtown 615,694 158,794 25.8% 19.8% - (10,000) 22,554 - - Far Northeast Heights 3,966,193 235,096 5.9% 9.3% (36,356) (6,484) - $16.13 -

North I-25 3,273,804 159,911 4.9% 5.0% 2,400 (83,510) - $10.69 - North Valley 1,000,058 91,100 9.1% 7.6% (2,293) (7,190) - - -

Northeast Heights 4,357,565 293,283 6.7% 4.8% 19,979 106,020 - $11.76 - Rio Rancho 2,156,804 37,369 1.7% 4.3% (9,880) 211,663 11,000 $13.26 -

South Valley 1,155,944 187,679 16.2% 26.1% 45,652 31,677 74,740 $13.16 - Southeast Heights 2,943,164 198,038 6.7% 8.7% 2,385 59,383 - $11.34 -

University 1,040,804 46,619 4.5% 6.2% (4,450) (489) - $8.55 - Uptown 2,276,718 172,216 7.6% 3.5% (1,983) 8,657 118,000 - -

West Mesa 2,115,010 74,499 3.5% 6.9% 1,406 10,665 41,117 $19.90 $14.00

Total 29,018,629 1,777,052 6.1% 6.9% 2,632 347,273 267,411 $14.85 $16.20

BY PROPERTY TYPE TOTAL SF VACANT SF VACANCY AVAILABLE % CURRENT QTR YEAR TO DATE CONSTRUCTION SF RENT

Community 2,256,713 135,583 6.0% 8.3% - (2,400) - $17.90

Free-standing 8,497,186 190,736 2.2% 3.6% 39,923 (3,795) 88,117 $13.82

Neighborhood 7,105,232 824,582 11.6% 10.5% (50,173) 79,524 - $14.85

Power 1,424,623 (60,938) -4.3% -5.6% 4,050 234,203 $16.20

Showroom 2,043,801 15,938 0.8% 3.7% - 2,272 - $9.52

Specialty/Theme 219,876 31,556 14.4% 0.0% - 6,958 118,000 $44.50

Strip 4,976,420 400,897 8.1% 9.2% 11,543 7,458 61,294 $12.09

Super Regional 2,190,336 146,767 6.7% 7.8% (2,711) 33,053 $43.00

Urban Retail 304,442 91,931 30.2% 34.2% - (10,000) $13.68

Total 29,018,629 1,777,052 6.1% 6.8% 2,632 347,273 267,411 $14.65


Office inventory includes all multi-tenant and single tenant buildings at least 10,000 square feet. Owner-occupied, government and medical buildings are not included if total space occupied is 75 percent or greater. Asking rates are full service gross on a per square-foot annual basis. Available space includes all vacant space and occupied space currently on the market. Colliers International makes no guarantees, warranties or representations as to the completeness or accuracy thereof.

Retail Brokers

Bob FeinbergSENIOR VICE PRESIDENT | PRINCIPAL

[email protected] +1 505 880 7060

Brandon SaylorASSOCIATE


Tom Jones, CCIMSENIOR VICE PRESIDENT | PRINCIPAL


Terrie Hertweck, CCIMVICE PRESIDENT

[email protected]

DIR +1 505 880 7022

Ben PerichASSOCIATE


Ed Anlian, CCIMSENIOR ASSOCIATE


Rosser KneeVICE PRESIDENT




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Copyright © 2015 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.

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AlbuquerqueKen Schaefer

Director of Research

2424 Louisiana Blvd NE Albuquerque, NM 87110

TEL +1 505 880 7012FAX +1 505 923 3812

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concerns growing market indicators - colliers international · forecast report albuquerque, nm q4...

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