Retail top commercial real estate sector
C ommercial real estate activity was uneven in the Albuquerque metro area during the first three months of the year — good for retail, a lull for industrial and still near bottom for office — according to the latest round of market reports by Colliers International.
The retail market continued to outperform other commercial property types with a vacancy rate of 6.3 percent, down from both 6.6 percent in the preceding quarter and 7.5 percent in the first quarter of 2014. The rate averaged 8.9 percent during the 2004-07 boom years.
Among the three commercial property types, the biggest move in the first quarter was in retail, with At Home, a self-described home decor superstore, opening in 88,000 square feet in the Northeast Heights, said Ken Schaefer, Colliers’ research director in Albuquerque.
The industrial market registered its first quarterover-quarter increase in vacancy rate in almost three years, rising from 6.9 percent in the fourth quarter to 7.1 percent in the first quarter. The first quarter rate is still substantially lower than 8.9 percent in the first quarter of 2014.
With industry consolidations and the flat pace of home construction, a major user of warehouse space in the metro, the Colliers industrial report notes, “The market is lacking sustainable drivers of growth.”
The office market’s vacancy rate was 20.5 percent in the first quarter, down from 20.9 percent in the preceding quarter, but up from 18.4 percent a year earlier.
The office market, which has been stuck at an unusually elevated vacancy rate of 18 percent and higher for going on five years now, saw occupancy gains canceled out by new vacancies in the first quarter.
UTC Aerospace Systems, known primarily as a government contractor, vacated 40,000 square feet in the Jefferson corridor in the biggest single new vacancy in the office market.
The company entered the market as BF Goodrich Aerospace in 1997 with its acquisition of Gulton Data Systems, a homegrown tech company. UTC still has a major local operation at 6600 Gulton NE.
The biggest office move involved Gap Inc.’s Corporate Shared Services Center downsizing from about 100,000 square feet in Downtown to just less than 75,000 square feet in the Jefferson corridor, Colliers reported. The net change was a negative for the overall market’s vacancy rate.
As for occupancy gains in the office market, the Colliers report says, “Deals in call center spaces are providing strong support. Over the past year, nearly 100,000 square feet of space has been leased and occupied by new call centers in the Albuquerque metropolitan area.”