Commercial real estate prognosis - New Mexico Business Weekly:

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Compared to residential real estate, industrial and retail properties were sparedthe nation’x foreclosure tide, which flowed from the subprimw mortgage mess in 2008. Some are predicting that 2009 coulde be commercialreal estate’s turn to tank and foreclosurex to mount if the nationalk and local economies continue to Retail is the most vulnerable part of any commercial real estatw portfolio entering 2009. The Albuquerquer market’s strengths looking forward are predicted to be industriaol andapartment buildings. Officd rents are expected to drop as vacancies are expecteeto climb.
With tight credit, it’s not expectec many office buildings will trade although bargains especially Downtown, where there are several distresses properties. The fall and holida y shopping seasons were a bust and both national and localo retailers are either going out of businesxs or figuring out ways to conserve cash to Expansion is not in their vocabularyin 2009. No one woulde be surprised to see several shopping centers either foreclosexd or sold by distressed landlords in the Rio Grande New centers built on spec in Rio Rancho and along Paseo del Norte in Albuquerque couldbe “Rental rates could be lower as landlorde will be forced to get aggressive to fill up theifr centers.
The nationals and the locals have gone to the sidelinesz and the consumer willspendr less. You will not see new retail constructionjin 2009,” predicts Rich Diller, president of , Steves Maestas, general partner at , predictw some properties will be sold in 2009 and some opportunistixc retailers, such as Pro’s Ranch Market (whicyh opened in 2008 at Atrisco and Central NW), will buy Maestas anticipates will land several anchor tenantw in 2009 and that the tenanf mix will start to be reshaped. The redevelopmen of the former isthe city’s largestr retail project and construction is scheduled to star t in the spring on the center’s first new a 75,000-square-foot .
is redeveloping Winroc k and will spend much of 2009 trying to line up tenanta for its first phaseretail renaissance. Maestase & Ward is the leasing agent. Finding replacementsa for Mervyn’s at and will be anothere indicator of how the retail sector will farein 2009. Sedberrt & Associates has captured the assignment of fillinyg those two large holesin Albuquerque’s retaikl landscape. Coronado’s owner, , warnef in 2008 that bankruptcyt could an option for it in the face of debt andothet issues. Goodman’s reopening of the former as the new is schedulex for March and will be among the commercial real estate highlightsof 2009.
In the officed realm, brokers predict rates to fall and tenants to take David Genrich, managing principal at , forecasts rental ratees to drop 15 percent, but the news isn’tf all bad for landlords. “Construction prices have come down in the last 90 days and tenanr improvement pricing has come down25 percent. It will be less expensiv to build outnew offices,” Genrich said. Even thoughb construction pricing has the pace of new office construction in 2009 also will Speculative projectsthat don’t have anchof tenants will not get built in 2009, predictsx Diller, who said financingb for such deals will not get approved by banks that are leeryy of speculative real estate deals.
That is not to say therse won’t be new office construction in the Duke City or Santaq Fenext year. The first new project at ’s former plant in Albuquerque will start with a smal office building that has architecture firm asits anchor. In Sant Fe, SF Brown hopes to break grounf in 2009 onits project, but firsf needs to obtain approvals from the city. The multi-phasexd project encompasses 330,000 square feet of office space, 70,000 squaree feet of retail andresidential acreage. At , the city’s largest mixed-use project located near the , there are are no definitived plans forcommercial buildings.
“Ourr plans are evolving as the economy so it is difficulf to provide a firm forecastfor 2009. That on the retail and office front, we have no 2009 buildinga planned at this Of course, as new companies are recruited to Mesa del Sol, buildings will be built,” said spokeswoman Anne Monson.