2010 Global Market Report - NAI Commercial Real Estate

Las Cruces, New MexicoAlbany, New YorkContactNAI 1st Valley+1 575 521 1535Metropolitan AreaEconomic Overview2009Population2014 EstimatedPopulationEmploymentPopulationHouseholdAverage IncomeMedianHousehold Income208,136229,49763,528$49,165$38,116New Mexico economists like to say, the Las Cruces economyis insulated from, but not immune to, national economicdownturns. Events of 2009 have served to strikinglyillustrate this truth. While the US entered a recession inDecember 2007, it wasn’t until March 2009, a full 14months later, before Las Cruces saw negative year-overyearemployment numbers.The office market has experienced rising vacancy ratesapproaching 10% - a rate far below the national average,but in excess of the 8% five year historical annual average.Absorbing the 100,000 SF of new office space permitted in2008, will provide building owners little latitude in rental ratenegotiations.In the retail market, there is nothing like the loss of a job todampen consumer sentiment, spending and demand forspace. Following 16 consecutive years of consistent growth,Total Gross Receipts, including the widely watched RetailTrade component, registered a small, uncharacteristicdecline in 2009 Q2 data. It is likely that unfavorable trend willimpact year end totals. Scant new retail sector constructionshould help maintain the supply and demand equilibrium andhold vacancy rates through the coming year within the10-12% range.The Las Cruces multi-family market has exhibited sustainedstability and strength. With a 2000-2009 period marketaverage occupancy of 93.9% and average annual rentalincreases of 2.4%, this has proven to be among the bestperforming commercial real estate sectors in Las Cruces.Developers have apparently taken note as more permitswere drawn for multi-family units in the first two months ofthis year than in the previous two years combined.Las Cruces will see substantial "downtown" renewal withthe addition of Pro's Ranch Market and the renovation ofthe Brazito Plaza. Also, national retailers are looking to getahead of the boomer wave moving to New Mexico whenthey are able to sell their homes elsewhere in the country.ContactNAI Platform+1 518 465 1400Metropolitan AreaEconomic Overview2009Population2014 EstimatedPopulationEmploymentPopulationHouseholdAverage IncomeMedianHousehold Income857,461867,195542,766$70,935$55,853Albany, the capital of New York, continues to outperform therest of the state. Recently named the newest internationalhome for AMD and a $2 billion chip fabrication plant, thecapital region is quickly earning its tech valley moniker. Nanotechnologyresearch and numerous opportunities in highereducation are helping to attract and retain workers. Theinsular nature of the state’s government seat has continuedto contribute to the stability of the area.The CBD office market continues to struggle with a glut ofClass B or lower inventory. Vacancy in that sector is 20%or higher. Functionally obsolete buildings that require substantialcapital to renovate are abundant in the downtownmarketplace. The suburban office parks are performing verywell with vacancy rates of 10-12% overall.A large state-owned tract of land commonly known asthe State Campus is being viewed as the next home for amixed-use park. Slated to be unveiled in Q2 2010, the parkwill offer high-end office space, research space, retail anda mix of residential units.The industrial marketplace has been an active arena. Thefew tenants that are moving have taken advantage of thecurrent situation, forcing landlords to reluctantly make lowerpriced deals rather than be burdened with a year-longvacancy. Rates are in the 8-12% range overall with spacesof 25,000 to 50,000 SF.Retail activity has slowed considerably with only the smallerfranchisors and very large, established retailers makingwaves in the pool. Dick’s Sporting Goods expanded to morethan 60,000 SF on two levels. Forever 21 will back fill theformer 30,000 SF space.Investment and multifamily offerings were down slightly aslenders continue to tighten their requirements. This practicehas driven capitalization rates up slightly to an average of8-9% overall.Look for brighter skies and more activity as the year unfolds.As a strong tertiary marketplace, the capital region hasremained a stable and safe environment to live, work andinvest.Total PopulationMedian Age31Total PopulationMedian Age39Las Cruces At A Glance(Rent/SF/YR) Low High Effective Avg. VacancyDOWNTOWN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIAL$$$N/AN/A14.00N/A21.0016.00$$$N/AN/A16.50N/A27.0019.50N/AN/A$ 15.50N/A$ 24.25$ 18.00N/AN/A5.8%N/A9.3%21.1%Bulk WarehouseManufacturingHigh Tech/R&DRETAIL$ 3.00N/AN/A$ 6.00N/AN/A$ 4.50N/AN/A5.0%N/AN/ADowntownNeighborhood Service CentersCommunity Power CenterRegional Malls$ 14.00N/AN/AN/A$ 18.00N/AN/AN/A$ 16.50N/AN/AN/A9.5%N/AN/AN/ADEVELOPMENT LAND Low/Acre High/AcreOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidential$$$$$$250,000.00250,000.0025,000.0025,000.00250,000.0020,000.00$$$$$$400,000.00400,000.0045,000.0045,000.00625,000.00105,000.00Albany At A Glance(Rent/SF/YR) Low High Effective Avg. VacancyDOWNTOWN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAILDowntownNeighborhood Service CentersCommunity Power CenterRegional Malls$$$$$$$$$$$$$22.0018.0012.0016.5016.0011.003.005.509.509.0012.0012.0018.00$$$$$$$$$$$$$26.0024.0016.0022.5020.0016.003.007.5011.5018.0016.0018.0035.00$$$$$$$$$$$$$24.0021.0014.0020.0018.0014.002.755.5510.5013.5014.5015.0026.50N/A5.0%29.0%N/A5.0%14.0%15.0%12.0%10.0%N/AN/AN/AN/ADEVELOPMENT LAND Low/Acre High/AcreOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidential$$$$$$150,000.00150,000.0075,000.0060,000.00150,000.0025,000.00$$$$$$750,000.00250,000.00175,000.00150,000.00850,000.00125,000.002010 Global Market Report ■ www.naiglobal.com 109