Real estate people are wired for optimism so it might have been expected that the presentation of the 2009 outlook for metro Albuquerque wasn't as depressing as an external person might have thought. Even so, it wasn't a happy tale told today by members of the Society of Office and Industrial Realtors to fellow developers at NAIOP, the commercial developers group.
New industrial developments will be on the west side, around the airport and at Mesa del Sol. The long dominant I-25 corridor is done.
Industrial rents are now above national rates due to the lack of land. Rates are expected to be flat for A and B level properties during the next year and will drop 10-to 15% for C properties. The vacancy rate will bump a point or so to 6.5% by year end and remain stable during 2009. Construction costs will drop slightly during 2009. An expected drop in construction in China will mean more available steel. There has been some industrial sales activity during 2008, mostly early in the year with a few recent deals.
For offices, the hope is that 2008 will end with zero net absorption. The vacancy rate is about 14% now. The office market has been tight, so only a slight increase in the vacancy rate is expected. The amount of sub-leased space is expected in increase. Much of the vacant office consists of large properties such as the former Blue Cross headquarters. The cost of tenant improvements will drop to about $40/square foot from the current $50. Just one reason is a huge drop in the price of copper.
New office construction will be minimal. The price of existing office properties will be down. Those interested in buying offices will need to bring money. A 40% down payment requirement is the outlook.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment