Monday, November 15, 2010

Office and Industrial Real Estate: Little Happening

Jobs are needed to justify building office and industrial buildings. The jobs aren’t there in metro Albuquerque.
What with a three supply of industrial space and a five year supply of office, no reason exists for new, speculative space. This was the outlook presented today to NAIOP, the New Mexico chapter of the Commercial Real Estate Development Association. The occasion was the annual office and industrial real estate update.
Money is the main reason for the expected paucity of new buildings. Lenders want up to 35% equity, backed by pre-leasing.
The industrial vacancy rate was 10.4% in the metro, driven by the GE engine plant closing. The fall 2009 vacancy forecast was 9.5%. As of now, no new industrial projects are in the pipeline for 2011. The forecast hopes 50,000 square feet of new industrial space will materialize.
Office space was 18.1% vacant in the third quarter of 2010, just above the national vacancy rate of 17%. For 2011, one project for 98,000 square feet is known. The little activity that does exist come from government.
For the national economy, Bab Bach, chief economist for Grubb and Ellis, sees 2.2% GDP growth in 2011. New wage jobs will average 125,000 per month in 2011, barely enough to absorb the new entrants to the labor force.

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