Monday, August 27, 2012

Starbucks and Sustainability Rule Offices

Metro Albuquerque area commercial real estate developers got the word from two national figures today. Some fly-over feeling threaded the talks which might be expected as these were national level people, concerned by definition with larger cities. Still, the material was interesting.

The speakers were San Jose-based David Pogue of San Jose, California, global director of sustainability for CB Richard Ellis, and Jeff Langdon, of the Santa Fe-based Rosemont Realty Services.

Sustainability in commercial real estate is about saving money and, though Pogue didn’t say so explicitly, for larger firms sucking up to the environmental coercion from the far left such as the Sierra Club. The green measure is an Energy Star label and / or being LEED certified.

The economic part is simple; use less energy and costs drop, meaning that, other things like rent equal, the building makes more money and, over time, grow in value.

The political part is a bit scary. Some larger cities are requiring that new construction be LEED certified. Large tenant improvements are getting the same requirement. Pogue sees a future where every light bulb (I think I got that right) will have a URL address. Big Brother will be in the building management business.

Cities such as San Francisco, Seattle, Boston and New York love the stuff. Mining companies are big on using less energy, which figures since they are in the business, understand the issues and are prime targets of the enviros. The two greenest cities, according to CoreNet, a consultancy, are Denver and Houston, home to mining and oil and gas firms.

Langdon started with the good old days when people worked in buildings and the common lease was 15 years with no cancellation clause. Today people work everywhere, The leases are more like ten years with a cancellation and maybe three years.

A big change is that accounting regulators say leases must be on the books. This will force shorter leases because firms don’t want to recognize that long term liability.

Starbucks is the new king of office space, Langdon said. This goes with my realization of a few years ago that Starbucks didn’t sell coffee, they rent table space. The price of the coffee is the rent for the table.

Still, Langdon said, “the basic office building” model remains the same. Space is customized for tenants. Transactions are expensive and slow. Owners get income from rent.

For the future some customers are saying they want to use the product—the office building—differently. A declining number of square feet per employee is one sign. In 1990 the space was 300 to 350 square feet per employee. In 2010 it was 200 to 220. The forecast is for 150 square feet.

For owners, the problem is that the buildings remain in place, mostly anyway. Some offices become hotels.

We have experienced this phenomenon. In 2005 in Washington, D.C., we stayed in a hotel that once was a bank. In Omaha, Nebraska, our hotel had been a creamery.

Saturday, August 25, 2012

Universities May Have Incentive to Delay Graduations

The received wisdoms is that students take too long to graduate from New Mexico's colleges and universities. One at least partial explanation comes from a parent who is also an economist.

Counselors routinely tell students to take only 12 hours or four classes per semester, this parent says. This "advice," if followed, ensures that students will need something over five years to get a bachelor's degree.

I had to go to the Eastern New Mexico website is the degree requirement is 128 hours. After much looking I gave up on finding this item on the University of New Mexico site, my tiny respect for UNM taking yet another blow. But there is was on page 37 of Eastern's online catalogue.

Students taking 12 hours per semester and no summer school complete 120 hours after five years. Students taking 15 hours per semester have 120 hours, but after four years. Summer school is needed. Six hours during summer school is a chore, but more than possible.

My parent informant believes that the 12-hour per semester advice stems from the notion that 15 hours or more (Gasp!) will strain the student brain. Further, the longer students stick around, the more they pay. The lottery scholarship pays all tuition, but "only" for eight consecutive semesters.

Students taking more time that those eight semesters must come up with cash. It seems that the universities have an institutional incentive to have students take a long time graduate.

Friday, August 24, 2012

18 Other States and NM Lose Jobs in July

Once again New Mexico lost jobs from the previous year. July is the month in question today. The Bureau of Labor Statistics released the state numbers last Friday and the Department of Workforce Services added details today.

The loss was 2,800 wage jobs on a seasonally unadjusted basis from July 2011. New Mexico was one of 19 states to lose jobs for the period, the BLS said.

The metro areas led the way with all four losing jobs. The total metro job loss was 5,000 from July 2011 through July 2012. That means the rural counties gained 2,200 jobs, reducing the total loss to the 2,800 reported.

Albuquerque led the lost way with 1,900 jobs gone away, followed by Santa Fe which was down 1,200. Las Cruces was close with 1,100 jobs lost. Farmington, the smallest population metro, lost the least, with 800 jobs gone.

Albuquerque’s job losses “improved,” if that’s the word, from a June 2011 to June 2012 loss of 3,700 jobs.

Statewide, DWS said, educational and health services, up 3,200 jobs, again posted the largest year over year increase, followed by leisure and hospitality (i.e. tourism), up 2,800. Mining gained 1,400 jobs, continuing more than two years of growth. Manufacturing added 1,000.

Professional and business services led the lost way, down 4,400 jobs, year-over-year. Speculation from the Martinez administration at this week’s LFC meeting suggests the losses are national laboratory related. Lab contractors are the first to shed employees.

DWS guesses that Las Cruces losses have to do with New Mexico State University and school districts. These jobs will return.

Unfortunately the DWS job report is politicized. The Martinez administration won’t let DWS say that job losses are bad. Well, if jobs losses can't be called "bad," are the losses good. Neutral?

Wednesday, August 22, 2012

TLR and DQ's Blue Corn Bourbon

The stop sign this morning hosting the TLR sign is at U.S. 64 and N.M. 434, north of the main part of Angel Fire. TLR means "The Lone Ranger," a movie in production starring Johnny Depp as Tonto.

We were told that today's filming was somewhere near Cimarron. The people sharing the Sunset Grill with us last night at dinner appeared to be movie production staff. The Grill is at the base of the Angel Fire ski hill.

We first found TLR signs a couple of weeks ago as we drove along N.M. 485 from N.M. 4 toward the Gilman Tunnels. I had noticed the signs but could conjure no meaning. Then, an open area was parked with trailers and RVs. My observation was, "Movie shoot." Some people wee chatted with at the tunnels said it was "The Long Ranger."

DQ is the Don Quixote Distillery and Winery ( and, specifically for us, means the Don Quixote Blue Corn Bourbon Whiskey, which we learned existed yesterday. Cindy Capelli told us about DQ when we visited yesterday at the Vivac

winery. Capelli's new business is New Mexico Wine and Scenic Tours ( At Vivac she was leading two young women from Bristol, UK, who are on a two-week tour of the American southwest.

DQ has a two-page feature in the just released September issue of New Mexico Magazine.

The idea of bourbon made from blue corn gets two reactions. First is, huh? Then comes, cool.

DQ's new semi-Santa Fe tasting and sales outlet is located along U.S. 84/285 at the exit to go to Los Alamos.

Monday, August 20, 2012

Ds Have Already “Destroy(ed) Medicare As We Know It"

“Destroy Medicare As We Know It”

That’s the fiendish horror which Democrats accuse Republicans of planning. The phrase is the apocalyptic specter which Democrats invoke when speaking of possible changes in Medicare, especially the changes proposed in the House of Representatives budget by Rep. Paul Ryan, now the Republicans candidate for vice president with Mitt Romney.

Changing Medicare, narrowly taken, does in fact mean ending Medicare as we know simply because any change means ending the old and bringing in something new.

In their stock phrase, the Ds are saying, basically, don’t change Medicare and, by extension, don’t change Medicaid and Social Security. This is a disservice to the American people, to put it politely. That’s because the entitlement programs—Medicare, Medicaid and Social Security—must change before they financially destroy the country.

To argue otherwise is to lie to the people. Of course the phrase is not a policy argument, it seeks to create fear of the Rs and therefore generate votes for Ds.

In addition to being hypocritical, deceitful and dishonorable, to the extent that the Ds phrase pushes the scary status quo for entitlement programs and a good thing, it also is a lie. That’s because the Ds have already changed Medicare.

In the heavy duty angst that has followed Ryan’s VP anointment, a new number has appeared from conservative research gnomes—$716 million. That’s the amount the president’s health care law pulls from Medicare. (As to exactly how, you will have to look around.) But the point is that the President has already “destroyed Medicare as we know it.” Further, the President claims that Ryan’s plan would cost seniors an extra $6,400 per year. I read today that this number came with huge caveats from the Congressional Budget Office, might apply in 2022 and has nothing to do with the current Romney-Ryan proposal.

Not too bad, lying on both sides of an issue. The American people are pretty smart. I hope they figure all this out. Romney and Ryan will have to help the education. I trust they won’t be nice.

Tuesday, August 14, 2012

Metro Abq Home Sales Up in July

As was suggested in this space a month ago that might happen, July sales of single family detached homes increased after a dip in June from May. The suggestion—fingers were crossed—came from The increase in pending sales in June over May led to the hope that July sales would increase over June.

July closed sales were 719 homes with 685 sales in June, according to figures just posted by the Greater Albuquerque Association of Realtors. Both figures were 69% of the respective previous month’s pending sales.

July closed sales were the second highest of 2012, behind the 737 sales during May.

Prices were steady during July. Both average ($210,685) and median ($175,000) prices dropped slightly from July 2011, but increased from June. The median price went back to the May figure and tied for the year’s highest. Average prices have been around $210,000 for the past four months.

The 4,152 active listings available during July were down 18% from July 2011. Active listings have dropped about 20% as compared to 2011 during the seven months of 2012. The smaller inventory is finally turning into faster sales. During July the average home sold in 65 days, the shortest sales period in months and months.

Townhouses and condominiums, except for a 94 day average sales period, showed a nice contract with July 2011 with increases in pending and closed sales and both the average and median price.

Thursday, August 9, 2012

Feds Are the Ones Requiring Painted Overpasses. NM DOT Has No Repainting Money.

Yesterday, as part of a background conversation for my coming column, the New Mexico Department of Transportation told me that pretty overpasses are a function of the requirement to spend federal money for what is called "transportation enhancements." These include the sculptural overpasses on the new U.S. 285 north of Santa Fe and the painted overpasses on I-25 south of Albuquerque. I think the sculptural ones are cool and the painted ones look dumb.

That's OK, I suppose, but the problem is that maintenance falls to NMDOT which budgets exactly zero dollars for maintaining these pretty things. That means the painted ones won't be repainted, thereby becoming trashy looking over time. Nor will be sculptural ones be fixed when they fall apart, which is happening now, due to the use of poor quality concrete (or something). Spending the enhancement money is part of getting road money. DOT needs the road money, so it does the enhancements.

The enhancements may well enhance, but inherently this derives from someone’s value system. And who, pray tell, might that be? Part of the charade is that communities get to talk about the enhancements and thereby feel good.

It's the old federal carrot-stick (or something like that) bludgeon that grows government.

DOT puts safety as job one (thank you Ford Motor Co.). Safety starts with stripes. That means the gap between the budget and the “ought to spend” is fairly small, “only” 18% as compared to 66% for maintenance. I lacked the time to explore the issue of road stripes disappearing at night and in the rain.

If safety really is job one, then why do some things change after 50 or so years of working fairly well. For example, St. Francis Drive in Santa Fe now has large bright yellow signs at the St. Michael’s Drive interchange proclaiming a “merger area alert” or something like that. (I didn’t write the copy.) The interchange has been in place for decades, merging traffic and all, without signs.

What changed? My guess is that change has to do with sign standards being a moving horizon. There is a thick federal item, I learned—the Manual of Uniform Traffic Control Devices, aka MUTCD, that is constantly revised by a group of state people and feds.