SIOR New Mexico Chapter 2015 Office and Industrial Success Stories 1
WHAT IS AN SIOR? SIOR is the leading industrial and office real estate brokerage association. SIOR Market Update SIOR confers the SIOR designation to only the most knowledgeable, experienced, ethical, and successful commercial real estate brokerage specialists.
SIOR NEW MEXICO CHAPTER MEMBERS
THANK YOU SPONSORS
AGENDA Market Overview Success Stories Question & Answer
INDUSTRIAL MARKET Say What? $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 $0 2007 2008 2009 2010 2011 2012 2013 Q3 2014 Source: CBRE Research, Q3 2014.
INDUSTRIAL MARKET TOTAL SQUARE FOOTAGE Total Floor (Million SF) 40.0 39.8 39.6 39.4 39.7M 39.2 39.0 38.8 38.6 38.4 38.2 38.0 39.1M FIVE YEAR CHANGE 601,516± SF 1.51% 2011 2012 2013 2014 2015 Source: CBRE Research, Q3 2015.
INDUSTRIAL MARKET MEDIAN ASKING LEASE RATE $7.00 $6.93 $6.90 $6.80 $6.70 $6.69 $6.60 $6.50 $6.40 $6.30 $6.20 FIVE YEAR CHANGE $0.24 3.46% 2011 2012 2013 2014 2015 Source: CBRE Research, Q3 2015.
INDUSTRIAL MARKET VACANCY RATE 12.0% 10.0% 8.0% 9.4% 7.4% 6.0% 4.0% 2.0% FIVE YEAR CHANGE 2.0% 0.0% 2011 2012 2013 2014 2015 Source: CBRE Research, Q3 2015.
INDUSTRIAL MARKET AVAILABLE SPACE 1 Building 100,000 SF+ Los Lunas, NM 4 Buildings 50,000 to 100,000 SF 4 Buildings 30,000 to 50,000 SF
INDUSTRIAL MARKET WHERE S THE SPACE? No Time for Build to Suit Few Choices for Large Facilities No Lending for Spec Buildings Economic Developers ask Where s the Inventory?
INDUSTRIAL MARKET RENTS VS. COSTS $5.88/SF Current Market Rate $8.00 - $8.50/SF Rental Rate needed to build a new building
INDUSTRIAL MARKET THE DELTA $2.12 $2.50/SF 26.5% - 30.82%
INDUSTRIAL MARKET THE GOOD NEWS! Tools To Bring Jobs to NM Increased Closing Fund to $50M Single Weighted Sales Tax Job Training Incentive Program (JTIP) Increased Economic Development Funding
OFFICE MARKET VACANCY RATE 25 20 15 10 5 0 2007 12.2% 2007 2008 2009 2010 2011 2012 2013 2014 2015 VACANCY Source: CBRE Research, Q3 2015. Class A Class B Class B Class C All Classes 22.6% 2015 22.2% VACANCY
OFFICE MARKET ALBUQUERQUE JOBS 450 400 350 300 250 200 150 100 50 0 2007 TOTAL 390,000 Jobs OFFICE 230,000 Jobs 2007 2008 2009 2010 2011 2012 2013 2014 2015 Office-sector Jobs in ABQ MSA Source: Bureau of Labor Statistics, November 2015. Total Nonfarm Jobs in ABQ MSA 2015 TOTAL: 384,000 6,000 OFFICE: 239,000 9,000
OFFICE MARKET ALBUQUERQUE POPULATION Population (000's) 910 900 890 880 870 860 850 840 830 820 2007 2015 +55,000 +6.5%.81%/YEAR 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: U.S. Census Bureau, Economy.com
OFFICE MARKET MEDIAN ASKING LEASE RATE Gross Median Asking Lease Rate ($) 24 22 20 18 16 14 12 10 2007 2008 2009 2010 2011 2012 2013 2014 2015 Class A 2007 $21.50 2015 $22.50 Society Source: CBRE of Industrial Research, Q3 2015. and Office REALTORS Class B 2007 $17.45 2015 $18.50 Class C 2007 $14.50 2015 $13.50 Overall 2007 $16.20 2015 $15.00
OFFICE MARKET VACANCY BY SUBMARKET Vacancy by Submarket (SF, 000's) 1,200 1,000 800 600 400 200 0 Source: CBRE Research, Q3 2015.
OFFICE MARKET USAGE FACTOR
OFFICE MARKET VACANCY RATE SOUTH VS. NORTH Vacancy Rate 35% 30% 30.2% 25% 20% 17.2% 15% 10% 5% 0% South of I-40 North of I-40 Source: CBRE Research, Q3 2015.
OFFICE MARKET WEIGHTED AVG ASKING RATE Weighted Average Asking Lease Rate ($/SF/YR) 18 16 14 12 10 8 6 4 2 0 Source: CBRE Research, Q3 2015. $12.38 $16.28 South of I-40 North of I-40
OFFICE MARKET WHERE S THE VACANCY? 10 Buildings with largest vacancies 1.34 Million SF 43% of Total Market Vacancy
OFFICE MARKET HALF IS IN DOWNTOWN! 5 Buildings In Downtown 729,000 Square Feet 24% of Total Market Vacancy
OFFICE MARKET MOST RECENT CONSTRUCTION 3 BUILDINGS MULTI-TENANT +50K 2008 & 2009 YEARS BUILT 226,000 TOTAL SQUARE FEET 75,000 AVERAGE SQUARE FEET
OFFICE MARKET GROSS LEASING ACTIVITY Gross Leasing Activity (SF, 000's) 1,000 900 800 700 600 500 400 300 200 100 0 2008 2009 2010 2011 2012 2013 2014 2015 YTD Source: CBRE Research, Q3 2015.
OFFICE MARKET CLASS A OUTSIDE DOWNTOWN 12.8% VACANT 123,000 Vacant Square Feet $22.50/SF Rental Rate
OFFICE MARKET CLASS A OFFICE CONSTRUCTION 50% - 70% PRE-LEASE $26/SF - $28/SF Rental Rate $3.50 - $4.50/SF New Premium
OFFICE MARKET WHERE & WHEN? 2016 LEASE EXECUTION 2017 DELIVERY NORTH I-25
OFFICE MARKET WHY? JOB GROWTH? LACK OF PRODUCT INEXPENSIVE VACANT LAND 30,000+ SF FLOORPLATES PROXIMITY TO EMPLOYEES AMPLE PARKING MODERN BLDG FEATURES
Success Story Jim Smith, CCIM, SIOR CBRE 31
SUCCESS STORY UNITED POLY SYSTEMS MESA DEL SOL - 5201 HAWKING SE 60,007± SF MANUFACTURING PLANT
SUCCESS STORY UNITED POLY SYSTEMS WHY BUILD A PLANT?
SUCCESS STORY UNITED POLY SYSTEMS
SUCCESS STORY UNITED POLY SYSTEMS
SUCCESS STORY UNITED POLY SYSTEMS WHY MESA DEL SOL - 5201 HAWKING SE? (South building former Schott Solar facility) 520 in length Heavy Power Availability of Yard Space Lease Purchase Option
SUCCESS STORY UNITED POLY SYSTEMS MESA DEL SOL - 5201 HAWKING SE INTERIOR 35 New Economic Based Jobs
SUCCESS STORY UNITED POLY SYSTEMS ECONOMIC DEVELOPMENT SUPPORT RESPONSIVE SUPPORT Albuquerque Economic Development $9M Bernalillo County Industrial Revenue Bonds (IRB) $450,000 Tax Exemption Job Training Incentive Program (JTIP)
Success Story 400 TIJERAS NW Tim With, CCIM, SIOR Colliers International 39
SUCCESS STORY MOLINA HEALTHCARE Century Plaza Largest Industrial Transactions Q4 2013 Q3 2014
SUCCESS STORY MOLINA HEALTHCARE 4 th Street Mall
SUCCESS STORY MOLINA HEALTHCARE
SUCCESS STORY MOLINA HEALTHCARE Administrative Offices Operator Command Ctr
SUCCESS STORY MOLINA HEALTHCARE With growth of cell phones and internet, CTL started focusing more on cloud and data center services Occupied only 1/3 of the building
SUCCESS STORY MOLINA HEALTHCARE BUILDING CHALLENGES Large Blocks of vacant Space in the building (150,000+ SF) Only 50 Parking Spaces Only 16 tenants in the entire market of 50,000+ Downtown office submarket approximately 30% vacant
SUCCESS STORY MOLINA HEALTHCARE 100,000+ SF 50,000 100,000 SF
SUCCESS STORY MOLINA HEALTHCARE Influencers to Sell Realize the difficulty of absorbing large blocks of office High costs to operate Ability to sign a long term leaseback Opportunity to re deploy sales proceeds
Success Story CENTURY PLAZA Tom Jenkins, CCIM, SIOR CBRE 48
SUCCESS STORY MOLINA HEALTHCARE 8801 Horizon Blvd 7401 Snaproll St
SUCCESS STORY MOLINA HEALTHCARE LOCATION REQUIREMENTS 150,000 contiguous square feet 40,000+ floor plates Redundant Power Dual fiber feed with multiple providers 5/1,000 Parking ratio Viable for 20 years
SUCCESS STORY MOLINA HEALTHCARE Proposed NorthPoint 25 Building
SUCCESS STORY MOLINA HEALTHCARE LEAVES DOWNTOWN FOR NORTH I 25 450 PARKING SPACES AVAILABLE DOWNTOWN
SUCCESS STORY MOLINA HEALTHCARE 20 40 First Galleria Alvarado Square Century Plaza
SUCCESS STORY MOLINA HEALTHCARE MUST HAVES Expansion Capability Amenities within walking distance Urban location desirable for recruiting millennial workforce Accessible location with public transportation
SUCCESS STORY MOLINA HEALTHCARE Century Plaza Largest Industrial Transactions Q4 2013 Q3 2014
SUCCESS STORY MOLINA HEALTHCARE Century Plaza Conceptual Interior
SUCCESS STORY MOLINA HEALTHCARE Century Plaza Largest Industrial Transactions Q4 2013 Q3 2014
Success Story Keith Meyer, CCIM, SIOR NAI Maestas & Ward 58
SUCCESS STORY FLAGSHIP FOODS WHY WOULD A COMPANY MOVE TO NEW MEXICO? OPPORTUNITY!
SUCCESS STORY FLAGSHIP FOODS TO AN SIOR OPPORTUNITY LOOK LIKE THIS:
SUCCESS STORY FLAGSHIP FOODS THE BUILDING BLOCKS OF THE DEAL Industrial Revenue Bonds Albuquerque Economic Development J TIP Training Money LEDA Funds
SUCCESS STORY FLAGSHIP FOODS
SUCCESS STORY FLAGSHIP FOODS GOOD NEWS TRAVELS FAST 2PM 4PM 8AM Next Day 7days later First Meeting with Client Call AED about opportunity AED has Breakfast with Flagship Foods CONFERENCE CALL +
SUCCESS STORY FLAGSHIP FOODS THE DEAL Very spirited negotiations 10 year lease with options $150,000 apart on Tenant Improvements Conference call with Jon Barela and Gary Tonjes to close the gap
SUCCESS STORY FLAGSHIP FOODS THE RESULT 50 New Mexico jobs are saved 325 New manufacturing jobs are added 138,000 SF of vacant manufacturing space filled
SUCCESS STORY FLAGSHIP FOODS THE RESULT $5 Million Spent in construction and remodeling $4 Million Spent in new equipment $10 Million Spent in annual payroll and benefits
SUCCESS STORY FLAGSHIP FOODS
SUCCESS STORY FLAGSHIP FOODS
SUCCESS STORY FLAGSHIP FOODS What does success taste like? Take home your complimentary bottle of 505 Southwest Sauce and find out!
The New Mexico Chapter SIOR wishes to thank Atsuko Poelman of CBRE & Kim Vanderpool of CBRE for their assistance in creating this presentation. 70
QUESTIONS 71