Bob - - - - Walt, last week we talked about the industrial market, can you give us an update on the office market and if we have time, the retail market also?
Walt - - - - Good morning Bob. The second quarter of 2012 had one significant transaction and that was the Lowe's call center occupying 65,000 ft.² at 6301 Jefferson. Red Cross also moved into 10,000 ft.² on Pan-American.
The vacancy rate for Downtown is over 22%, North I-25 corridor is 16.6%, in the Uptown market the vacancy is a 21.4%. So there is still substantial vacancy in the office market. The total vacancy in all markets for office space is 18%.
Median asking lease rates are $22 per square foot per year on a full-service basis for class A space, $17.50 for class B and $14 for class C. The overall median asking rate for office space is just over $15.50 per square foot per year.
On the construction front, there is no construction underway in the office market at this time.
Bob - - - - What about the retail market can you give us a quick update on that market?
Walt - - - - The retail market is showing signs of life. Over 100,000 ft.² of retail space was absorbed in the second quarter of 2012.
The overall vacancy declined to 12.1%. A couple of notable movements were Savers, occupying 45,000 ft.² in the northeast heights and Albuquerque Youth Symphony occupying 24,000 ft.² on Menaul.
Activity is up in the retail market and another good sign was 25,000 ft.² of newly constructed retail space and add that to the ongoing construction of Targets 165,000 ft.² are good signs in the retail market.
The overall median asking rent is $13 per square foot per year on a triple net basis. Those asking rates include $12 per square foot per year for in-line strip retail centers and up to $43 per square foot for regional malls.
So summarizing these two markets, the office market continues to experience significant challenges including high vacancy rates and high unemployment numbers which continue to hamper any recovery in the office market.
On the other hand, the retail market appears to have headed toward a mild recovery; it appears this recovery will remain moderate until we get into 2013.
So for both the office and the retail markets, there still are opportunities for tenants to negotiate good rates, concessions, terms and tenant improvement dollars.
Bob - - - - Walt, talking people contact you today to talk about commercial real estate?
Walt - - - - Thanks Bob, Walt Arnold, Sperry Van Ness, my direct line is 256-1255 and our website is Walt Arnold.com. I know that was a quick summary of the office and retail market in the Metro area, give me a call and we can talk about these markets in more detail. Bob thanks for the time today, will talk again next Monday.
Walt Arnold CRE Report