A Changing Landscape - Colliers International...the Albuquerque MSA, though there are a few,...
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A Changing Landscape Last year’s holiday season saw sales rise overall, but with online sales continuing to take a bigger piece of the pie, retailers are having to adapt. As a result, some companies are struggling while others thrive. New opportunities have also arisen as consumers look more and more for retail “experiences.” Along with the rest of the country, Albuquerque continues to feel the effects of the changing retail landscape. Many national retail bankruptcies and store closures have created numerous vacancies across the city. Over the last quarter, the city saw closures at Cottonwood Mall including Macy’s, Wet Seal, The Limited, Zio’s and Lonestar. The Uptown submarket saw Marcello’s Chophouse close its doors after 10 years of business and Sears has downsized its footprint by 50 percent. In addition to Marcello’s and Lonestar, a third steak house, Texas Land and Cattle located in the North I-25 submarket, closed in the first quarter. With Gordmans and BCBG Max Azria filing for bankruptcy and Bebe adopting an all-online model, Albuquerque’s retail scene is likely to see more closures in the coming second quarter. As stores are closing their doors, there are already new doors opening. National chain restaurants, locally owned breweries and well positioned discount apparel are thriving in the Albuquerque retail market. Retailers like Tuesday Morning and Ross Dress for Less have been well received in the Albuquerque market as quality discount retailers. Tuesday Morning recently relocated in the Cottonwood submarket. The store joined Home Goods in a backfill of a junior anchor space where Circuit City had previously been in 2009. Until now, the space had been used as a seasonal location for Spirit Halloween and was temporarily home to a Baillo’s west side location. The large spaces left by last year’s closure of Hancock Fabrics, Office Max and Sports Authority have already begun to be Research Report ALBUQUERQUE | RETAIL Q1 2017 Key Factors in This Quarter > Retail bankruptcies and store closures have left particularly high vacancies in the Cottonwood submarket > Various discount stores have found success in Albuquerque, backfilling larger spaces vacated by national tenants > Food continues to grow in the city, attracting many new to market concepts as well as single tenant fast food > New breweries continue to enter the market, despite concerns they may be reaching their saturation point and facing stonger competition Albuquerque Market Summary Total SF..................................................... 29,399,835 Total Available SF .....................................................2,630,103 Availability %.................................................................. 8.95% Total Vacant SF .......................................... 2,520,343 Vacancy % ........................................................ 8.57% Q4 2016 Available SF............................................... 2,401,325 Q4 2016 Available % ...................................................... 8.17% Change in Available SF.....................................228,778 Asking Rent.................................................................... $14.10
Transcript of A Changing Landscape - Colliers International...the Albuquerque MSA, though there are a few,...
A Changing LandscapeLast year’s holiday season saw sales rise overall, but with online sales continuing to take a bigger piece of the pie, retailers are having to adapt. As a result, some companies are struggling while others thrive. New opportunities have also arisen as consumers look more and more for retail “experiences.”
Along with the rest of the country, Albuquerque continues to feel the effects of the changing retail landscape. Many national retail bankruptcies and store closures have created numerous vacancies across the city. Over the last quarter, the city saw closures at Cottonwood Mall including Macy’s, Wet Seal, The Limited, Zio’s and Lonestar. The Uptown submarket saw Marcello’s Chophouse close its doors after 10 years of business and Sears has downsized its footprint by 50 percent. In addition to Marcello’s and Lonestar, a third steak house, Texas Land and Cattle located in the North I-25 submarket, closed in the first quarter. With Gordmans and BCBG Max Azria filing for bankruptcy and Bebe adopting an all-online model, Albuquerque’s retail scene is likely to see more closures in the coming second quarter.
As stores are closing their doors, there are already new doors opening. National chain restaurants, locally owned breweries and well positioned discount apparel are thriving in the Albuquerque retail market.
Retailers like Tuesday Morning and Ross Dress for Less have been well received in the Albuquerque market as quality discount retailers. Tuesday Morning recently relocated in the Cottonwood submarket. The store joined Home Goods in a backfill of a junior anchor space where Circuit City had previously been in 2009. Until now, the space had been used as a seasonal location for Spirit Halloween and was temporarily home to a Baillo’s west side location.
The large spaces left by last year’s closure of Hancock Fabrics, Office Max and Sports Authority have already begun to be
Research Report
ALBUQUERQUE | RETAILQ1 2017
Key Factors in This Quarter > Retail bankruptcies and store closures have left particularly high vacancies in the Cottonwood submarket
> Various discount stores have found success in Albuquerque, backfilling larger spaces vacated by national tenants
> Food continues to grow in the city, attracting many new to market concepts as well as single tenant fast food
> New breweries continue to enter the market, despite concerns they may be reaching their saturation point and facing stonger competition
Albuquerque Market SummaryTotal SF ..................................................... 29,399,835
Total Available SF .....................................................2,630,103
Availability %.................................................................. 8.95%
Total Vacant SF .......................................... 2,520,343
Vacancy % ........................................................ 8.57%
Q4 2016 Available SF ...............................................2,401,325
Q4 2016 Available % ...................................................... 8.17%
Change in Available SF .....................................228,778
Asking Rent .................................................................... $14.10
2 Albuquerque Research Report | Q1 2017 | Retail | Colliers International2
backfilled. Ross has backfilled the Office Max space in La Cueva Town Center. Sketchers is backfilling a portion of the Hancock Fabrics space in Plaza Paseo del Norte. NAPA will also be backfilling a portion of the San Mateo and Candelaria Hancock space.
Food, especially single tenant fast food with drive thru, continues to expand and do well in Albuquerque. Many new to market concepts are currently in the works for the city. Blaze, Sauce Pizza, Thai Boran, Takumi, and la Madeleine are all currently in the process of entering the market.
Microbreweries also continue to grow despite some speculation that perhaps Albuquerque has hit its saturation point. The Canteen Taproom has seen success at its new Tramway location and Steel Bender Brewyard opened at the end of the quarter on 2nd Street.
Despite so many openings, New Mexico is still in the lower half of states for gallons of beer sold per legal aged adult. However, the state has climbed to 11th in the nation for number of breweries per capita. According to the Brewers Association, there were 3.1 craft breweries per capita in 2016. More breweries are expected to open throughout the remainder of 2017. Whether or not the market has actually hit its saturation point, a competitive threshold has certainly been reached. With the significant presence of strong established competitors in the market, new breweries will have a harder time establishing market share than in past years.
Despite fluctuating interest rates, there has been little upward movement in the cap rates of Single Tenant Net Lease and core assets. Available investment inventory supply remains constrained in the Albuquerque MSA, though there are a few, perceived higher risk, non-core assets that have been slow to trade. Over the balance of 2017, Albuquerque is likely to be impacted by upward pressures in all asset classes as the national retail landscape changes.
Albuquerque Vacancy by Submarket
16%
14%
12%
10%
8%
6%
4%
2%
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% of Submarket % of Total Vacancy
Steel Bender photos courtesy: C. Kizer
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Market Statistics by UseAlbuquerque – Retail
PRIMARY USE TOTAL SF AVAILABLE SF VACANCY AVAILABLE % VACANCY % CHANGE IN AVAILABILITY RENT Q1 2017
Community 2,211,070 149,113 142,106 6.74% 6.43% 38,672 $14.61 Free-standing 8,441,577 341,161 329,052 4.04% 3.90% (13,599) $12.53 Neighborhood 7,271,016 1,221,102 1,169,148 16.79% 16.08% 38 $13.63 Power 1,529,223 213,198 205,235 13.94% 13.42% (62,777) $13.00 Showroom 1,851,189 - - 0.00% 0.00% - - Specialty/Theme 380,815 - - 0.00% 0.00% 1,725 - Strip 5,176,864 452,398 428,671 8.74% 8.28% (34,214) $13.24 Super Regional 2,190,336 206,278 206,278 9.42% 9.42% (162,050) - Urban Retail 347,745 46,853 46,853 13.47% 11.46% 3,427 $16.95 Total 29,399,835 2,630,103 2,527,343 8.95% 8.57% (228,778) $14.10
Market Statistics by SubmarketAlbuquerque – Retail
SUBMARKET TOTAL SF AVAILABLE SF VACANCY AVAILABLE % VACANCY % CHANGE IN AVAILABILITY RENT Q1 2017
Cottonwood 4,156,757 335,275 324,518 8.07% 7.81% -182,462 $9.19 Downtown 597,532 46,116 39,116 7.72% 6.55% 1,805 $14.79 Far Northeast Heights 3,947,553 305,543 304,423 7.74% 7.71% 6,277 $13.82 North I-25 3,327,712 354,528 335,424 10.65% 10.08% -22,366 $4.78 North Valley 973,625 97,756 87,906 0.00% 9.03% -18,834 $10.10 Northeast Heights 4,327,493 310,024 273,780 7.16% 6.33% -37,102 $9.93 Rio Rancho 2,057,801 292,971 292,971 14.24% 14.24% 2,570 $9.84 South Valley 1,265,369 143,492 143,492 11.34% 11.34% 9,594 $3.48 Southeast Heights 2,873,621 345,444 342,029 12.02% 11.90% 2,845 $9.68 University 971,353 45,329 45,329 4.67% 4.67% 5,926 $9.52 Uptown 2,459,628 122,015 122,015 4.96% 4.96% 6,161 $22.83 West Mesa 2,441,391 231,610 216,340 9.49% 8.86% -3,192 $11.57 Total 29,399,835 2,630,103 2,527,343 8.95% 8.60% -228,778 $14.10
* Retail inventory includes all multi-tenant and single tenant buildings at least 10,000 square feet. Available space includes all vacant space and occupied space currently on the market. “Change in Availability” is based on the change in availability from Q4 2016 to Q1 2017. Absorption will be found in subsequent reports after new vacancy data is collected.
Information herein has been obtained from sources deemed reliable, however its accuracy cannot be guaranteed. The user is required to conduct their own due diligence and verification.
Copyright © 2017 Colliers International.
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Sarah Lynas Director of Marketing & Research | Albuquerque +1 505 880 7012 [email protected]
Maxwell Gesten Research Analyst | Albuquerque +1 505 880 7004 [email protected]
Copyright ©2017 Colliers International.The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
Albuquerque Submarket Area Map
