WESTERN SNAPSHOT, SEPTEMBER 2007

Albuquerque Retail Market

Foltz

Albuquerque continues to draw the spotlight from national retailers as well as developers and investors, its residential growth attracting widespread attention. The Cottonwood Mall, Rio Rancho, North Interstate 25 and Far Northeast areas continue to lead the market with vacancy rates under 4 percent. Also showing increased retail growth are the Uptown, Southwest Mesa, Los Lunas and East Mountains submarkets.

Recently completed projects in the Cottonwood Mall area include Cottonwood Corners and Cottonwood Commons. Kohl’s, Circuit City, Borders Books & Music, Pei Wei, Tropical Smoothie, Massage Envy, Ideal Image and Mark Pardo Salon and Spa complete the 600,000-square-foot Cottonwood Corners project. Bed, Bath & Beyond, Cost Plus World Market and PetCo anchor Cottonwood Commons, located adjacent to Lowe’s Home Improvement Warehouse. Costco is currently under construction across from Cottonwood Mall as well as Smith’s Food & Drug. With the recently opened extension of Paseo del Norte and a new high school opening this fall, additional residential and retail are expected to follow.

Rio Rancho continues to be one of the fastest growing small communities in the nation from a residential standpoint, and retail development is not far behind. A new Wal-Mart Supercenter was completed at the corner of Southern and Unser boulevards. New to the north side city are a recently completed multi-purpose arena in a newly developing town center, a new administration building under construction, and plans for a new University of New Mexico branch college and Lionsgate Studios facility. These developments will certainly stimulate retail and restaurant development to serve this burgeoning employment / education / entertainment complex.

Northern Rio Rancho also continues to attract retail for an underserved residential population. Another Wal-Mart Supercenter is currently under construction in the City of Bernalillo, which is located on Interstate 25 adjacent to Rio Rancho on the way to Santa Fe. Flying Star restaurant, a local favorite with several locations in Albuquerque, is currently under construction along with adjacent upscale retail space near the intersection of Camino del Pueblo and NM #550.

Uptown, the location of Albuquerque’s two older malls, Coronado Mall and Winrock Center, is now home to ABQ Uptown, the city’s first lifestyle center. Tenants such as Pottery Barn, Apple, BCBG, Sharper Image, Elephant Bar and Coldwater Creek have opened their first stores in Albuquerque, joining Williams Sonoma, White House/Black Market, Chico’s and others to bring a higher level of sophistication to Albuquerque’s shopping experience. ABQ Uptown, being developed by Hunt Development, is currently planning two additional phases, which will add more retail, residential, office, entertainment and hotel rooms to an already retail rich area. Winrock Center, adjacent to ABQ Uptown and home to two Dillard’s stores, is currently undergoing plans for a major renovation.

The North I-25 and Far Northeast corridors continue to experience vacancy rates less than 4 percent and have several new big box tenants with the addition of Kohl’s and Ashley Furniture. In addition, Trader Joe’s and Pharmacia recently entered the Albuquerque market with their first stores on Paseo del Norte. Several new strip centers are being constructed along Paseo del Norte, one of them anchored by Flying Star.

Downtown Albuquerque is poised to experience new growth with the planning of a new multi-purpose arena, extended New Mexico Rail Runner commuter train service to Santa Fe by the end of 2008, and the addition of more high-density apartment and loft condo projects such as Paradigm Development Company’s The Belvedere. Already the focal point of Albuquerque’s nightlife scene with a Century Theatre and numerous restaurants and nightclubs, the downtown area should see more retail development soon.

Infill and redevelopment projects are happening throughout the city. A new retail and apartment project is currently under way near the University of New Mexico’s main campus. Sunflower Market is currently remodeling an old market space for its second Albuquerque location. The old Wyoming Mall has been demolished to make way for a new Wal-Mart Supercenter. An old vacant center at I-40 and 12th Street has been replaced by a new Lowe’s Home Improvement Warehouse.

Two new master-planned communities are underway with retail as integral components. At Mesa del Sol, located south of the Albuquerque International Airport near I-25 and Rio Bravo, master developer Forest City Enterprises is planning a 600,000-square-foot urban center to be built at a future I-25 interchange. SunCal Companies, a California-based developer, has purchased the former Westland Development properties on the west side of Albuquerque and is planning a retail town center to serve its numerous residential developments underway near Interstate 40 and 98th Street.

Lease rates for new construction projects are in the high $20s to low $30s per square foot in some areas and up to the low $40s in the ABQ Uptown development. Impact fees, a proposed big box ordinance and a proposed new archaeological ordinance threaten to add even more costs to development in Albuquerque, causing rates to continue to increase. Several surrounding communities, including Los Lunas, Rio Rancho and Edgewood, in the East Mountain area, are taking advantage of this opportunity by encouraging retail development in their communities.

Greg L. Foltz is president and qualifying broker at Coldwell Banker Commercial – Las Colinas in Albuquerque.


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