The Albuquerque metro is maintaining a steady retail market. Keys to this steadiness include year-over-year positive job growth, consistent population expansion, low unemployment and a measured expansion of retail inventory since 2000. On the other side of the coin are two items of concern: some flatness in retailer sales figures and retailers being impacted by their stores in other marketplaces outside the Albuquerque metro.
Albuquerque’s retail sector of 27.28 million square feet (measured from buildings equal to or exceeding 10,000 square feet in size) has posted a vacancy rate of 7.8 percent across all product types, down from 8.1 percent last year. Asking rents for new construction shop space are $20 to $28 per square foot per year NNN. In the Cottonwood Mall and Uptown submarkets, top spaces are in the $30 to $45 per square foot range. Asking rents for new mid-size and large space range from $16 to $20 per square foot per year and $12 to $16 per square foot per year, respectively.
Active submarkets within the Albuquerque metro area are Uptown, Far Northeast Heights and the South Valley. In Uptown in the past 2 years, Coronado Mall and ABQ Uptown have welcomed the leading tenants in today’s mid- to upscale arena. General Growth Properties’ Coronado Mall has expanded Victoria’s Secret and added Forever 21 and Sephora. Hunt Development’s ABQ Uptown is the premier outdoor/esplanade development in New Mexico. William’s Sonoma, Pottery Barn, Apple Store and more make it the place to shop and be seen in Albuquerque.
In the Far Northeast Heights submarket, retail development has focused along the Paseo del Norte corridor east of Interstate 25. Target, Lowe’s Home Improvement Warehouse and Ashley Furniture have anchored the corridor at I-25, while Albertson’s, Trader Joe’s and Pharmica have anchored the corridor at Ventura Boulevard. The underserved South Valley submarket has struggled for attention over the years yet boasts a population of 104,934 (2007 estimate). In 2006, Wal-Mart Supercenter positioned itself at Rio Bravo and Coors Boulevard. Today, a home improvement-anchored development with junior anchors, shop retail and pads are pre-leasing adjacent to the mass merchandiser. Last month Pro’s Ranch Market opened an approximately 79,000-square-foot grocery store within a 220,000-square-foot retail redevelopment at Atrisco and historic Central Avenue SE.
An underserved marketplace for years, Rio Rancho has now been discovered and defined in a retail manner by Wal-Mart Supercenter. The submarket’s second location opened in April at highways 528 and 550. Of note is a Lowe’s Home Improvement Warehouse-anchored development in Rio Rancho at Northern and Loma Colorado boulevards. Midland Development Company’s Loma Colorado will offer an additional 170,000 square feet of anchor, junior anchor and shop space, plus pad sites.
The third and fourth quarters will pick up the retail pace. Currently, a number of retailers, developers and investors are considering the Albuquerque market. They find the benefits of a growing population, solid job growth and generally solid demand. One of the great unknowns though is fuel cost. Based on an ICSC study, a one-cent increase in fuel costs results in a $1 billion impact in annual retail sales nationally. The belief here is that Albuquerque’s retail marketplace is more stable than many areas nationally and will stand the test of 2008 to set up for greater success in 2009.
Steve Lyon is vice president at NAI The Vaughan Company in Albuquerque.