— By Anthony Johnson, AJ Johnson and Chris Fiello, Pegasus Group —
New Mexico is no different than the rest of the nation and is not immune to some of the same symptoms that are taxing the national retail market. However, New Mexico retail is also showing signs of resilience as it reshapes itself and finds ways to weather the storms of high interest rates, major brand closures, economic uncertainty and crime.
As of now, the big issue is in the theft and resale of retail goods. Indeed, the problem of brazen theft — which is seen in countless cites in the nation — has led New Mexico Gov. Lujan Grisham to announce the revival of the Governor’s Organized Crime Prevention Commission. The hopes are to crackdown on this behavior, which is having a detrimental impact on the bottom line for New Mexico businesses, especially small ones. This onslaught of petty shoplifting to organized sprees of large-scale theft has caused retailers large and small to exit locations. Target, for example, announced in May that it was preparing for a loss of half a billion dollars this year because of rising theft.
In 2023, New Mexico saw multiple store closures, including several national retailers like Walmart, Macy’s, Bed, Bath & Beyond and Tuesday Morning. And like the rest of the country, where 800 retail stores are closing or will close in 2023, New Mexico is showing the same pattern.
But the news isn’t all doom and gloom. Retail has remained resilient and has chosen to evolve rather than die. While tired and uninspired restaurants close their doors, multiple innovative food hall/entertainment venues have opened across our state. These include the Block @ Plaza Enchanted Hills in Rio Rancho and Sawmill Market and Tin Can Alley in Albuquerque.
As enclosed malls have suffered through the pandemic, mall staple retailers like Bath & Body Works are signing leases in power center-type projects that are typically anchored by the thriving discount soft good retailers. Similarly, malls like Winrock Town Center have been “de-malled” and converted into the dominant retail power center in the state. Following the trend of evolution, buildings that were once home to other businesses that didn’t double down on customer service and convenience are coming down to accommodate brands that are growing rapidly. These brands include Chick-Fil-A, Raising Canes, Dutch Bros, Champion Xpress Car Wash, etc.
Ultimately, the retail real estate market in New Mexico is stronger than ever, but looks different than it did 30 years ago. Those who embraced the change in an increasingly global and digital age are becoming the face of the ever-changing look of retail real estate in New Mexico.
In terms of new retail development, the state will soon receive a new, ground-up shopping center in Carlsbad from SimonCRE and Unisus Development. The project will contain about 200,000 square feet of retail space, pad sites and shop retail. THE BLOCK, a new $11.5 million retail/entertainment venue, is also under construction in Rio Rancho. The center will feature indoor and outdoor retail and event areas made from repurposed shipping containers. The project was announced by real estate investment management company TDA Investment Group (TDA) in conjunction with Pegasus Group in October 2022. Construction on the project commenced in November 2023 and is scheduled to open in 2024.
The market for prime retail pad sites has also been white hot. Prices have soared and vacancy is at an all-time low. This surge has been led by carwashes, chicken QSRs, coffee QSRs and cannabis dispensaries. With that said, we are finally experiencing a well-needed correction in the market, as all this growth has started to stabilize to a more sustainable level.