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  • Realty & Development Advisors, L.L.C.
  • 8814 Horizon Blvd. NE #400
  • Albuquerque, NM 87113

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Office search pleasant when there’s plenty of choice

The Sheehan & Sheehan law firm’s recent search for its next office took it from Downtown to Journal Center to Uptown, illustrating what it’s like in arguably the softest office market in Albuquerque’s history.

With its lease expiring this summer at the First Plaza building in Downtown, managing director David Gorman said the decision was made to scout for space that was better configured to meet the firm’s evolving needs.

Scott Throckmorton of Argus Investment Realty was their guide in an office market that reached a recent peak vacancy rate of 21.5 percent in the third quarter of 2014, according to Colliers International. The most recent rate was 20.5 percent in the first quarter of this year.

Albuquerque’s all-time-high office vacancy rate is 22.4 percent, set in 1989, according to historic data kept by CB Commercial, a predecessor company of commercial real estate services firm CBRE.

Sheehan & Sheehan was looking for Class B office space, which makes up two-thirds of Albuquerque’s office market. A Class B building typically has a wide range of tenants and looks pretty good. Rents are in the middle of an office market’s high-to-low range.

The average asking lease rate for Class B space was $16.10 a square foot in the first quarter, roughly where it was at the end of 2006 and down more than 10 percent from a high of about $18 a square foot in mid-2009, according to Colliers data.

“Generally speaking, we were looking at solid B to B+ buildings with good ownership, good management, no deferred maintenance and curb appeal,” Throckmorton said. “We did take a look at some Class A buildings to give them a sense of price and quality.”

A factor in the search was that Sheehan & Sheehan, as a 60-year-old law firm with 10 attorneys, would be considered a low-risk tenant by any local landlord. In other words, doors opened for them.

“There were quite a few potential options out there,” Gorman said. “There were certainly people interested in having us. It made it very attractive.”

With Throckmorton screening out unsuitable properties, the law firm ended up looking at four spaces in Downtown, four in the Journal Center area and four in Uptown.

“We looked at eight or nine spaces in one afternoon,” said Quentin Smith, an attorney with the firm who participated in the search.

“I can’t speak for everybody, but I enjoyed the process,” Gorman said. “Trying to visualize how we would fit into a space, what it would look like.”

The search was narrowed to three finalists, then through negotiations to two finalists before the five-story, 74,057-square-foot Albuquerque Centre at 6001 Indian School NE in Uptown was chosen.

In broad terms, the Downtown buildings tended to be a little dated and required the added cost of paid employee parking, they said. Journal Center area buildings are new, but seemed a little expensive, they said.

“Uptown seemed like it had good value for pricing and quality of building,” Throckmorton said.

Concerning the Albuquerque Centre, where the law firm will lease 10,000 square feet with a balcony on the fourth floor, Gorman said the negotiated deal “became the standard against which we measured everything else.”

Built in 1985, the building has been owned by a partnership that originated in Albuquerque in the early 1990s, and is currently 86 percent occupied, said leasing agent Barbara Haase of Cauwels & Stuve Realty and Investment Advisors, which manages the property.

The asking lease rate at Albuquerque Centre is $18.50 a square foot. The building has gone through a series of upgrades recently, including a new heating and cooling system, upgraded energy-efficient lighting, a renovated lobby and rest rooms, and an exterior paint job.

“That’s what it takes to lease a building in this market,” Haase said.

The space that Sheehan & Sheehan will occupy formerly housed the Cauwels & Stuve company, said Paul Cauwels, who added, “What made the deal happen was we had some great space for them. We knew it could be laid out really well for them.”

Another factor in the deal – or maybe just a coincidence – is that all the commercial real estate players know each other well. Cauwels and Throckmorton were high school classmates and friends, while Throckmorton and Argus associate Stacey Nenninger have worked with Haase on any number of successful deals over the years.

Albuquerque Journal, published April 27, 2015

Massive industrial build-to-suit project gains footing in South Valley

Apr 21, 2015, Damon Scott, Reporter- Albuquerque Business First

Almost 381,000 square feet of build-to-suit industrial warehouse space has been proposed on a plot of land in Albuquerque’s South Valley.

Jim Smith, the industrial specialist at CBRE New Mexico, is working with Cauwels & Stuve Realty & Development Advisors on the massive project that would consist of three buildings ranging from 108,000 to 163,000 square feet each.

The project is important to the Albuquerque area’s market as most of its desirable industrial buildings, with high ceilings and other amenities, have been gobbled up. And there’s no speculative construction on the horizon, as asking lease rates for the more updated stock are much less than what a new building would cost to construct. “No developer is crazy enough and no bank would be willing to loan on those types of buildings,” he said.

Build-to-suit shells, though, can give prospective companies a more ready-to-go option, with a shorter timeline for construction completion.

The build-to-suit project is located in the South I-25 corridor where much of the city’s industrial activity has been taking place. US Foods is operating there, as well as Admiral Beverage Corp. and auto parts provider LKQ. The corridor has started to catch up on the retail end as well, with Las Estancias continuing to add to its retail and restaurant lineup at Coors and Rio Bravo boulevards.

The shells that Cauwels & Stuve would build would offer ceiling heights of 28 feet and other specs that companies looking for build-to-suit space want, Smith said. “Most of the newer industrial buildings built after 2000 that have more than 22 or 24 feet of height are at about 3 percent vacancy [in the Albuquerque area],” Smith said. “The older stuff has been vacant for three or four years.”

Smith says “flat is the new up” in the industry. “There’s not a lot of activity and the median industrial transaction size has trended down since 2011. There are not a lot of big companies moving around for the most part,” he said. Smith added that for every Nova-moving-into-a-Schott-building type transaction, there are 50 transactions of 1,500 to 3,000 square feet. Nova Corp. recently moved its data center operations to the former Schott Solar building at Mesa del Sol. “It’s musical chairs with not a big influx of new users. We’re recovering slowly,” said Smith.

New industrial park planned for South Valley

A 24-acre industrial park, with a 108,800-square-foot warehouse as its opening phase, is planned by a group of local investors on Prince SE, north of Rio Bravo in one of the Albuquerque metro area’s go-to areas for industrial development.

Preparations are underway to have the initial 108,800-square-foot building, one of three planned for the site, ready for construction once a tenant is lined up to lease a minimum of 50 percent of its space, said Paul Cauwels, who with Jeff Stuve head up the investment group.

“We like the South Valley for industrial development because North I-25 (submarket) land prices make it cost prohibitive,” Cauwels said. “Rio Bravo is one of six bridge crossings so you’ve got open access to the West Side if you’re distributing product locally.”

The initial building will be concrete tilt-up construction with 28-foot-high ceilings. Part of the basic lease package is office space built as an exterior addition to the warehouse proper, Cauwels said.

“Offices inside warehouses are dark and mostly windowless,” he said. “This way, you get three sides with glass and skylights that work.”

Regarding the building’s 28-foot-high ceilings, leasing agent Jim Smith of CBRE noted that, at the end of the year, industrial buildings with ceilings 24 feet and higher had a vacancy rate of 3 percent compared to a vacancy rate of 9.4 percent for buildings with ceilings lower than 24 feet.

Cauwels and Stuve are local commercial real-estate veterans who are partners in Cauwels & Stuve Realty and Development Advisors. Their industrial park at 3750 Prince SE is near two of the South Valley’s premium distribution centers, US Foods and Admiral Beverage.

April 14, 2015 from the Albuquerque Journal

Mark Thompson awarded the designation of CCIM

Cauwels & Stuve broker Mark Thompson was recently awarded the designation of CCIM, which makes him a Certified Commercial Investment Member. This is a coveted designation that is recognized as a hallmark of professional competency. CCIM qualifies its members as experts in the field of commercial real estate investments and offers an undisputed competitive advantage in the industry. The pinning ceremony held last week in Chicago culminated a six month process of coursework, case studies and comprehensive exams.

April 2015

C&S Signs New Uptown Lease for Law Firm

Sheehan & Sheehan, P.A., a Martindale-Hubbell AV rated law firm, is relocating its ABQ headquarters from Downtown to Uptown. The company will occupy over 10,000 square feet at 6001 Indian School Road NE, known as Albuquerque Centre, a property managed and leased by Cauwels & Stuve. According to the Sheehan & Sheehan website, the firm was established in 1954 and engages in general, civil, trail and appellate practice in all state and federal courts in New Mexico. Albuquerque Centre has undergone numerous upgrades in the past 2 years, including replacement of the 150 ton chiller/boiler, renovating the entry lobby and restrooms, updating common area finishes, and painting the exterior. The property has a mix of professional tenants such as attorneys, engineering firms and insurance companies and is locally owned.

April 2015