Brokerage Outlook: New Mexico

• Las Cruces Retail

• Albuquerque Retail

• Albuquerque Industrial

• Las Cruces Industrial

• Albuquerque Multifamily

• Albuquerque Office

• Las Cruces Office

Las Cruces Retail Oxford Submitted by Grady Oxford, associate broker with the Las Cruces, New Mexico office of STEINBORN/ TCN COMMERCIAL. Posted 09/19/07. What area is your expertise? • With over 20 years of experience, one of my specialties includes the retail market of Las Cruces, New Mexico. What trends do you see presently in retail development in your area? • There have been several infill developments and Las Cruces has started to grab the eye of national retailers and tenants. Because of such influx there has been a high demand for retail sites. What type of retail product is doing well in your area? • Anchored shopping centers with small shop and pad retail sites have been and are doing well in the Las Cruces area. What retailers are new to your area? • Many national retails have started to place anchor sites in Las Cruces. Some of the most recent include a high influx of Starbucks Coffee, Best Buy, Men’s Warehouse and others. Who are the active retail developers in your area? • There are a few local developers but there has been recent interest from regional and national development groups. Where is the majority of development taking place? Why is this area doing well? • Most retail developments are starting to stretch towards the north end of Las Cruces towards the higher-end housing market. Because of the newer and more upscale housing in the northeast end of Roadrunner Parkway, retail sites and retailers and have begun developments in the highly sought after neighborhoods and regions. What area do you expect to be the next big retail development market? Why? • The next big retail developments are going to be taking place in the northeast end of Las Cruces. The reason for this is again is the higher demographics in that area. Please describe the retail leasing activity in your area. • There seems to be a separation of the classes. Class B shopping centers seem to be struggling, while A and C centers are performing well. Please give a measure of retail vacancy rates and a measure of available sublease space. • Retail vacancy rates in Las Cruces have typically been in the range of 7.5 percent through 14 percent depending upon location and site selection. What types of retailers should look into your market in the coming year? What type of retail is needed? • More upscale retailers should consider Las Cruces because of its growing demographics. I think Las Cruces is preparing itself for a higher-end retail cluster.

Albuquerque Retail Jones Submitted by Tom Jones, senior associate with Albuquerque, New Mexico-based Grubb & Ellis/New Mexico. Posted 12-13-05. click here to see chart What area is your expertise? • Retail, Albuquerque and surrounding areas. What trends do you see presently in retail development in your area? • There have been several infill developments but major development is being analyzed in Rio Rancho and the southwest quadrant. What type of retail product is doing well in your area? • Anchored shopping centers with small shop and pad retail. What retailers are new to your area? • Trader Joe’s, Kohl’s Who are the active retail developers in your area? • There are a few local developers but there has been recent interest from regional and national development groups. Please name one or two significant retail developments in your area. What impact will these projects have on the market? Ventura Place (underway): community center Located at: Paseo Del Norte & Ventura Blvd, Albuquerque, NM Developed by: Jayeff Development Tenants: Trader Joe’s, Jinja (Asian rim restaurant with locations in Orlando, Florida, and Santa Fe, New Mexico). Other major tenants are in negotiation but cannot be disclosed. Albuquerque Uptown (underway): lifestyle center Developed by: Hunt Development Located at: Louisiana Blvd & Indian School Rd, Uptown, Albuquerque Tenants: Talbots, Cold Water Creek, Jared Jewelers, J. Jill Paseo & I-25: Located at: Paseo Del Norte & I-25 Tenants: Lowe’s Home Improvement, Target, Walgreens, Office Depot Where is the majority of development taking place? Why is this area doing well? • Rio Rancho & southwest quadrant of Albuquerque. What area do you expect to be the next big retail development market? Why? • Rio Rancho, New Mexico. The city has the land mass and the vision to master plan the growth of the city and they are very pro-business and pro-development. Please describe the retail leasing activity in your area. • There seems to be a separation of the classes. B shopping centers seem to be struggling while A and C centers are performing well. What major leases have been closed recently? • Trader Joe’s 14,000 square feet at Ventura Place • Ace Hardware, 14,000 square feet in the former Eckerd’s building at Tramway & San Bernardino Hastings’s, and 14,000 sft in the former Eckerd’s building at Tramway & Candelaria. Please give a measure of retail vacancy rates. Please give a measure of available sublease space. • 9.1 percent vacancy rate in Albuquerque • Retail sublease available in Albuquerque - 288,000 square feet What types of retailers should look into your market in the coming year? What type of retail is needed? • More upscale retailers. I think Albuquerque is ready to step up to a higher end retail mix.

Albuquerque Industrial Jim Smith Jim Smith, senior associate with the Albuquerque, New Mexico, office of CB Richard Ellis. Posted 06/26/07. What area is your expertise? • Albuquerque, New Mexico Industrial. What trends do you see presently in industrial development in your area? • Albuquerque continues to see a very tight lease market with slowly rising lease rates and little for-sale inventory. This situation is expected to continue for a time because high construction costs make it difficult to bring competitively priced new product on line. What type of industrial product is doing well in your area?            • All types. Industrial condo projects have been particularly successful in the past 2 to 3 years, driven by smaller owner/users. Who are the active industrial developers in your area? • The most active developers in the Albuquerque market are Forest City Covington, New Mexico (Mesa del Sol master planned development Albuquerque southeast Mesa); Brunacini Development (Meridian Business Park on Albuquerque’s west side); and Mechenbier Construction (north Interstate 25 corridor). Please name one or two significant industrial developments in your area. What impact will these projects have on the market? • One project is the Mesa del Sol project, developed by Forest City Covington (south of Albuquerque International Airport and adjacent to I-25 and Kirtland Air Force Base). Phase one is 300 acres and aimed at bringing high-wage rate economic base jobs to the city. The employment center will ultimately be approximately 1,300 acres within a 12,900-acre, master-planned community. The first two tenants (Advent Solar and Albuquerque Studio’s) are operating while other major tenants are being pursued. SunCal/Cordero Mesa, on the far west side of Albuquerque, north of I-40 has seen activity from a Tempur-Pedic mattress manufacturing facility, a Shamrock Foods distribution facility and the recently announced Tesla Motors electric car manufacturing plant. Where is the majority of development taking place? Why is this area doing well? • The preferred submarket for most Albuquerque MSA tenants continues to be the north I-25 corridor. Because there is very little developable land left in the submarket, tenants are being forced to look at the west Interstate 40 corridor from Coors Boulevard to the Cordero Mesa area and Mesa del Sol. Mesa del Sol’s economic development capabilities make this area attractive to major digital media, renewable energy and other clean manufacturing businesses relocating to Albuquerque. What area do you expect to be the next big industrial development market? Why? • Mesa del Sol on the Albuquerque’s southeast mesa and the former Westland Development property on Albuquerque’s far west side, currently owned by SunCal Corporation. Both sites offer available industrially-zoned land and national developers with the wherewithal to move projects forward. Please describe the industrial leasing activity in your area.            • Leasing activity in the Albuquerque MSA has been strong although the lack of inventory and asking lease rates of planned projects in the market may be beginning to affect activity. The lack of inventory and dramatically higher lease rates on new product, driven by construction costs, has made it difficult for tenants to find space. Industrial space with outside storage is virtually nonexistent. Please describe the industrial sales activity in your area. • Again, it is most affected by the lack of inventory. Demand by owner/users, driven by historically low interest rates, has spilled over into multi-tenant properties with users looking at multi-tenant properties with vacancies and occupying the vacant space after purchasing the property. Industrial investment demand is strong due to a good economic situation — job growth, unemployment and personal income growth — in the local market along with cap rates that are marginally higher than the California market. Please give a measure of industrial vacancy rates and a measure of available sublease space. • The Albuquerque metro vacancy rate for buildings exceeding 10,000 square feet is 4.4 percent as measured by CBRE|NM. The market total for industrial space is approximately 37.49 million square feet. What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in the next year? • Interest rates will continue to be at historic lows, keeping owner/user demand strong. What industries do you expect to expand in the next year to absorb a great deal of industrial space? What areas will be affected? • Albuquerque will continue to see strong activity in digital media, renewable energy and spin-off business from Sandia and Los Alamos National Labs, distribution business related to residential construction will continue to expand cautiously.

Las Cruces Industrial Bulsterbaum Submitted by Kary Bulsterbaum, associate broker with the Las Cruces, New Mexico, office of STEINBORN / TCN Commercial. Posted 07/26/07. What area is your expertise? • In Las Cruces, New Mexico, it is hard to focus solely on one particular real estate market, but a strong focus of my has been in the industrial market. What trends do you see presently in industrial development in your area? • Las Cruces has seen some industrial activity throughout the years but mainly in the last five. We are seeing increased interest by out-of-state businesses looking to relocate manufacturing, warehouse distribution and call-center activities to the southern New Mexico area in recent months. A few key economic indicators that have been fueling this growth are aggressive government incentive programs and increased exposure from the press. More specifically, the New Mexico Space Port has drawn significant attention to the southern New Mexico region. What type of industrial product is doing well in your area? • We have been seeing a demand for purchase of office/warehouse properties, measuring up to 20,000 square feet. Smaller industrial spaces (under 2,000 square feet) are also in high demand, but have become limited in supply. Please describe the industrial leasing activity in your area. • In the past 2 years, industrial leasing activity in Las Cruces has been slow. While a continued desire to own remains the primary goal of many users, we expect leasing activity to improve across the board. Costs for new construction have risen between 30 and 40 percent during the past year and continue to rise, and interest rates are slowly increasing. We expect that these combined factors will trigger increased demand for leased space and a gradual increase in rental rates. Please describe the industrial sales activity in your area. • Fueled by historically low interest rates, industrial sales activity has been fairly strong. Quality properties that are well priced rarely sit on the market for extended periods of time. Please give a measure of industrial vacancy rates and a measure of available sublease space. • As of the end of 2005, the industrial vacancy rate in the Las Cruces metropolitan area was averaging about 8.5 percent. Vacancy rates have ranged from as low as 5.5 percent to as high as 14.5 percent. What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in the next year? • Current interest rates have fueled the strong demand for acquisition of industrial properties. What industries do you expect to expand in the next year to absorb a great deal of industrial space? What areas will be affected? • For 2007 and beyond, we expect an expansion in the aerospace industry, R&D research and development, science and technology, and manufacturing areas. We anticipate absorption and expansion of flex space and warehouse properties as a result of this expansion.

Albuquerque Multifamily Romero Submitted by Joe R. Romero, CCIM, senior vice president/principal with Albuquerque, New Mexico-based Grubb & Ellis/New Mexico. Posted 12-13-05. click here to see charts What area is your expertise? • Albuquerque multifamily brokerage & development What trends do you see presently in multifamily development in your area? • Apartments: Rents have not yet justified construction. Amenities-driven on new construction – larger floorplans, upgraded finishes. Who are the active multifamily developers in your area? • GSI Properties out of Portland Where is the majority of development taking place? Why is this area doing well? • West side of Albuquerque – this is the only way Albuquerque can expand. What area do you expect to be the next big development market? Why? • Rio Rancho and surrounding cities – impact fees on Albuquerque’s development is prohibitive. What areas are doing well in terms of apartment leasing? Which areas are struggling with leasing? • Higher end units are stable, affordable units are struggling due to first-time homebuyer competition. Please give a measure of apartment vacancy rates. • Vacancy is 7 percent city-wide in Albuquerque. What impact do current interest rates have on the apartment and condo markets? What predictions do you have for interest rates and their effect on the multifamily market in 2006? • I think rates will go down due to energy effects not yet realized.

Albuquerque Office Daniel B. Newman, first vice president with the Albuquerque, New Mexico, office of CB Richard Ellis | New Mexico. Posted 06/28/07. What area is your expertise? • The office market in Albuquerque, New Mexico. What trends do you see presently in office development in your area? • There are a number of new office buildings under construction. The new buildings are primarily in the north Interstate 25 submarket. There has been strong success demonstrated in this area in recent years. Currently, the vacancy rate in this submarket is 11.4 percent. Who are the active office developers in your area? • Forest City/Covington, Titan Development, and Opus West. Please name one or two significant office developments in your area. What impact will these projects have on the market? • Mesa del Sol is a large urban infill project in Albuquerque being developed by Forest City Covington. The newest planned office building is a 72,000-square-foot building in the Mesa del Sol Town Center. The first floor of the office building is designated as retail while the top two floors comprise approximately 40,000 square feet of office. This project will provide a new paradigm in community development. Another planned development is the north I-25 Corporate Center. This property comprises 60 acres of mixed-use development including a 200,000-square-foot data center and 350,000 square feet of build-to-suit office space. This project is being developed by Titan Industrial Development. New office space will be available in late 2008. Where is the majority of development taking place? Why is this area doing well? • Most of the new office development in Albuquerque is being constructed in the north I-25 market sector. This area has been the target of development since the early 1990s because of its location along I-25 (which is the major north-south transportation arterial) and the two major east west arterials connecting Albuquerque’s Northeast Heights and Northwest Mesa. These are the two most populous residential areas. What area do you expect to be the next big development market? • Mesa del Sol in Albuquerque’s Southeast Heights. Why? Forest City Covington has committed significant resources to this project. Its track record includes the redevelopment of the former Stapleton Airport in Denver into a similar live-work community. The first phase of the project is the 1,400-acre employment center. Major developments in the employment center include Albuquerque Studios, a new movie studio; Advent Solar, a solar panel manufacturer; and the National Nuclear Security Agency. What areas are doing well in terms of office leasing? • The areas with the best stats in the office market are north I-25 and Uptown. Which areas are struggling with office leasing? Downtown is struggling with the highest vacancy rate due to the departure of large blocks of space to build to other markets. Please give a measure of office vacancy rates and a measure of available sublease. click here to see chart What impact do current interest rates have on the office market? • The impact of interest rates is two-fold. Obviously, large speculative development will be limited if the cost of money climbs. Furthermore, if interest rates inhibit the growth of business, the demand for office space will diminish. Another smaller impact is that the development of office condominiums is very rate sensitive. We predict that this market will dry up if there is a rate increase. What predictions do you have for interest rates and their effect on the office market in the next year? • We anticipate that rate growth will be limited due to the impending election. What is the status of job growth/(un)employment rates and what bearing will it have on the office market? • Albuquerque has been experiencing positive job growth in recent years. Many factors contribute to Albuquerque’s success including a pro-business city and state government, a very productive workforce, good climate, and a low cost of living. Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? • We see companies seeking a young, well-educated workforce coming to Albuquerque. What areas will be affected? All areas of the city benefit from these types of jobs. Would you like to make any additional observations about the office market in your area? • We anticipate that rates will rise over the next few years due to higher land costs and increased cost of construction.

Las Cruces Office Shelton Submitted by Bob Shelton, associated broker with the Las Cruces, New Mexico, office of Steinborn/TCN Commercial. Posted on 08/24/07. What area is your expertise? • One area I specialize in is the Las Cruces, New Mexico, office market. What trends do you see presently in office development in your area? • Office condos are beginning to gather interest in the local community, and more office condo developments are beginning to go up. Who are the active office developers in your area? • Locally based developers are active in the market. There are a few national developers but they do not make up the majority in the office market of Las Cruces. Where is the majority of development taking place? Why is this area doing well? • There is a high cluster of new Class A office space available on the north end of town as well as on the south side of the Roadrunner Parkway corridor. What area do you expect to be the next big development market? Why? • New Mexico State University’s Arrowhead Research Park is a very large office development that is currently under way. It is located between Interstates 10 and 25. High-end educational tenants will be the first occupants with government contracts lined up to fill space thereafter. What areas are doing well in terms of office leasing? Which areas are struggling with office leasing? • The downtown submarket has been doing poorly because of aged and dilapidated facilities. Newer submarkets in the Telshor and Roadrunner Parkway corridor have been doing well because of their high-end demographic location and curb appeal. Please give a measure of office vacancy rates and a measure of available sublease. • Vacancy rates in the office market area are about 14 percent downtown and 8.5 percent for Class A and B spaces. What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in the next year? • Historically low rates have spurred demand for office condominiums. Rates are predicted to stabilize by midyear. What is the status of job growth/(un)employment rates and what bearing will it have on the office market? • Job growth has been relatively steady at about 2 percent in the past year. Most of this growth has occurred in the government, education and healthcare sectors. The office market will continue to benefit from this growth. Is there any type of office tenant absorbing a majority of space? What industries do you expect to expand in the next year to absorb a great deal of office space? What areas will be affected? • Back office operations have absorbed a majority of office space. In-bound and out-bound call centers will experience strong demand for space.