Albuquerque: “cinderella city.” – Construction Industry
Arlene Cinelli Odenwald
A CONSTRUCTION BOOM is sweeping Albuquerque.
Dubbed one of 15 “Cinderella cities” by the national American Institute of CPAs, Albuquerque is poised at the beginning of another economic cycle driven by the turnaround in the construction industry.
“Megatrends” author John Naisbitt may have been right when he predicted Albuquerque would be one of the booming cities of the ’90s.
Apparently, the Duke City is becoming a Cinderella with a hammer in her hand. Residential construction — single and multi-family — as well as commercial and industrial are all either experiencing healthy growth today or on the verge of expansion.
Employment generally decreases in the summer due to seasonal job changes as educational services drop significantly, but this summer employment remained the same because of job increases in services, the extractive industries and construction.
Construction continued to lead the way in growth rates with a 12 month gain of 3,600 jobs or 11.6 percent. Heavy construction has particularly been strong.
“Construction is definitely up and couldn’t be better,” says Gerald A. Martin, president and CEO of Gerald A. Martin, Ltd., a general contracting firm. “We’re excited.”
New single family residential construction is hot.
From 1992 to 1993, new housing in Albuquerque increased by 46 percent, according to Jim Folkman, executive director of the Homebuilders Association of Central New Mexico.
The first half of this year alone, it increased 12 percent over the same period last year, Folkman says.
Statewide housing permits were up by 15.4 percent over the 1992 level, according to U.S. Housing Markets, published by Lomas Mortgage USA.
Dennis Roberts, director of labor, public and industry relations for Associated General Contractors, notes in terms of square footage that total non-residential construction increased by 46 percent from the first quarter of 1992 to the first quarter of 1993.
This is all the more remarkable considering that for the same period from 1991 to 1992, total non-residential construction actually went down 22 percent in terms of square footage.
New home construction in Albuquerque has been flourishing for at least a year now; apartment occupancy, meanwhile, has been climbing, hovering at nearly 95 percent today.
You’re never going to have 100 percent vacancy, says Norman Gabel, marketing associate with Jaynes Corporation. Ninety-five percent is about as high as one can go in multi-family occupancy rates.
High occupancy rates drive up rent; and rents in Albuquerque are climbing. Though occupancy rates are high and rents up, apartment building has not picked up quite yet.
Construction industry experts expect this sector to begin to really move early next year, and if not next year, then definitely the next.
In a report published by Ernst & Young and the National Real Estate Index, called MarketScore, Albuquerque ranked second after Raleigh-Durham, N.C., as a market promising to offer the greatest total return potential through 1996.
MarketScore gave Albuquerque a “97-Excellent” grade, outranking Austin, Denver, and Honolulu.
Construction is doing so well that contractors are having a hard time finding quality craftsmen despite the fact that today in New Mexico there are about 34,700 construction workers, about 90 percent of the all-time high level reached in 1985.
Even so, the market seems to have absorbed all the available manpower in the construction industry.
All contractors seem to be affected, from the small custom home builder to the commercial and industrial builders. “It’s getting harder to find talented craftsmen,” says Martin.
Bob Clark, chief executive officer of Clark Custom Homes, Inc., says: “It used to be that scheduling in advance I would have to wait, if I had to wait at all, a day maybe two for a framing contractor.
“Today, even scheduling ahead, I may have to wait two, sometimes three weeks before I can get the framers on my job.”
Joe Mock, president of Mock Homes Associates, Inc., says his business is up 50 percent over last year. Mock who builds custom homes, contends today’s growth is “real growth,” making it much healthier.
Mock attributes the growth to Intel’s expansion and Phillips Laboratory.
“Fifty to 55 percent of my buyers are from out of town,” says Mock.
Glenn Perrin, president and owner of Craftmasters, says he’s had to turn down work this year. “You always hate to do that,” he says, “but the demand is so high, you have no choice.”
Perrin does a lot of remodeling work, as well as some new home construction.
Though builders are waiting for the apartment sector to gear up, multi-family dwelling units are still being constructed.
Tom Love, associate broker with CBS Property Services, says Bomasada, a 200-unit apartment complex at Osuna and Eubank, can probably be called the first apartment complex to get off the ground in the new apartment building cycle.
Surveys like MarketScore created more interest in cities like Albuquerque, says Love.
There’s Sycamore Plaza, a 453-dwelling unit complex going up on Academy at Wyoming. This apartment complex will be part of a retail, restaurant and commercial center as well. Anchor stores planning to move in include Wal-Mart and Smith’s.
Besides the Bomasada project and Sycamore, there’s Presidio — a high end apartment complex at Eubank and Academy, as well as Pavilion on Academy west of Tramway. Bradbury and Stamm was the contractor on Pavilion.
Bob Stamm, chairman of the board at Bradbury and Stamm, says they do a lot of apartment construction. “We’re waiting in expectation for the apartment building sector to turn around,” he adds.
Bradbury and Stamm, which has completed projects like the Albuquerque Journal Center, Hewlett Packard, and the Lovelace Building, has been one of the primary contractors in the I-25/Jefferson Corridor area.
Currently, Bradbury and Stamm is working on 22 job projects: 13 public works projects; five are health related; one is a church; and three are private.
“The majority of the work is still public dollars,” Stamm says.
Stamm, too, says his company has had to hire more subcontractors because there is so much work today.
“Though we have nothing to do with Intel, it’s having an affect on us,” says Stamm. “For instance, we’re experiencing a shortage of mechanical and electrical help.”
According to CBS Property Services, the industrial segment is improving steadily. Spokesmen for CBS Property also indicated that the industrial market occupancy rate in Albuquerque is at 95 percent.
A longstanding problem with Albuquerque’s industrial sector is that Albuquerque has never had vacant industrial warehouse space to entice companies to relocate.
The idea operating here is that a company looking to relocate is much more apt to consider moving into an empty warehouse rather than tie themselves down to a 10-year building contract.
Whether it’s Intel’s $1 billion expansion project or Phillips Laboratory’s expansion, industrial tenants today are approaching builders and asking them to build buildings for them.
Sumitomo is planning to build an 80,000-square-foot facility in the I-25/Jefferson Corridor. Sumitomo produces computer wafers to sell to Intel.
Norman Gabel, marketing associate with Jaynes Corporation, foresees a trend for larger projects in the market essentially waiting to be done.
Gabel expects four dozen projects, valued somewhere between $3 and $15 million to be coming up soon.
“That would represent a jump 50 percent higher than usual,” he says, referring to similar projects like Wal-Mart, Home Depot, and the New Mexico Factory Outlet Center, located west of the Budaghers exit on I-25 midway between Albuquerque and Santa Fe.
New Mexico added 3,600 new construction jobs from July 1992 to July 1993, ranking the state fourth nationally in construction job growth.
COPYRIGHT 1993 The New Mexico Business Journal
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