Albuquerque Market Snapshot
- Aug 12, 2014
Albuquerque, New Mexico—The Albuquerque Metropolitan Statistical Area is still lagging in its continuous process of pulling out of the deepest and longest recession since the 1930s. A growing list of casualties came from the recession, including failed businesses, businesses that moved and families who have left the state.
The attraction and interest it once triggered in the investors is much decreased. However, Albuquerque has a few bright spots that look promising—the three Ts: tourism, transportation and technology. Returning tourists are returning helping boost the hospitality industry employment and earnings, as well as the retail trade; 800 new jobs have been created through Union Pacific’s new terminal at Santa Theresa, plus the expansion of the port in the area; and the Innovate Albuquerque initiative has been successful. Additionally, the mining and extractive industries have been on the up side, and renewables are advancing through solar and wind energy, algae and other biofuels, and Mesa del Sol’s smart grid.
In the past 12 months the asking rent price has been moving in a slight but steady upward direction, from $748 in the second quarter of 2013 to $760 in the same quarter of 2014, according to data sent by Reis Inc.; the effective rent price for the same period of time ranges between $712 in early 2013 to $730 per month in 2014’s second quarter. The construction industry on the residential market remains low, as consequence the vacancy rate dropped from 4.1 percent in the first quarter of 2013 to 3.3 percent in the second quarter of 2014.
According to Marcus & Millichap reports, in 2014 the hotel sector in New Mexico has posted its best showing in several years. During the course of 2014, regional occupancy is expected to rise, though it’s still a long way to regain the former peak levels of occupancy. Occupancy of 51.9 percent year to date was 90 basis points higher in March than one year ago. Transactions of flagged hotels in New Mexico increased considerably, more than 70 percent compared to last year.
CBRE’s report on the retail industry shows a slowed activity, but still healthy. The overall vacancy rate increased by 47 basis points quarter-over-quarter and by 30 bps year-over-year. The asking lease rate for community centers increased by $0.50 from last year to $17 per square foot annually, with the lease rate range narrowed from $8.5- $29.5 last year to $8.5- $28. The asking lease rate for strip centers increased by $0.40 from the previous year to $12.40 per square foot annually, with the lease rate range decreasing from $31 to $26. Neighborhood centers remained unchanged at $13 per square foot annually, but the lease rate range widened from $8.50-$28 to $6-$28.
The office market has suffered the largest negative net absorption in market history in Q2 2014 due to Presbyterian Healthcare relocating from leased space to an owned building; because of this the overall vacancy rate increased by 167 basis points (21.1 percent) from last quarter and 230 from one year ago. However, gross leasing activity in the first half year was steady. The overall asking lease rate remained unchanged from last year at $15 per square foot annually; however, the lease rate for Class A buildings increased by $0.25 from last year.
Albuquerque’s industrial market remained consistent for the second quarter of 2014, according to CBRE’s report, with positive net absorption of 89,498 square feet. The overall vacancy rate decreased by 7 basis points from the previous quarter, reaching last year’s rate of 9.2 percent. The overall asking lease rate decreased with $0.25 to $6.5 per square foot annually on a triple net basis.