Albuquerque, N.M.—As employment in the Albuquerque MSA tumbled 0.5 percent in 2011, reflecting a loss of 1,900 jobs, demand for apartments fell to a four-year low. Vacancy continued to rise slightly to 5.6 percent, while the average price per unit fell below $50,000.
Even with the tough job numbers, sales in single-family rose nearly 25 percent from 2010 to 2011. Inventory levels, however, were at an eight-month supply, pushing the median sales price for homes down 7.2 percent to $167,000. Hendricks & Partners expects that renewed interest in home-buying to push multifamily vacancies up to 5.9 percent by 2013.
However, even though apartment demand in Albuquerque may not be doing well with respect to past trends, it is still outperforming its regional neighbors—such as Phoenix, Tucson and Las Vegas—in both rent growth and occupancy. Additionally, new construction in 2012 and 2013 is expected to soar with 1,100 market-rate apartments in the planning stages.
Hendricks & Partners projects that the local economy will grow at a slow but steady pace through 2013, outperforming other metropolitan areas in the region. The most recent market report notes that, due to a lack of major investment initiatives, economic stimulation beyond organic growth is unlikely.
However, there will be a few promising developments in the next couple of years, albeit ones unlikely to produce many permanent jobs. The SunVia project—a $1.5 billion, 500-mile-long solar-powered transmission system linking New Mexico and Arizona—is slated to begin construction in 2013 and be completed in 2017. 3,900 construction jobs are expected to be created in the four years the renewable-energy project is under construction.
Meanwhile, a 12,900-acre mixed-use development in Albuquerque’s south mesa is expected to be conducive to longer-term growth years, even decades down the road. Plans for the project currently include 18 million square feet of office and industrial space, 37,500 homes for 100,000 residents, 5,300 acres for parks and open space, and a number of schools and education facilities—all over 35 to 50 years of development.
Average rent in the metro area came in at $765 in 2011, up from $747 in 2010. The most expensive area was the northwest market at $799 per month, while the most affordable was the southeast market at $633 per month.
Hendricks & Partners projects that, due to tight market conditions, economic stability and rising homeownership costs, rental rates will continue to increase—by 2 percent in 2012 and 2.5 percent in 2013—to an eventual high of $800.