Albuquerque Commercial Real Estate News

Albuquerque, NM retail market featured in Western Real Estate Business

April’s issue of Western Real Estate Business featured a highlight on the Albuquerque, N.M. retail market supplied by Sperry Van Ness/Walt Arnold Commercial Real Estate.  Take a look at what makes Albuquerque stand out:

Compared to performance nationally, the Albuquerque retail market is bucking the trend with limited increases in vacancy rates as well as limited reductions in lease rates. Albuquerque’s insulation from what other markets throughout the Southwest, such as Phoenix and Las Vegas, are experiencing is based on the city’s economic engine being driven by a heavy concentration of federal government support, which spins off a stable layer of private enterprise. Secondly, unlike other larger markets, Albuquerque was not burdened with an over inventory of vacant and in-development projects when the economic downturn began. This is not to say that Albuquerque has not experienced its share of real estate woe.

At the end of 2009, Albuquerque’s retail market had a net absorption of 144,000 square feet, which was almost four times higher than 2008. This was primarily due to the decrease in new construction. The vacancy rate rose from 8 percent at the end of 2008 to 10.8 percent a year later. The last two quarters of 2009 reflect decreases from previous quarters and forecasts indicate a vacancy rate of 10 percent at the end of 2010, far below the projected national vacancy rate of 11.7 percent.

Perhaps the most distressing to retail property owners, as with all commercial landlords, will be the reduction of lease rates not only with prospective tenants and renewing tenants, but also with the existing tenant, whose lease still has a number of years remaining, asking to renegotiate. Throughout 2009, retail lease rates fell, across all retail types, anywhere from 15 to 20 percent. Only in fourth quarter 2009 did Albuquerque start to see the beginning of stabilization in lease rates. Strip and neighborhood centers showed level or slight increases in lease rates whereas larger community centers tracked slightly downward. Available space is declining, and deals are being made, which will cause lease rates to continue on their current course.

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