Market in a Lull as Shorter Leases Become the Norm
Overall vacancy is up 130 basis points from last quarter with 185,159 square feet of Negative absorption. Vacancy is now 18.15% with availability at 17.51%. The Albuquerque base inventory increased by 397,578 square feet after annual data maintenance was completed. Also, the Santa Fe office market statistics are now included in our reports and tracked separately from the Albuquerque data. The Santa Fe data can be found on page 3.
The Santa Fe market is tight, with only 4.26% of vacancy and asking lease rates averaging $20.00 per square foot, full-service. The office inventory tracked in Santa Fe totals 1.6 million square feet and excludes buildings that are less than 10,000 square feet in size.
In Albuquerque, the office market has seen a lull in activity with fewer tenants moving in the market. Many active users are looking for shorter lease terms, typically around three years. As the length of the term is reduced, landlord concessions such as the amount of tenant improvement dollars and free rent also decreases. In addition, construction costs continue to rise rendering it costlier to improve outdated spaces. Despite this lull in the office market, Albuquerque’s economy is improving, and the national economy may be on track to exceed the current record of 120 months of economic expansion.
Key factors this quarter
Santa Fe office market is now being tracked.
Active users are looking for shorter lease terms
Vacancy will increase due to Sitel leaving the market.
Albuquerque's largest positive absorption of the quarter was in the North I-25 Corridor