Submarkets are hot

The third quarter of 2018 saw office vacancy rates increase slightly, with an overall positive absorption of just under 13,000 square feet. Vacancy continues to hold steady at 17.60% with particularly high vacancy in the Airport and Downtown submarkets. The average office vacancy rate outside of these submarkets is 13.35%, which is below the 15-year average of16.87%.

Albuquerque’s unemployment rate has dropped 22% from lastyear and is currently 4.7%. Historically, a strong economy and low unemployment have correlated with a reduction in overall office vacancy. This correlation has weakened as the workforce has evolved and become more mobile and collaborative. Businesses continue to “right size” their footprint to more efficiently use their space to meet new workplace demands. These changes are ongoing and will result in a new equilibrium vacancy rate for the
office market.

The largest absorption in the third quarter was a new to market IT service management company, TaskUs, which leased 50,500 square feet at First Plaza. The company announced in August that it would be entering the Albuquerque market and bringing 700 new jobs to the Downtown submarket over the next five years. It is expected that the new jobs will contribute to the efforts to grow downtown’s daytime population and is projected to have a $117 million economic impact with $100 million in new payroll.

Key factors this quarter

  • With the exception of the Airport and Downtown submarkets, Albuquerque’s office vacancy rates are below the 15 year average of 16.87%.

  • The largest absorption of the quarter was 50,500 square feet leased at First Plaza by TaskUs, a new
    to market IT service management company.

  • Several large investment sales took place including Jefferson Commons, 6100 Uptown and 4401
    Masthead.