New Mexico’s Retail Market Gives Steady Performance
The New Mexico commercial real estate market continues to be a safe play for owners and developers in the Southwest. Albuquerque, which contains 50 percent of the state’s population, continues to drive the market with more than 80 percent of the commercial real estate transactions.
A moderate supply-demand imbalance currently exists. This imbalance will allow vacant real estate to be matched up with occupier requirements relatively quickly, taking the vacancy rate lower or continuing to place upward pressure on the need for new construction.
The New Mexico market, like many others, has experienced little to no development on the periphery of the city. Instead, owners and occupiers remain focused on the core areas of the market where density can be increased for a more efficient use of retail or office space.
Albuquerque’s tech sector is also picking up momentum through the organic growth of existing companies and a large push from the University of New Mexico in partnership with the business community. New Mexico has one of the highest per capita concentrations of doctorate degrees in the U.S.
The vacancy rate for retail space sits at 12.5 percent as of the first quarter of 2018. The outlook will be trending lower toward the end of 2018 as retail boxes vacated by Macy’s, Toys R Us and Babies R Us are almost immediately back-filled with either new market entrants or existing retail occupiers looking to improve their positioning within the market.
The first quarter’s 232,500-square-foot gross activity was 25 percent higher than last year’s annual gross activity, while the 107,800 square feet of total space vacated in the first quarter was about one-tenth of last year’s total space vacated.
— By Jim P. Dountas, first vice president, investment properties, CBRE. This article first appeared in the May 2018 issue of Western Real Estate Business magazine.