CHALLENGE

The Paseo Nuevo Office Property, a Class A 5-Story Multi-Tenant Office Building in Albuquerque's coveted North I-25 corridor, encountered several challenges. These included a high vacancy rate due to the anchor tenant's departure, leading to revenue loss and impacting financial returns. Additionally, in-place rental rates couldn't cover rising operating expenses, resulting in declining returns. The pandemic worsened matters, causing further tenant vacancies during the lease-up period and straining the property's performance.

ACTION

To tackle these challenges, the property leasing team launched a targeted marketing program, employing two key actions. First, they adopted a proactive marketing strategy to attract new tenants that aligned with the vacant spaces, reducing out-of-pocket leasing costs. Second, the team identified tenants who recognized the property's value and offered increased rental rates, seeking to establish long-term and high-value partnerships.

RESULTS

1. Full Occupancy: As of March 2023, Paseo Nuevo successfully reached a 100% stabilized occupancy rate.
2. Rental Rate Growth: Over a span of four years, the property managed to secure new leases with increased rental rates of over 30%.
3. Diverse Tenant Portfolio: The property's targeted marketing approach attracted a more diverse mix of national credit and professional local tenants, mitigating risk and ensuring a stable revenue stream.
4. Long-Term Leases: The marketing efforts also led to a substantial increase in the average lease term for tenants, providing stability and predictability for the property's future income, assuring investors of sustainable returns.