Albuquerque Office Market Update

Real Estate Advisors track 431 multi-tenant office buildings over 10,000 square feet in the Albuquerque market.  These buildings total 14,783,384 square feet, with 2,798,921 square feet of availability.  Since the pandemic began in March of 2020, the office market availability rate has increased approximately 27%, from roughly 15% to 19%.  

In tracking overall market statistics, reports generally state availability, vacancy, or both.  The difference between vacancy and availability is:

  • Vacancy is limited to space that is not leased whereas 
  • Availability includes space that is not leased plus space that is available for sublease

As many of our investor clients want to know what spaces are competing for tenants and our user clients want to know what options are available in the market, our snapshot reports the availability.  

Despite the current overall 18.93% availability rate, when you talk with most commercial real estate brokers, they will tell you that Albuquerque is a tight market, and the pandemic has had minimal effect on the market.  The basis of this statement that almost 2/3 of all the office vacancy resides in 25 buildings.   

Much of the additional availability that has come online since the onset of the pandemic consist of large contact center and back-office operations.  The 7 closures Real Estate Advisors is tracking, range from approximately 20,000 to 200,000 square feet.  Companies that have vacated this type of space in the market during the pandemic include Verizon, Thomson Reuters, Cannon, Alliance Data, Concentrix Corporation, Aura, and Optum.

As the majority of the Albuquerque Office Tenant base consists of small to medium sized local and regional tenants, the increase in the number of large blocks of space does not change the number of options most tenants have in the market.  Outside of the 25 buildings in the market that make up most of the available space, the availability rate in the other 406 buildings is 9.98%.  As a result, the overall average market rental rate of $16.78 has remained relatively the same as that at year end 2019.

The Class A Office Market consists of 1,562,615 square feet.  The current availability rate is 26.20%.  This rate is skewed by two buildings that have occupancy rates of less than 50%: 500 Marquette and 8801 Horizon.  The 500 Marquette building has hovered around 50% vacant for the last five years whereas 8801 Horizon’s vacancy is due to the recent consolidation of Optum’s acquisition of DaVita Medical Group.

The Class B Office Market makes up approximately 75% of the total market.  Class B Office space totals 11,052,488 with an 18.29% availability rate.  Almost all the contact center and back-office closures occurred in Class B office space.  Consequently, statistically of all the classes, the Class B office market has experienced the most significant negative absorption since the onset of the pandemic.

The Class C office market has been the most stable class of building as the tenant base which resides in these buildings are typically smaller local users that have been the least impacted subcategory of users during the pandemic.  The Class C office market consist of 2,168,281 square feet with a 16.98% vacancy.