Unveiling Albuquerque’s Retail Real Estate Resilience: A Comprehensive Analysis

Albuquerque’s retail market continues to exude strength, shown by a low vacancy rate and
restrained new construction. This market strength is supported by a resilient consumer base,
providing a solid foundation for sustained growth and stability in the market.

Despite the overall strength, the market faced a temporary setback with negative absorption in
the trailing 12 months. The closure of a major retailer, Walmart at San Mateo, resulted in a
significant impact of 310,000 square feet. However, this challenge has encouraged adaptive
strategies within the market, showcasing the market’s ability to overcome tough times and come
back even stronger.

A limited number of available properties helps keep vacancy rates low. With most construction
projects in Albuquerque being built-to-suit or preleased, the market experiences minimal
disruptions to vacancy rates. This planning shows how developers carefully match supply with
what the market needs, creating a balanced retail environment.

In tenant dynamics, discount stores like Goodwill and Dollar General have emerged as key
players, driving significant leasing activity. Their ability to thrive in the market reflects shifting
consumer preferences towards value-oriented shopping experiences, reshaping the retail
landscape of Albuquerque.

Despite facing inflationary pressures, annual rents have exhibited a growth rate of 3.7%.
However, it’s noteworthy that Albuquerque’s average rent remains considerably lower than the
national index, showing the specific economic situation and what people can afford in the area.
The investment landscape in Albuquerque’s retail real estate sector presents a lot of
opportunities for investors. California investors, in particular, have shown a keen interest,
focusing on smaller net-leased deals valued under $5 million. Approximately 70% of
transactions involve private buyers. Cap rates averaging in the low-6% range highlight important
factors like tenant credit, location, and lease terms that influence investment choices in this

Albuquerque’s retail real estate market is a testament to resilience, adaptability, and
opportunity. Despite challenges, the market continues to evolve, directed by a strong consumer
base, strategic tenant dynamics, and a favorable investment landscape. Navigating this
landscape requires a keen understanding of market dynamics and a proactive approach to
seize emerging opportunities, and positioning stakeholders for success in this ever-evolving
retail ecosystem.