Albuquerque Starts off 2022 with a Bang
Industry News | NAI SunVista News | Office
Welcome to 2022! January started off with a bang! The activity in the market has continued to remain strong creating a positive impact on the Albuquerque market.
Given the US economy grew at it fastest pace since 1984, demand remains strong, the labor market is tight, and we are poised for another year of solid, above-trend growth. In an effort to slow the economy, the Federal Reserve plans to raise interest rates more than once this year; albeit at a slow rate.
It should be noted commercial real estate performance has been good during periods of high inflation with returns more closely correlated to growth than inflation. The overall economic strength of the environment is much more important than whether inflation may rise or fall going forward. “If the economy is doing well, real estate will do well, no matter what happens with inflation. Inflation is not critical in itself for commercial real estate” remarked Greg MacKinnon, research director of the Pension Real Estate Association.
Spikes in GDP and inflation have been caused by a culmination of events started by the pandemic. Here at home the housing demand wears on creating multiple bid scenarios and sale transactions over asking price.
JLL noted their research supports the fact that investors are relaying on innovation and talent metrics when making strategic decisions about which cities are the best targets for investment. “Investors also have a crucial role to play in rejuvenating city centers and helping to shape cities’ spatial dynamics with mixed use transformational projects.” Gratefully, there are many of these types of projects on the drawing boards for Albuquerque. Take MaxQ, the area near the Amazon fulfillment center and the up-and-coming Mesa Del Sol, all present unique mixed-use opportunities.
Office performance over the last five years is highly correlated to the innovation-centric and talent-rich cluster, while over the longer-term period, gateways have always been the top performers. It’s clear there’s a correlation between corporate expansions into new markets, where talent and innovation metrics are prioritized, and the office market performance as these choices play out. With talent a very important factor in where companies will relocation, Albuquerque is well positioned to benefit from new companies setting roots in our beautiful Land of Enchantment.
We will return to the office more flexible than ever. Employers have already begun offering amenity friendly environments in order to retain their best employees. As such, office demand is expected to remain strong particularity in the tech, life science and healthcare industries. The most advanced employers have tools in place to analyze data and strategize on how to best use their office space. While managers are weighing the advantages and disadvantages of a 4 day work week to others have already moved past the Great Resignation and are utilizing the skillsets of new hires. Ultimately both employers and employees agree company culture is their top priority.
Shelly Branscom, CCIM is an NAI SunVista commercial real estate specialist who provides substantial long-term strategies and business planning services to her clients. She prides herself on thinking outside the box, enabling her to contribute unique solutions and outcomes specific to each of her clients. Learn more about Shelly and her listings.
NAI SunVista is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services.