It’s no surprise that land has become increasingly attractive to investors, developers and owner/users, as real estate prices continue to rise, and existing buildings remain in limited supply. This is a pattern that is not only happening in the Albuquerque MSA but occurring in markets nationwide.
Despite macroeconomic headwinds, (stock market fluctuations, interest rate increases, inflation, construction costs, and supply chain issues) momentum is still visible in land sales and ground leases.
Single Family Housing | Strong single family home sales activity over the past two years has resulted in a robust demand for residential land by housing developers. This is demonstrated by multiple planned residential communities currently going through permitting processes or under construction in the Rio Rancho area, Albuquerque’s West Side, Mesa del Sol and Los Lunas. Recently, there seems to be a slight cooling in the housing market due to the aforementioned macroeconomic conditions.
Seasoned home developers communicate that they are staying ahead of game and working on products and prototypes that can meet the financial needs and living expectations of the customers shopping the current market. We are even seeing new single-family rental concepts enter the market: a telling sign that there is still demand for single-family products at a variety of price points.
Multifamily Housing | A lack of new construction of multifamily housing in the last decade coupled with rising home costs and interest rates, has resulted in a healthy need for new multifamily inventory. Class A developments are not only being developed on expanding peripheral markets of Albuquerque, they are also finding their way to in-fill opportunities in established neighborhoods and key corridors. Based upon the economic factors occurring in the housing market the demand for multifamily land for development should continue to be resilient.
Industrial | Driven by recent consumer shifts towards electronic/mail-order shopping, fast retail and convenient delivery, industrial land along key logistic corridors is more valuable than ever. Evidence of this can be seen in recent industrial land sales and construction of distribution warehouses along both West I-40 and South I-25 corridors. Demand is outpacing supply nationwide and the Albuquerque metro is reflecting an approximate 1% vacancy rate of available industrial properties (see NAI SunVista 2022 Q2 Industrial report). Government tech and national security research/manufacturing, the film industry and cannabis cultivation are also contributing to today’s historic demand. A lack of suitable industrial land continues to be a bottleneck for developers, as it relates to zoning and access to utilities/infrastructure and water resources.
Retail | There is no denying the land wars for pad sites that are occurring in key growth corridors with high traffic counts and visibility. As housing continues to expand on the periphery of the city, quick-serve restaurants, convenience stores, car washes, and coffee-drive-thrus among many other concepts are racing to get land under contract and out-position the competition. Consumers have not only influenced the uptick in “convenient retail” but they also want a better experience when they do decide to skip convenience and dine out. Experiential retail, which combines activity/entertainment with dining/drinking is hotter than ever.
Land investment still comes down to the fundamentals of availability, access to infrastructure and resources, zoning and the ability to make it “pencil” for the buyer.
Written by; Genieve Posen, NAI SunVista Advisor
For more information on land development opportunities, industrial/warehouse commercial real estate and retail properties, contact Genieve Posen.