Contrary to earlier predictions, office leasing activity improved in the second quarter with the fastest growth rate since Q2 of 2021 according to a Jones Lang LaSalle (JLL) chart. Although we are not yet back to pre-pandemic leasing absorption, out of the 53 markets tracked, 66% saw quarter-over-quarter growth. According to Jacob Rowden, manager of JLL Research, the growth is primarily being contributed to large-scale transactions consisting of over 100,000 square feet bouncing back with 38 transactions in Q1 and 46 transactions in Q2. Additionally, sublease vacancy has begun to slow.
Flight to quality is still the dominant trend for tenants to upgrade to higher-end space as their leases expire. Class A office space has been healthy in the Albuquerque market for several quarters causing some Tenants to begin to explore premium enhancements within Class B and Class C buildings according to a recent CBRE report. Amenities such as enhanced security systems and upgraded HVAC facilities are among the top choice amenities today.
Here in Albuquerque, quality move-in ready space is scarce. Tenants in the market seeking alternative offices should allow time to tour several properties, select the best fitting space, negotiation the terms and understand construction timelines for Landlords and Contractors to perform the Tenant Improvement work. Although construction costs are coming down, labor expenses have risen causing Tenant Improvement packages to remain high.
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.