Land/Industrial – 2023 Q3 Market Review

The vacancy rate continues to rise as new construction projects are completed.

Research and Analytics provided by Riley McKee

The vacancy rate for industrial real estate in Albuquerque has doubled year over year from its record low of 0.93% at the end of September 2022 to just over 2% today. 

The North I-25 corridor has the most vacant space with roughly 250,000 square feet currently on the market. Submarkets west of the river and north of I-40 have the lowest amount of vacant space. Only one building in that geographic area is currently available: a 15,000 SF warehouse in Bernalillo.

The median triple-net (NNN) asking lease rate has decreased for the second consecutive quarter and currently sits at $11.34 per square foot. Nearly all industrial space on the market has a price tag at or above $10.00 per square foot, though, which may be the floor for lease rates until the vacancy rate returns to its historic average of around 5-6%.

New construction of industrial space has ground to a halt. While about 1,500,000 square feet scattered across a dozen or so projects is still being marketed, as of this writing no actual construction is underway. The interest rate environment is most likely to blame, as both construction financing and permanent financing costs are pricing developers out of the market.

The market for owner-occupied industrial real estate is in a similarly strong position. The median asking sale price for a vacant industrial building is $130 per square foot, a rising figure but still well below replacement cost. Many users find it more affordable to purchase and renovate existing space rather than building from the ground up.

Download: Q3 2023 Land & Industrial Quarterly Report

The Land and Industrial Q3 market research and data is compiled by NAI SunVista commercial real estate land and industrial specialist, Riley McKee. Riley advises industrial and logistics real estate owners and occupiers on leasing, acquisitions, and dispositions.