Albuquerque: Duke City Strives to End Woes

The metro has one of the highest unemployment rates in the nation and moderate population growth, yet its real estate fundamentals continue to lag those of neighboring areas.

Albuquerque rent evolution, click to enlarge
Albuquerque rent evolution, click to enlarge

Albuquerque continues to be one of the less dynamic metros in the U.S. The long-lasting slowdown is due, in part, to a struggling job market. With one of the highest unemployment rates in the nation and moderate population growth, the metro’s real estate fundamentals continue to lag those of neighboring areas.

Job gains have been limited, concentrated in the education and health services; financial activities; government; and trade, transportation and utilities sectors. The manufacturing sector has been experiencing a downturn in the metro during this cycle. Most recently, Intel laid off 700 employees. According to the state’s economic development department, manufacturing employment is down 9 percent in New Mexico since 2012. On the other hand, Facebook announced that the first $250 million phase of its data center is set to open late next year. The social networking company revealed plans to add a second building at its Los Lunas facility, bringing the center’s total footprint close to 1 million square feet. More than 80 percent of the 650 workers who operate the facility are New Mexico residents.

Investment continues to be modest, but on the upswing, with $202 million in multifamily assets trading through July, outpacing 2016’s total transaction volume by nearly 69 percent. With no new stock so far this year and only 1,200 units underway, rents will most likely increase gradually. Yardi Matrix forecasts 3.1 percent rent growth for Albuquerque by year-end.

Read the full Yardi Matrix report.