First-quarter demand for office space in the Albuquerque market was almost 20 percent lower than the five-year quarterly average despite growth in office-using jobs, according to a report compiled by real estate investment firm CBRE.
But first-quarter vacancy statistics were partially skewed by two large tenants relocating to buildings not classified as offices or not tracked by CBRE, the report noted.
The office sector in the Albuquerque metropolitan statistical area added 2,900 net jobs in the year ending in January, a 1 percent increase year-over-year. Demand for large office space is expected to remain strong for the rest of 2018, especially in the education and business services industries.
Vacant space in Class A buildings, the most-desirable, premium office spaces, remained at a record low for first quarter 2018.
Leasing activity in the first quarter included about 151,000 square feet of office space. The overall vacancy rate stood at 20.4 percent. The $15.59 per square foot gross median asking rate was up $0.09 from a year ago. No significant rent growth is expected in the coming quarters.
The median asking lease rate for Class A buildings fell by 1.9 percent from last quarter to $22.94, while the Class B rate rose slightly from $18.25 last quarter to $18.50 this quarter. The Class C rate remained unchanged quarter-to-quarter at $14.50.
During the first quarter, U.S. Citizenship and Immigration Services downsized and vacated almost 35,000 square feet to relocate to a 17,000-square-foot industrial R&D/flex building, and New Mexico Mutual vacated 31,000 square feet of leased space to move into its own newly-built 58,000-square-foot office building. Brown Mackie College also vacated more than 43,000 square feet.