09 May 14 By Cole Flanagan, CPA, MBA No Comments

Albuquerque Multifamily – On the Upswing

As is the case in many markets across the nation, the Albuquerque multifamily market has experienced an increased demand for apartment housing since 2011. The opportunities and hurdles that face Albuquerque set the city apart from others, making for a unique and distinct multifamily market.

The geographical constraints that bind the market to the north, south, and east, along with the historical growth and economic focus of the city on its east side, leaves the main area for growth to the west. Estimates show thousands of units slated for delivery on Albuquerque’s west side over the next couple of years, with over 1,900 permits requested citywide as of March 2014, but there have been a few developers able to produce new product in high barrier to entry areas on the city’s east side. Namely, a joint venture between local Titan Development and Phoenix-based Alliance Residential, teaming up to deliver the 260-unit first phase of Broadstone Santa Monica project, which is setting the market and outpacing pre-construction projections on both rent and lease-up.

While success on the east side is turning heads, the west side projects are faring well despite the competition. Major projects on the west side and downtown include the 240-unit Andalucia Villas by Bay Hill Development, the 254-unit Broadstone Cottonwood by Titan/Alliance, the 150-unit Silver Moon Lodge Apartments by DBG Properties, and the 71-unit Casitas de Colores by Romero Rose. These projects will likely continue their success, given that demand is set to outpace supply for the foreseeable future, particularly if the city begins to generate job growth in a similar manner to the secondary markets like Phoenix.

When it comes to multifamily development, Albuquerque may be ripe for the pickings for both local and national investors. The city generally lags the rest of the nation in economic trends, and as the market is trending up, the time may be now for investors to get into the market and hit the upswing. Furthermore, the market provides for added benefits to investors, principally those looking for better yield outside the primary markets, as well as a steady atmosphere without the large booms and busts. Albuquerque has always been known as one of the most stable markets in the nation, primarily in the multifamily arena. Vacancy rates are roughly six-percent currently, and typically stay between the four-percent to seven-percent range, with modest rent increases ranging from flat to three-percent in a given year. This provides for a stable, reliable atmosphere on which investors can depend.

The leading factor that will drive this market into the future is going to be job growth. Again, while Albuquerque did not feel the severe effects of recession like its neighbors in Phoenix and Las Vegas, the market is also not bouncing back as strongly. A point of reference when analyzing the market is that Albuquerque and the State of New Mexico remained below the national average for unemployment throughout much of the recession, and does not have as deep of hole from which to emerge. That being said, the city and state have recently made drastic improvements in their corporate tax competitiveness and are working diligently to bring strong employers to the market. The Albuquerque multifamily market will benefit from the coming job growth, leaving the upswing in this market still to be realized by the savvy.

Investment Property Advisors, www.IPArealty.com, is a uniquely positioned team of experts focused on providing market knowledge, insight, and opportunities in the investment arena in both New Mexico and across the nation.  The team is a division of NAI Maestas & Ward, a leading real estate services company in the state of New Mexico.  With strong relationships, market expertise, and a true focus on the investments, the Investment Property Advisors are poised to lead and set the market.