The harsh economic realities from the Covid-19 pandemic in 2020 forced lot of hands in Albuquerque’s commercial real estate sector. People lost jobs. Expansion deals went on hold.
While there is some optimism for a return to normalcy in 2021, developers and dealmakers will need to continue to be creative to serve clients and the community.
On the residential side, home builders and brokers stayed busy throughout the year thanks to 2020’s strong housing market. With that amount of activity, there will need to be more homes built in 2021 to replenish the inventory of single-family homes in the market.
Albuquerque’s newer neighborhoods could be on the outskirts of the metro area. There’s a good possibility the Covid-19 pandemic could influence the design of those new homes, in order to accommodate a flexible working schedule from home and in the office next year.
With all that in mind, let’s take a look at what I’ll be watching for both commercial and residential real estate in 2021.
— Ron Davis
Commercial real estate
- What happens to restaurants affected by shutdowns and economic conditions from Covid-19? From being allowed to open at limited capacity to being shutdown altogether, restaurant employees and owners had to adjust on the fly in 2020. With a vaccine in its early stages of distribution, will that be enough to ease restrictions and bring customers back in?
- Will underperforming or unused buildings be repurposed for another use? Some developers can see the possibilities that one corner of a street presents. Take Josh Skarsgard and Clayton King whose firms bought spaces that were occupied by a shutdown gas station and car wash that will soon be occupied by national tenants like Chipotle and Starbucks, respectively. On a bigger scale, Art Gardenswartz and Jim Long saw the vision with big box spaces and turned it into mass gathering spaces like Bridges on Tramway and Sawmill Market, respectively.
- Where can industrial users find space in Albuquerque? Albuquerque’s industrial market had a vacancy rate of 2.78% as of September, according to the latest report from NAI Maestas & Ward. Its industrial brokerage team of Keith Meyer, Alex Pulliam and Jim Wible are tasked with finding tenants to fill spaces in Montgomery Plaza that were formally occupied by event retailers iT’Z Pizza and Movies 8. With a tight industrial market, will developers look at similar uses
Residential real estate
- Will the housing market remain strong? Albuquerque’s housing market saw a year-over-year increase in pending and closed sales, median sales price and a sharp decrease in number of days on the market, according to the Greater Albuquerque Association of Realtors. GAAR previously told Business First that the Albuquerque metro could benefit from people leaving suburban areas and opting for a more peaceful and tranquil lifestyle in less dense populations.
- Will the supply of single-family homes and apartment units remain tight? In GAAR’s October report, the inventory of homes for sale dramatically fell by 49.2% year-over-year. John Garcia, executive director of the Home Builders Association of Central New Mexico, said the metro area has about one-month supply of homes, and would need about a seven-month supply to make it a “buyers” market. Todd Clarke, CEO of NM Apartment Advisors told Business First that about 1,500 new units are needed annually in the Albuquerque metro area. But ultimately, only about 800 to 1,000 are built because of costs associated with land and construction. Business First reported on thousands of new homes planned in Los Lunas and different subdivisions in the Mariposa community in Rio Rancho over the course of the year. In August, Business First reported on surge in investment for Albuquerque’s residential housing development as more than 750 apartment units were planned across the metro.
- How will Albuquerque’s outskirts and neighboring communities grow? On the heels of a major expansion by Netflix, the Mesa del Sol master-planned community just south of the Albuquerque International Sunport, is one of the hottest submarkets in the area, Garcia said. He added that his organization will continue to grow residential building at scale in Rio Rancho and Los Lunas because of business-friendly climates and expectations they will remain “hot” areas going into 2021.