Office market carries on despite Delta uncertainty
Office asking rates in Albuquerque stabilized during Q3, resembling the year over year averages seen in 2019 and 2020. Average asking rates were $19.65 Full Service across all building classes, down only $0.05 from Q3 last year, and up from Q2 of this year. Positive absorption continued in Q3, with a total of 13,306 SF absorbed by a handful of small to moderately sized transactions. This led to an overall vacancy rate of 14.02%, the lowest vacancy rate recorded since 2009.
Key Factors in this Quarter
A handful of moderate office leases in primarily suburban office buildings drove the second straight quarter of positive absorption, bringing overall vacancy to 14.02%, the lowest since 2009.
Average lease terms continue to be shorter after dropping off at 48 months in 2019. Tenants continue to seek shorter terms and early termination options to give greater flexibility amid continued uncertainty in the market.
Increased construction and labor costs have created a dramatic increase in tenant improvement costs. In response, some landlords are offering to amortize a portion of these costs into the base rental rate.