Much has been made about the demise of office buildings in the national media since Covid. A Wall Street Journal article reported that the office vacancy rate is 19.6% nationwide, which is the highest it has been since at least 1979 (https://www.wsj.com/real-estate/commercial/offices-around-america-hit-a-new-vacancy-record-166d98a5).
However, I was interested to see if there’s been any change in the relationship between the office vacancy rate and employment specific to the Albuquerque area.
Using historical office vacancy rates from Colliers | New Mexico among properties larger than 10,000 SF coupled with employment data from the New Mexico Department of Workforce Solutions in conjunction with the US Bureau of Labor Statistics, I created the following graph:
The graph shows from 2013 through 2019 that employment and vacancy had a typical correlation–as employment increased, vacancy decreased. However, post-Covid this relationship appears to have changed. As employment has been increasing, vacancy has also been increasing.
Of course, this is a broad swath of the market and does not speak to the performance of individual assets, submarkets, flight to quality or other factors.
Notably, though, there does appear to be a change in the correlation of employment and vacancy in general post-Covid in the Albuquerque market.
The million dollar question is if and when the relationship between employment and vacancy will normalize.
According to CoStar office traffic does appear to be increasing, which could ultimately normalize the trend, but it is still a far cry from where it was pre-pandemic, as shown in the following table:
ABQ CRE 