Contrary to earlier predictions, office leasing activity improved in the…
As we approach the height of summer, I’m thrilled to honor all dads this Father’s Day. My soul is content to celebrate the freedoms our founding fathers fought so hard to get for all citizens of these great United States. Happy 4th of July! For me, gathering with family and friends, children giggling and pets napping are all components of both of these celebrations. They define freedom, love and satisfaction in my life.
The commercial real estate industry continues to be robust. As New Mexico reaches our goal of 60% vaccinated, more and more employees are returning to the office. You might be asking, what is the outlook for office space? Shrink or expand?
In the short term, we do not expect big pendulum swings in either direction. In fact, business travel is rebounding ever so slowly, continuing to require the need for Zoom or Microsoft Teams meeting platforms. In Albuquerque, we will not realize the effect of the pandemic and whether businesses will shrink or expand until the end of tenants’ existing lease terms. Landlords are grateful those lease terms will expire at varying dates versus all at the same time.
What we know
One thing we do know about offices is the amount of space employers are leasing per employee is rising as employers enlarge the amenities and flexibility being provided in an effort to attract talent and create their desired culture. Rick D’Amato, design director of workplace at LPA Design Studios, says they are “designing spaces to be completely flexible from a technology and infrastructure standpoint and anchoring that design around how companies and their employees operate.
“This allows everyone to work exactly the way they want at any given time in a seamless way. Giving employees the freedom to choose an optimal workspace for any given task results in immense user satisfaction. This is an important lesson we’ve learned from the pandemic and it’s critical that companies take advantage of it.”
D’Amato went on to say he expects that “companies will need to increase shared spaces and common areas to accommodate hybrid work models as there is going to be a lot more shared usage of space as people return to the office in our new hybrid working environments.” Flexibility is key. What works today may not be the same as what works months or years from now.
Here in the Albuquerque metro area, there are a number of industrial developments in the planning stages and working their way through the city and county approval processes. The lack of industrial inventory has caused a tremendous amount of pent-up demand. As such, we are noting that some larger retail vacancies are being converted to industrial uses.
Residential housing “on market” inventory is at an all-time low. The median asking price in the Albuquerque metro area has increased from +/- $240,000 to +/-$270,000. Several members of the residential real estate community have indicated homes are selling over asking price due to the number of multiple offers received. Talk about a seller’s market!
Nationally, home sales are up 11% over May of 2020 indicating continued strength in the housing market. However, reports indicate nationally home sales were down 3% between April and May 2021. Might this be the start of a turning tide? Perhaps nationally, but in New Mexico, I believe it will be a number of months before we see our tide turn.
As you celebrate this Independence Day, will you be one of the thousands who are numbers of leisurely traveling? Family gatherings are on the rise. Take time to enjoy every minute with your family, friends, children, grandchildren and four-legged friends this Independence Day!