Pandemic Effects on Vacancy and Leasing Rates

The downsizing of the American workforce over the course of the pandemic has caused marked effects in the commercial real estate world.

This reduction in the number of employees in the workforce coupled with employers providing flex schedules, has resulted in the nation bringing sublease space to the market. The good news is the rate at which new sublease space is being listed continues to slow. JLL’s report indicates Q2 2021 is the third consecutive quarter of seeing slower rate of sublease space being listed.

SIOR reports “leasing activity rose again this past quarter to its highest level in more than five years providing for limited to no available sublease space available as compared to Q1 2020.”

Growth from the tech sector

Tech companies accounted for more office leasing activity than any other industry in the Q2 with the finance and insurance industry trailing behind by a long shot. Amazon, Facebook, Netflix, Raytheon and other governmental agencies led the local, Albuquerque metro market leasing activity. Each are also bringing jobs to our community.

That begs the question: Does Albuquerque have enough housing for the increase in jobs with these four large companies as well as the new jobs planned at NBCUniversal, BlueHalo and Intel? Some of the less sought-after homes with two bedroom floor plans or fixer-uppers will become more popular. Multifamily rents are on the rise and will continue in the upward direction as more and more people move to Albuquerque. Although there are a handful of multifamily developments in the works and/or under construction, these apartments will not be ready for occupancy until end of Q4 or into 2022.

Learn more about metro Albuquerque’s office vacancy rate here.

Realtors’ forecast

Meanwhile, the National Association of REALTORS (NAR) recently released their July 2021 Commercial Market Insights report. The numbers look positive!

“Sustained job creation, more consumer spending, and the continuing return of the workforce to the office underpinned the commercial real estate’s recovery across all property sectors in the first half of 2021.” In this issue, learn more about NAR’s projection for expanding sales and commercial leases in 2021 and 2022.