Federal government consolidation is the leading cause of office space consumption in the Albuquerque, New Mexico, market, according to Scott Throckmorton and David Laney, president and associate broker, respectively, of Argus Investment Realty. The Department of the Interior’s Office of the Special Trustee is being constructed by Opus West at the Journal Center, an 86-acre property located at Jefferson and Masthead NE in Albuquerque. The 165,000-square-foot build-to-suit project will consolidate three or four locations and double the square footage the agency is currently using. Opus West is also building the 150,000-square-foot office for the Department of the Interior’s Bureau of Indian Affairs. This project, also a consolidation, will be located at Interstate 40 and 12th Street on Indian-owned land. Located along North Interstate 25, the third government unit under construction is a 150,000-square-foot building for the FBI.

Most new office development in Albuquerque is occurring along the North I-25 frontage area. “Growth is occurring here for two reasons,” say Throckmorton and Laney. “The first is that with the newly redesigned ‘Big I,’ the interchange of Interstates 40 and 25, businesses are centering themselves along this busy corridor to increase exposure, decrease drive time for employees and business associates. The North I-25 corridor offers quick access to both the Northeast Heights, the older established area, and the rapidly developing suburbs of the west side and the community of Rio Rancho.”

“Secondly,” continue Throckmorton and Laney, “the Far Northeast Heights and the West Mesa and Rio Rancho areas continue to develop newer housing stock, tipping the balance of population further north than previously, thus shifting the center of the city. Also, for the last few years, the amenities there have increased dramatically with the new construction of hotels and restaurants.”

Leased space is also starting to tighten up in both Class A and high-quality Class B buildings. As this continues, and if current interest rates hold their position, smaller firms will start building their own offices until the lease market returns. Right now the overall vacancy — excluding sublease — is 12.5 percent in the Albuquerque market. In the central business district, it is 13.4 percent and in the suburban market it is 12 percent. The average range for Class A rental rates is currently $18 to $22 per square foot per year.

Large corporate tenant migration will continue toward the North I-25 corridor buildings, and in particular, the Journal Center, say Throckmorton and Laney. North I-25 is popular right now because of land availability and its central location. Demand will create build-to-suit and spec development in this submarket.

Some companies that have closed major leases recently include the College of Santa Fe, Radiology Associates and the Department of the Interior. The College of Santa Fe has leased 40,000 square feet at the Pinetree Corporate Center. Radiology Associates has leased 25,000 square feet at “25” Project, located at I-25 and Jefferson.

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