Albuquerque apartment demand drops, but rent growth projected to continue

Multifamily demand in Albuquerque fell to a four-year low in 2011, as the vacancy rate rose to 5.6 percent and the average cost per unit dropped beneath $50,000.

The metropolitan statistical area lost about 1,900 jobs during the year, and single-family home sales rose about 25 percent from 2010. While prices remained low due to extensive inventory, Hendricks & Partners reports that the renewed interest in home buying may cause a further increase in multifamily vacancies, establishing a rate of 5.9 percent by 2013.

Occupancy rates and rent growth are low for the city's recent history, but remain higher than other metro areas in the region, including Phoenix, Tucson and Las Vegas. Approximately 1,100 new apartment units are being planned, with construction rates expected to increase during this year and the next.

Despite projections of increased apartment construction and higher vacancies, Hendricks & Partners indicates the near future appears positive for the metro area. Market conditions are tight, according to the firm, and the fundamentals are expected to cause further rent growth of about 2 percent this year and 2.5 percent in 2013. This suggests that while business will be limited, those rental property management companies involved in the city will have an opportunity to profit.