Improving Fundamentals Follow Multifamily Construction Slowdown in Albuquerque

Supply growth is expected to accelerate through the end of the year. Projects totaling 900 units are slated for delivery in 2025, after more than 2,000 combined units have been completed since the beginning of 2023. Following this year, the pace of multifamily deliveries should decline, with roughly 500 units currently scheduled for completion in 2026. Additional inventory growth in the immediate future will likely push the vacancy rate higher. Beyond 2025, operating conditions should perform well as supply growth becomes less robust. In 2026, vacancy is expected to trend lower and rent growth will likely accelerate. Multifamily permitting will likely slow in the coming quarters. Permitting trends have been uneven in recent years, with permits for more than 350 units being issued in some quarters, while other quarters have recorded permits for less than 50 units.

Transaction volume in the Albuquerque multifamily investment market remained limited in recent months, tracking levels recorded since the beginning of 2023. Sales activity has been spread throughout the region to this point in the year, with the Far Northeast Heights, Southeast Heights, North Valley, and North I-25 submarkets all recording sales. Southeast Heights recorded its first sale since 2023, marking a return to activity in a historically active submarket. In recent quarters, the transaction mix has consisted of a wider range of property vintages. Properties built during the 1960s, 1970s, 1990s, 2010s, and 2020s have changed hands to this point in 2025. In the previous decade, properties built in the 1970s or 1980s led the way in transaction totals, largely due to limited new construction.

Looking ahead

Supply growth is expected to accelerate through the end of the year. Projects totaling 900 units are slated for delivery in 2025, after more than 2,000 combined units have been completed since the beginning of 2023. Following this year, the pace of multifamily deliveries should decline, with roughly 500 units currently scheduled for completion in 2026. Additional inventory growth in the immediate future will likely push the vacancy rate higher. Beyond 2025, operating conditions should perform well as supply growth becomes less robust. In 2026, vacancy is expected to trend lower and rent growth will likely accelerate. Multifamily permitting will likely slow in the coming quarters. Permitting trends have been uneven in recent years, with permits for more than 350 units being issued in some quarters, while other quarters have recorded permits for less than 50 units.

Sales activity in the Albuquerque multifamily investment market will likely remain limited in the coming quarters as investors continue to track the competitive impact of recent and future supply growth, while also monitoring the pace of absorption across the market. Longer term, investment opportunities should present themselves as the recently built inventory stabilizes. Nearly every property that was completed in 2023 has been successfully leased-up, and many of the properties delivered in 2024 are trending in that direction. Sales velocity in the traditionally strong Northeast Heights and Southeast Heights submarkets should gain momentum in the coming quarters after a brief dip in activity in recent periods.

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