The Albuquerque metro area’s first-ever designation with a green dot in the Urban Land Institute’s annual Emerging Trends in Real Estate report got a standing ovation at a Monday luncheon of NAIOP, the commercial real estate development association.
Green translates to “generally good overall real estate prospects” in this year’s report after four years of negative ratings for Albuquerque’s prospects for commercial real estate investment and development.
Albuquerque’s assets like low cost of living and low cost of doing business are offset by weaknesses like an exodus of young adults, said Maureen McAvey, a senior resident fellow at the Washington, D.C.-based institute.
The Millennial generation aged 16-35 has grown on average by 0.5 percent a year in the metro compared to 2.2 percent nationwide, indicative of what was described as a “brain drain” and pointing to the potential for a future hole at the upper levels of the metro’s work force.
“If I were you, I would want to know more about this,” McAvey said. “Why aren’t our young people staying?
Albuquerque’s green dot rating, which is based on the red-yellow-green of a traffic light, appears to be on the cusp given the red-dot desgination for Tucson, whose scores in various categories used in the ratings were close to Albuquerque’s.
The general trend across the country is improving prospects for real estate. Two years ago, 60 percent of the metros were rated green. This year, for the first time since 2006, 84 percent of the 75 rated metros were green, McAvey noted.
The caution about real estate in general is based on the premise that the gradual recovery nationwide is in its seventh or eighth year, which means a downturn in the real estate cycle is likely overdue, she said.
Albuquerque first appeared in the Urban Land Institute’s 2012 Emerging Markets report with a red dot, which wasn’t unusual at the time. Albuquerque moved to a cautionary yellow designation in the 2014 report. The current 2016 report is the metro’s first green rating.