The quiet apartment market of Albuquerque, N.M., made some news this summer. In a deal announced in late August, Aragon Holdings bought 240 luxury apartments at Broadstone Town Center, one of the newest apartment communities in the city.
By all accounts, Aragon has purchased a strong property in a stable market. “We don’t have the highs that some market have, but we don’t have the lows either,” says Kelle Senye, executive director of the New Mexico Apartment Association. The purchase is the first acquisition in New Mexico for the California-based apartment investor, which has reportedly purchased more than 4,000 apartments over the last four years.
Though terms of the deal were not released. NREI’s analysis of recent comparable sales in the area provided by data firm Real Capital Analytics puts a likely price for a property like Broadstone at about $18 million, or $75,000 per unit. However, there haven't been many sales to go on in Albuquerque: The sale is one of only two major apartment properties sold this year. Less than a dozen such properties have sold in the city since the Great Recession.
Albuquerque’s 6.8 percent unemployment rate, compared to a national rate of 8.2 percent, made Broadstone an attractive investment, said Larry Clark, president of Aragon, in a press release. He notes that the metro area’s population has grown more than 25 percent since 2000, and is expected to grow another 30 percent by 2020.
Broadstone is located within two miles of major job centers such as downtown and the University of New Mexico. It is also just a few thousand feet away from a major hospital complex and the terminals of the local airport, called the Albuquerque International Sunport. However, the city has a large exposure to the defense industry, which could be on the Congressional chopping block in the budget fights to come. “The metro’s economy could take a hit should defense cuts be significant,” says Brad Doremus, senior analyst for Reis Inc.
The apartment market in Albuquerque is healthier than many secondary markets. The vacancy rate fell to 4 percent in the second quarter. That’s 70 basis points below the national average. It’s also down from 4.4 percent the year before. The vacancy rate in Albuquerque peaked at a relatively moderate 7.2 percent, according to Reis, Inc.
Finished in 2009, Broadstone Towne Centre is one of the newest properties in the metro area—which has not seen a great deal of new construction. The class-A community leased up in record time, says Senye. The apartments are now 95 percent occupied. The original developer, Alliance Residential, has been a buyer and a developer in Albuquerque, partnering on projects with Titan Development, including one at the former Del Rey Mobile Home Park. Alliance also acquired the Uptown Village community.
Rents now start at $950 a month for a 741-square-foot one bedroom apartment at the Broadstone and rise to $1,655 for a 1,532-square-foot three-bedroom, according to the property’s website.
That makes the Broadstone one of the priciest rental communities in the market. The average effective rent in Albuquerque was $705 in the second quarter, up about 2 percent from $689 the year before, according to data from Reis, Inc.