Low Housing Prices Lure
Employers to Albuquerque

Albuquerque helped to launch Microsoft Corp., when Bill Gates and Paul Allen co-founded the fledgling software giant there in 1975 before moving to Washington state -- in part because of difficulty recruiting new hires in the then-remote desert region.

New Mexico's largest metropolitan area, overshadowed by faster-growing Western rivals such as Seattle and Phoenix, and dominated by smaller businesses, has long struggled to lure and keep big corporate players, says Lawrence Waldman, a senior economist at the University of New Mexico's Bureau of Business and Economic Research.

A building under construction for Advent Solar Inc. is the first structure to be built in Mesa del Sol, a multiuse project on nearly 13,000 acres in Albuquerque.

The latest and largest bid to attract and retain employers is Mesa del Sol, an ambitious master-planned project valued at $5 billion over its multidecade buildout. Developers plan to transform nearly 13,000 acres of vacant land in southeastern Albuquerque into a city within a city containing 38,000 homes, schools, stores and as much as 18 million square feet of office and industrial property.

Forest City Covington LLC, the project's joint-venture development team that includes Forest City Enterprises Inc., of Cleveland, wants to meet the demand for jobs and places to live, fueled by the population's shift to sunny Southwestern cities. They also hope to avoid problems, such as traffic and overcrowded schools, that often plague fast-growing communities.

"There are not many places like this where you get to start from scratch and do it right," says Mark Lautman, director of economic development for Forest City Covington. The first building, an 87,000-square-foot office and manufacturing space for Advent Solar Inc., which manufactures solar-energy panels and will employ about 250 people, is due to be completed this year.

The Albuquerque region's population surged 7% to about 781,000 in 2004 from 2000, well above the U.S. average growth, according to the U.S. Census Bureau. Employment levels also rose 3.1% in December from the year-earlier month, more than twice the national average of 1.5%, according to the U.S. Bureau of Labor Statistics. Positive job news included technology-support provider Sento Corp.'s decision last year to open a customer-support center in downtown Albuquerque; it is expected to employ 800 people within about two years.

The growing economy has helped to drive improvements in the area's commercial-leasing market. The warehouse-distribution market was the strongest sector, with above-average rents, thanks in part to the increasing needs of companies to transport goods to customers throughout the Southwestern U.S., says Ken Schaefer, director of brokerage services for Grubb & Ellis/New Mexico. Office and retail vacancy rates tightened in the fourth quarter while rents rose, but office rents lagged well behind national measures.

Downtown Albuquerque had a fourth-quarter vacancy rate of 18% and remained one of the weaker submarkets of the region's office market, which has a total of about 12.3 million square feet of space -- roughly the equivalent of three of Chicago's Sears Towers.

Mesa del Sol developers believe the project will help to boost downtown occupancies by attracting more companies that need lawyers and accountants. But the University of New Mexico's Dr. Waldman cautions that the region -- though home to large employers including Los Alamos National Laboratory, Kirtland Air Force Base, and Intel Corp. -- still is largely driven by small business. "It's a slow process" to develop such a large tract of land, he says. "We're not going to be another Phoenix."

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