"Because Albuquerque's real estate investments can providesignificantly better returns, a number of out-of-state and localinvestors have been drawn to the marketplace," Grubb & Ellisexplains. For example, USB Realty Investors LLC, paid $13 millionfor the City Place office building in 2001 and Citicorp paid $24million for the Montgomery Plaza.

"With an active investment marketplace, there is a high demandfor triple net leased properties with credit tenants, regardless ofspecialty type or price range," the report notes. "In 2002,Albuquerque capitalization rates will range from 10% to 10.5% onclass A office properties, 10% to 11% on class B office propertiesand 10% to 12% on industrial and retail properties."

Still, Albuquerque faces one hurdle–consumer confidence. "Theshort-term challenge for 2002 is to regain consumer confidencegiven the recent domestic adversities and the condition of theeconomy," the report notes. "Great opportunities exist in realestate for investors. Investment capital is currently available atlower costs than in recent years, which allows buyers to leverageinto properties they may not have otherwise been able toconsider.