Copyright © 2021 Albuquerque Journal
Bernalillo County officials have approved selling two more properties as part of the county’s consolidation into new Downtown headquarters – in one case taking almost 30% less than the originally agreed upon sales price they OK’d two years ago.
The County Commission on Tuesday gave the go-ahead to sell its stake in the One Civic Plaza building to the building’s co-owner – the city of Albuquerque – and to sell 501 Tijeras NW to a local family known for its car dealerships and Downtown real estate investments.
Although both sales still need New Mexico Board of Finance approval, the city is scheduled to pay $5.5 million for the county’s 50% stake in the 11-story building on Civic Plaza, while the Garcia family, through a company called Townsite QO21, will buy the Tijeras Avenue building for $1.35 million.
Neither of the properties was advertised, according to a county spokesman who noted that is not required by state law, and the sales prices match the buildings’ latest appraised values.
However, the county was prepared to sell 501 Tijeras to the Garcia family two years ago for its then-appraised value of $1.91 million. The County Commission approved the deal in August 2019, and the Board of Finance approved it a month later contingent upon seeing additional documentation.
The parties were not planning to close on the sale immediately, because the building still houses the County Assessor’s Office. They intended to complete the transaction in 2020 to shorten time the county would spend leasing the three-level, 27,222-square-foot building back before it could move employees to the new headquarters.
But when COVID-19 hit in early 2020, the Garcias asked to postpone the sale. Ed Garcia said the family needed to concentrate on its existing investments, which include about 1 million square feet of Downtown space.
“We were just trying to stabilize … the other office properties we have in Downtown, and that was our focus. It wasn’t this property,” he told the Journal.
But the building’s $1.91 million appraisal from 2019 expired during the delay. The county did another in August 2020, which resulted in a $1.84 million valuation.
The Garcias asked for another earlier this year. The county agreed – in part, a spokesman said, because the lengthy sale approval process might have run up against the 2020 appraisal’s expiration. The new one came back at $1.35 million.
County staff took the deal back to the County Commission last week at the lower sale price. With no discussion about the previous approval or price differential, the commission voted unanimously to approve it.
Downtown office space values have not in general plummeted in the last two years, according to one local commercial real estate executive. In fact, they have in some cases risen slightly, said Jim Chynoweth, managing director for CBRE’s Albuquerque office.
But he said it is not uncommon for different appraisers to reach different conclusions or for later valuations to factor in new or additional details not previously known.
In addition, “I would tell you that’s a tough property,” Chynoweth said of 501 Tijeras. “That building … would not be a high-demand building.”
Despite the $560,000 loss in appraised value during the delay, a county spokesman said there was no guarantee the county would have done better if it denied the Garcias’ request to postpone and tried to find a different buyer. If it sat on the market for an extended period of time, the county would still have to pay to maintain it.
“We have to weigh that,” spokesman Tom Thorpe said. “Yes, maybe there’s a small depreciation or we lose a little bit of money. In the long run of having to go back to the drawing board, it’s actually (potentially) a wash or we come out ahead.”
Ed Garcia said that the family has not determined how it will use the three-level 501 Tijeras property but that it no longer makes sense as an office building. He said they will likely pursue a mix of uses, which could include some offices, apartments or a restaurant.
The Garcia family already has bought one property from the county.
In May 2019, the County Commission approved selling 415 Tijeras NW – a onetime county courthouse and jail – to one of the Garcia family’s companies for the appraised value of $647,500. The New Mexico Board of Finance raised questions about the purchase price and requested another appraisal, which came back at $170,000, according to a county spokesman. The county and buyer agreed to the original appraised value, and the Board of Finance approved the sale in November 2019.
Garcia said that the county is still using a portion of the building but that film crews have been using other sections.
” ‘Better Call Saul’ filmed in there,” he said. “We get a lot of request for the space.”
The county is selling off existing properties as part of its consolidation into Bernalillo County @ Alvarado Square, a $68.1 million headquarters at 415 Silver SW. About 900 employees will eventually work in the building, which is scheduled to open to the public in August.
Including the two aforementioned sales pending state BOF approval, the county will have generated about $7.5 million from the dispositions.