Faster permitting tops commercial real estate professionals’ local government wish list

A speedier permitting process is what Albuquerque’s commercial real estate professionals most want from their local government right now.

That was one of the findings of a poll that NAIOP New Mexico released to its members last week. The trade organization will regularly release similar polling, in partnership with the Journal, through its luncheons and newsletters.

The poll’s first question asked NAIOP members to rate the current deal velocity in their segment of commercial real estate on a scale of 1 through 10.

In providing a rating, the poll asked members to consider how often they are receiving inquiries from clients, tenants and investors; how quickly deals are moving from conversation to contract; how quickly projects are moving through the underwriting, design and approval stages; and how often they are seeing clients pursue business opportunities.

Out of 57 responses, the majority selected a rating of 7 and the average of all responses was 5.7. A rating of 6 is the option Lance Sigmon selected. Sigmon is principal and co-owner of the local commercial real estate investment and development company Allen Sigmon Real Estate Group.

“The main issue is capital goes where it is welcomed and wanted,” said Sigmon, who has worked in the local commercial real estate business for more than two decades. “New Mexico has created an environment that does not welcome capital for commercial real estate investors like our other surrounding states have.”

Some of the factors Sigmon said have made New Mexico less investment-friendly are unpredictable and significant property tax increases, high gross receipts taxes on new construction projects and slower permitting.

Of the 72 respondents to the poll’s second question — asking members to select up to three things they most want to see from their local government — 65% said faster permitting was the top priority. Tax relief or predictability garnered the second most votes, with 51% of respondents selecting that option.

“Doesn’t surprise me at all,” Sigmon said of the top result. “While the city of Albuquerque has made strides in that direction, there’s still more work to be done.”

Alan Varela — director of the city’s planning department, which handles permitting — said the city’s average permit speed has dropped substantially over the last three years as a result of process improvements, technological upgrades and staff efforts.

In fiscal year 2023, the average time it took the city to issue a commercial building permit — from time of application to the time it’s issued — was 121 days. That average dropped to 98 days in FY24 and 37 days in FY25.

The problem, Sigmon said, is these averages don’t include the time developers have to spend getting permit applications ready and meeting city requirements before applying.

“There’s two perspectives here — Alan starting the clock at a different time than developers start the clock,” Sigmon said. “I hear what he’s saying, but it’s nuanced. It’s not that straightforward because now they have many more requirements that you have to have done for your project before you submit. They didn’t have that before, so it’s kind of a trade-off.”

Varela acknowledged the work left to be done, adding that the department’s goal for this year is to cut commercial permitting averages down to 26 days.

“We focus on continual improvement, and we are now placing a lot of our attention on reducing the timing for development approvals,” Varela said. “This will require help from City Council, and we look forward to working with them.”

Sigmon said he’s optimistic about the work being done, adding that faster permitting would mean more predictability and less risk for the commercial real estate community and more deals and capital flowing into New Mexico.

“I see so much of what New Mexico has to offer,” Sigmon said. “My hope is that politicians in the state have the willpower to do what’s necessary and to make the necessary changes to make us an economic powerhouse, instead of sending capital to our surrounding states. Because at the end of the day, if we don’t grow, we die.”

Kylie Garcia covers retail and real estate for the Journal. You can reach her at kgarcia@abqjournal.com.