Why doesn’t Downtown Albuquerque build up?

Albuquerque is shooting for the sky when it comes to development in Downtown Albuquerque, but its skyline tells a humbler story.

Revitalizing Downtown Albuquerque has been at the center of development conversations for years, but those conversations always seem to have the question: Is building up a part of the equation, and if so, is it feasible? Some developers say yes, but it poses significant challenges.

Cities like Austin have found a way to transform their skylines, even through periods of national economic uncertainty, thanks to a growing tech ecosystem. The city has seen consistent vertical development over the past couple of decades, with its tallest 74-story building currently under construction.

Costs to build and a lack of private equity funds and market demand are the primary limitations keeping Downtown Albuquerque from building up, according to Jim Long, CEO and founder of Heritage Cos., which owns New Mexico’s tallest building, the WaFd Bank building.

Long said the cost it would take to replace his two Downtown high-rises, the WaFd building and the 20-story Clyde Hotel, would exceed $400 million, creating a significant cost barrier for many developers.

Private equity funds for investing in projects that would cost hundreds of millions to build are also few and far between, Long said. He added that lenders typically like to see borrowers be able to cover at least 25-30% of a project. For a $400 million project, developers would have to come up with up to $120 million.

A lack of market demand is also a driving factor. Long said there is simply not enough demand for big, tall office buildings, hotels or residential housing to “warrant a project like this.”

The primary reasons developers construct tall buildings? Governments putting public money into projects to attract additional investment, and expansions by large companies, Long said.

“To fill a large building, you have to have large tenants. You have to have large companies based here. We don’t have very many large companies based here,” the CEO said.

Many of these reasons are why past efforts to build up higher have failed — the most notable being former Albuquerque Mayor Richard Berry’s early 2017 campaign to reshape the Downtown skyline with a proposed 34-story “Symphony Tower” at the parking lot on Third and Marquette NW. The project was ultimately scrapped after the current mayor, Tim Keller, took office in late 2017.

There is nothing preventing developers from building higher from a zoning perspective. There are no height restrictions for Downtown, said Mikaela Renz-Whitmore, manager of the city’s Urban Design & Development Division.

Renz-Whitmore said she thinks culture also plays a role in the development of Downtown’s structure.

“As part of a Southwest culture, where people really appreciate our vistas and our views... I think culturally, we kind of like our low, spread out development, and I think that absolutely set the flavor for what got developed,” Renz-Whitmore said.

At least one local company today is in favor of vertical development in the heart of the city: Geltmore LLC, a family-run team of local developers who were involved with the Symphony Tower proposal. Geltmore Principal David Silverman agreed with many of the challenges Long spelled out, but added, “That’s not to say we can’t do it.”

Long and Silverman both said some of the first steps to making vertical development in Downtown more feasible would be attracting large companies, potentially tech, into the area and establishing a Downtown Business Improvement District, or BID, which assembles a defined area’s property owners to collectively fund projects and services to boost economic development. Putting a BID together is currently underway Downtown.

Silverman added that the University of New Mexico “committing to something significant coming Downtown” is important, as well as the city investing in Downtown entertainment, such as a performing arts center or concert venue.

“We need a vision, we need a plan. ... We need to not be scared to take some chances,” Silverman said. “If we’re just going to focus on alleys and the graffiti and the lights, we’re not really going to get anywhere. That’s important, but we gotta aspire to a little more than just the status quo.”

For Geltmore, the planning and aspiring have already started. The group is currently under contract to purchase Downtown’s Wells Fargo building at Second and Lomas NW. If all goes well, the acquisition will lead to some interesting development opportunities.

“There’s vacant land that comes with it, like a whole city block,” Silverman said. “Our plan is to go vertical, and we’re going to start planning now for that in the future.”

Silverman said the more than 500-room hotel that was identified as a potential strategy for boosting tourism in Visit Albuquerque’s most recent 10-year Destination Master Plan is a project that is on Geltmore’s radar and could potentially fit the bill for a tall building next to the Wells Fargo tower.

“It’d be nice to change the skyline and get something taller. (It’s) certainly something that we’re hoping to accomplish,” Silverman said. “We’re pretty far away at the moment, but we’ve certainly got our sights to try to do that.”

Renz-Whitmore said developers getting creative with mixed-use spaces would be necessary to spur vertical growth in the heart of the city. She gave the example of UNM thinking about a dormitory tower project.

“I do think there’s opportunities for building tall buildings, but I think our market isn’t quite there yet,” Renz-Whitmore said, adding she doesn’t see another skyscraper going up in Downtown but does see more buildings between three and seven stories starting to go up at populated centers throughout the city.

Long agreed, adding, “(Downtown) should grow vertically when the market demand warrants it. ... If you were to build today, it would be an economic disaster.”

Silverman said he and the Geltmore team hope to see barriers, including costs, shift over the next five to seven years.

“Why wouldn’t we invest in some density in our core? If people say the health of your city is judged by your Downtown, then why wouldn’t we try to make our Downtown better?” Silverman said.

He added, “All these other case studies, like Tucson, all these other little places have done it. We can do it; we just need some vision.”