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Experts agree the Downtown core needs a lot of new housing. What's taking so long?

More residents would lead to a virtuous circle of economic uplift, the conventional wisdom holds

Extra building costs unique to the area are a choke point

But two projects in the works right now could change the game in the coming years
TOP: The proposed Downtowner apartment complex is on track to be built at Silver and Second. BOTTOM: Elevate @ Lomas and Third has been delayed but looks set to break ground in the spring. Other developers are paying very close attention.
Like a smash hit song, the refrain seems to pop up everywhere. If your travel in Downtown area civic circles for a few days or weeks, you'll hear it too.

The melody goes something like this: There is almost nothing wrong with the Downtown core that cannot be cured by a boatload of additional housing units. Hundreds and hundreds of units. Maybe, eventually, thousands.

More housing, the theory goes, means more people. Those people will, in turn, support existing businesses and inspire the creation of new ones, thus bolstering the offerings for tourists and conventioneers and making the area more attractive to regional visitors. They will generally watch out for the place, lead to more political representation, and in the long run, create the kind of talent supercluster that brings new businesses to town and translates into that tantalizing tableau we see elsewhere, with lots of people looking to spend money walking up and down the newly vibrant streets. That will attract even more people, and the whole virtuous circle will begin again.

Surprisingly enough, the theory seems to enjoy something close to consensus approval in Downtown area circles. You'll hear it from neighborhood leaders, business leaders, and developers alike. Mayor Tim Keller is on board, telling a press conference over the summer that the core could use "at least 1,000 units."

Part two of the daydream turns into a bit of a lament, however, and it goes something like this: Why hasn't this vision become a reality yet? The Downtown core (defined here as roughly the box surrounded by Lomas, Eighth, Coal, and the railroad tracks) is one of the few places in the city where you might just put up hundreds of units without attracting much in the way of political opposition. Thanks to land-use rules alternately held over from the horse and buggy days or instituted more recently with the Integrated Development Ordinance, the amount of expensive parking developers would have to add is minimal. And while taking transit may not be for everybody, if you're game, life doesn't get any better than the Downtown core, with its dozens of local and intercity bus routes, plus Amtrak and the Rail Runner.

More to the point, what units are available tend to get snapped up fast.

Additional housing is no fly-by-night idea for Downtown revitalization, even in the car-oriented towns of the Rocky Mountain West: It worked in Denver. It seems to be working in Colorado Springs.

So what exactly is standing between us and this brave new world where Downtown is no longer described as "dead" by the indifferent or as "full of potential" by friends looking to spare its feelings?

We decided to find out.

An expensive sort of complexity
Single-family homes in the suburbs are often maligned as "cookie-cutter," but from a construction perspective at least, the shoe fits. Often working from a limited number of off-the-shelf blueprints, construction crews that are sometimes less specialized (and paid less to boot) can quickly move in, spread out their tools and materials, build relatively uncomplicated houses, and then efficiently move on to the next job, which itself is bound to look a lot like the last. Repeat that simple assembly line process for a couple or few decades, and you get Albuquerque's Westside.

But if you build a multi-family complex Downtown, the cookie-cutter becomes a 1,000-piece puzzle, and every one of those pieces has a cost.

You can see one of those complications playing out right now at Silver and Second, where Homewise is building a collection of townhomes just south of Silver Street Market (DAN, 6/22/21). As multi-family development goes, the project is on the small side, but it nonetheless requires a fantastic quantity of building materials, and so the non-profit developer has arranged to stage them on a vacant lot catty-corner to the job site. The city, which donated the land on which the townhomes are going, conveniently owns that vacant lot, too.

But that lot is not going to be vacant forever. The city is in negotiations with developer Jay Rembe, whose portfolio includes the Silver Lofts and many of the prominent new or refurbished structures in West Downtown, to put up nearly 200 apartments there.

So when it comes time to break ground, where is he supposed to stage all of his materials, given that the immediate area's supply of vacant lots will have run out?

To be sure, that is a problem that can be solved with creativity and good logistics, but it is also a problem that the suburban residential developers - with their comparatively small pile of materials and ample space within neighborhoods that may not even have residents yet -simply don't have.

The list goes on: Land costs are higher Downtown, and with space at a premium, parking structures can be essential but add cost - sometimes tens of thousands of dollars per space. Build high enough, and you'll be forced to use expensive metal framing rather than wood or perhaps even supplement the water pressure. If the project gets big enough, worker pay scales can go up.

"The higher you go the more complicated it gets," Rembe told DAN.

Add to that an inflation picture that has shaken the construction world particularly hard, driving up the cost of materials and delivery times, including specialty items more likely to be needed for a bigger apartment project.

"An elevator right now is a one-year lead item," said Scott Throckmorton, who is developing the 144-unit Elevate @ Lomas and Third project. He also pronounced labor availability these days as "suspect."

The improvisational and expensive nature of Downtown development is only heightened when it comes to renovating older and (possibly worn-down) buildings or repurposing, say, former offices into residences.

"That doesn't fit into a nice formula," said Mark Baker, who repurposed a former Sears built in 1936 into the offices, apartments, and the 505 Central Food Hall and more recently purchased a former convent at Seventh and Copper that he aims to turn into 15 apartments (DAN, 11/8/21). "Not all developers are willing to step into that territory."

Finding a place to build in the first place isn't easy either. There are plenty of vacant buildings, but few are actually for sale, and the situation with empty land isn't much better.

"There's very few sites in Downtown where you're going to be able to go ground-up," said David Silverman, a principal at Geltmore, which developed the Imperial Building.

Exceptions include surface parking lots, Throckmorton added, but persuading the owners to relinquish their cash flow is quite the job in and of itself.

Fronting the bill
Paying for construction and that laundry list of extra steps is often a task that developers are not actually in a position to do by themselves. Instead, they rely on investors and lenders to come up with the money. Appraisers also come into play because they estimate what sort of income a property might ultimately fetch, calculations that are scrutinized closely before checkbooks come out.

"Development is very hard and very risky and very expensive," Silverman said. 

With millions of dollars on the line, fears about safety and security in the Downtown core loom particularly large for people who could alternately invest elsewhere in the city, state, or country if they chose to.

"It's still a really desirable area," said Billy Eagle, a senior vice president specializing in multi-family housing at CBRE, a commercial real estate services firm. Still, "if you look at the news, there's still a lot of fights and crime Downtown ... it's just a big detractor for the potential tenants."

Plenty of businesses and residents may put up with the rough edges, in other words, but the people fronting money for new buildings don't particularly want to think about how difficult it will be to find more people like that, particularly if the crime or homelessness situation deteriorates further.

"Most of our investors are Albuquerque-based. They know what Downtown is like," said Josh Rogers, a senior vice president at Titan Development, which is presently leasing out a brand-new 92-unit complex near Presbyterian Hospital and building another 288 units on an adjacent parcel. "At the end of the day, you're asking a tenant to live in a place. You're asking your tenants to take a risk with you."

That mountain of challenges effectively means that Downtown, at the moment at least, is primarily the domain of a certain type of true-believer developer, almost always bolstered by some sort of public subsidy, be it donated land, a tax credit or abatement, a fee waiver, or a special loan.

This is also why names like Baker and Rembe keep popping up on area projects. They're not philanthropists, but they are motivated by a certain love of the urban Albuquerque game.

"All the guys that are making the effort to redevelop Downtown have some level of passion and love for what they're doing there," said Damian Chimenti, the owner of Insight Construction, whose projects include many of Rembe's West Downtown buildings. "I think they're willing to sacrifice some returns for doing what they love to do."

But for all the problems, there is, at the end of the day, demand. The commercial/retail scene in the Downtown core may be dreadful at the moment (DAN, 11/30/21), but whether bolstered by a hot housing market citywide or a genuine love of city center living, the residential side is anything but.

"When projects do find a way to get built, they're rented immediately," Chimenti said. 

Despite everything, a reason for optimism
The complexities, paired as they are with rapidly-rising costs and a labor shortage, would seem to be enough to torpedo prospects for a housing-induced Downtown renaissance, at least in the near-to-medium term. But if there is reason to think otherwise, it comes in the form of the two projects pictured above.

Rembe's Downtowner and Throckmorton's Elevate @ Lomas and Third represent something very new in the Downtown housing game: Unlike affordable projects such as Casitas de Colores and Silver Gardens, they will rent out at market rates. And unlike other market-rate projects, such as Baker's forthcoming convent renovation and Homewise's townhomes, they are comparatively gigantic, with a combined total of nearly 350 units.

(That plays to one advantage of Downtown construction that we haven't mentioned: Build smaller and/or higher, and you can squeeze in more units per acre. That sort of economy of scale is a big help for people trying to make the numbers work.)

The hope is that the projects will act as a sort of pioneer species. If both are ultimately built and rented out at the right rates, they will make a powerful business case to other developers that Downtown is ready for more large apartment or condominium projects. Investors and lenders may have their doubts now, but there is nothing, it seems, quite as compelling as a couple of good comps. And if the new buildings inspire a few new restaurants or other amenities to open up, thus making the area that much more appealing to live in, so much the better.

That would do the trick for Titan, at least, which has not done any multi-family development in the Downtown core.

"If those projects are successful, we will see a domino effect of people investing in Downtown," Rogers said. "I guarantee you Titan will be Downtown."

That is precisely the sort of thing that Karen Iverson, the manager of the city's Metropolitan Redevelopment Agency, wants to hear. As one of the chief facilitators of public subsidies for Downtown area projects, including a $2.2 million request for proposals to stimulate new housing that closes tomorrow, her job is basically to steer us toward that tipping point.

"What we really need to do is develop a base of comps that will begin to prove up the market," she said, something that could lead to the routine construction of complexes in the 150-250 unit range.

In the last ten years, the Downtown core has seen the construction of about 500 new housing units, Iverson said. With only about 1,300 units total, that's a serious increase, but she would like to see that rate quadrupled to 200 per year, with a renewed emphasis on market-rate units whose tenants bring with them added economic heft.

Prioritizing all those affordable units was "the right place to start," she said, but "we do need to look at diversifying the housing supply."

That recipe of good comps, a marquee rail trail, and what Iverson called a "robust strategy" for dealing with crime and homelessness, could in theory lead to a Downtown where the city can redirect its money to other things.

"I think the next five years will be very transformative for Downtown," Iverson said. "Over time, the subsidy tapers off. We can focus on creating the amenities, creating the public realm that is conducive to a walkable Downtown."

Count Eagle as bullish on the prospects.

"We've had these projects that have been teed up for years and years," he said. "But now they're finally coming to fruition."

That is easier said than done, but one of the people doing the building is also feeling good about it.

"I am optimistic," Rembe said. "I think we've all got to keep fighting hard and taking some risks."
Downtown Albuquerque News covers greater Downtown, which we generally define as the area created by I-40, the Rio Grande, and the railroad tracks. We publish weekdays except for federal holidays. If someone forwarded DAN to you, please consider subscribing. To subscribe, contact us, submit a letter to the editor, or learn more about what we do, click here. If you ever run into technical trouble receiving DAN, click here.
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