Building A New Albuquerque
Just Southeast of downtown Albuquerque sits 9,000 acres that are being developed into Mesa del Sol, the largest urban development underway in the U.S.
Randall Shearin

Albuquerque, New Mexico, is a city that’s poised to grow. With a moderate climate that rarely sees snow and a cost of living that’s below the national average, it’s a dream town for many. But Albuquerque really hasn’t been discovered much the way that the rest of the sunbelt has. With about 750,000 full-time residents, metropolitan Albuquerque is the largest city in New Mexico (population: 1.9 million), but it is still much smaller than other western cities like Denver and Salt Lake City. The city of Albuquerque has made a huge push over the past few years to attract new businesses and residents, and it is succeeding.

The Albuquerque skyline. Just a few minutes from downtown Albuquerque sits Mesa del Sol, the largest urban development underway in the U.S. Photo courtesy of MarbleStreetStudio.com

But the biggest story in Albuquerque is going to take place over a period of years. It involves 9,000 acres of property just a few miles southeast of the city’s downtown. This area is now known as Mesa del Sol, and it’s being master planned by Forest City Covington NM, a joint venture of Forest City Enterprises and Covington Capital. Over the next 25 to 30 years, Forest City Covington will build residential, retail, educational, office and research space at Mesa del Sol. It will, in effect, create a whole new Albuquerque. One that will drive growth and new residents to the area. At its size, Mesa del Sol is the largest urban development underway in the U.S.

Shopping Center Business recently flew to Albuquerque to meet with Michael Daly, chief operating officer of Forest City Covington NM. While there, we also took the opportunity to meet with several people involved in the project, including Albuquerque Mayor Martin Chavez and Robert Feinberg, senior vice president and principal of Grubb & Ellis|New Mexico Real Estate Advisors, who will handle retail leasing on the area’s first shopping centers.

Largest Urban Development

Mesa del Sol is so large that the developers will not be able to master plan it all at once. Instead, Forest City Covington has started with 3,000 acres at the northern end of the property, creating an economic development zone designed to attract new employers to the area. Already, Albuquerque Studios, a division of California-based Pacifica Ventures, previously the manager of Culver Studios in Culver City, California, has built eight soundstages at Mesa del Sol. It is the largest soundstage facility in North America, designed for film and television production. Albuquerque Studios began leasing its space to movie studios earlier this year, and filming began on the first movie in March. Albuquerque is a very moviemaking-friendly community; the state of New Mexico rebates 25 percent of the production costs back to the studios for any film made in the state. The opening of Albuquerque Studios has caused some to term the area “Tamalewood.”

Advent Solar has built an 87,500-square-foot manufacturing facility at Mesa del Sol. Mesa del Sol is developing an employment base before developing residential and retail.

About a half-mile from Albuquerque Studios, an 87,596-square-foot LEED-certified research building for Advent Solar, Inc., a solar energy company, has been developed. Advent Solar will eventually employ 1,000 people at this location, producing solar cells and modules. Albuquerque has one of the highest levels of PhD’s per capita in the country, since two of the three national laboratories are located there. With that level of education, the city and Mesa del Sol are hoping to attract more high tech companies. Recently, Tesla Motors, a company that produces electric cars, including a sports car that costs $70,000 and propels itself from 0 to 60 in about 4 seconds, announced plans to produce its second model, an upscale four-door sedan, at a 150,000-square foot factory that it is building at Mesa del Sol. The University of New Mexico plans to develop a film and media school at Mesa del Sol as well. Forest City has endowed a chair for UNM to create a film and digital media program.

Albuquerque is home to the largest hot air balloon festival in the world. Photo courtesy of MarbleStreetStudio.com

While the office and employment development is underway at Mesa del Sol, the next step is retail to service the employees. The movie studios will have about 4,000 people on the lot at full capacity. All of these people need somewhere to eat, pick up dry cleaning and get convenience items, says Daly.

The first retail center planned for Mesa del Sol is a convenience-oriented town square that will provide services to Albuquerque Studios and other tenants.

“The studio is really driving the demand for the retail at Mesa del Sol,” says Feinberg, who is currently working with retailers who want to service the needs of tenants. Feinberg is working with a number of large-scale tenants who will be creating smaller, more focused stores for the convenience-oriented center.

Albuquerque Studios project at full build-out.

“Those types of tenants will be the clientele for the center for the first 2 years, until housing comes along and changes the nature of retail at Mesa del Sol,” says Feinberg. “There is so much activity between the studios and the new economic development that is taking place that there will be enough employees to drive significant special services retail.”

Rooftops To Retail

The first step in getting retail of a significant size to Mesa del Sol is getting residential there first. To that end, Forest City has set aside about 1,500 acres of the first 3,000 acres of Mesa del Sol to be used for residential and support retail. The company is in the process of working with homebuilders and their architects to develop numerous housing concepts and styles for the neighborhoods of Mesa del Sol. Daly estimates that there may be as many as 15 different housing companies offering multiple floorplans and housing types as the project grows.

“As you have different products, different builders will be willing to create a production program,” says Daly. “We are not going to take typical floorplans from builders. They are going to have to do their own production floorplans to specifically fit the environment we are trying to create at Mesa del Sol.”

There are currently about 22,000 lots available for residential development in greater Albuquerque, not including those in Mesa del Sol. This doesn’t leave a lot of room for mass expansion for the city. When Mesa del Sol begins releasing lots to homebuilders, it will release approximately 500 lots per year. Once rooftops are built, a significant retail development is planned for Mesa del Sol. And rooftops are not far off; the first residents will move to Mesa del Sol in June 2008. Daly estimates that 500 to 700 houses per year will be built.

“By 2010, we will have as many as 5,000 people working at Mesa del Sol,” says Daly. “They have to eat somewhere and they have to live somewhere. Their Number 1 choice for living will be close to work. With our housing set at $160,000 to $500,000, most will choose to live in Mesa del Sol.”

Forest City Covington is working to develop schools in the area for residents. Every use is being outlined on a master plan, which is being designed by Peter Callthorpe, the same architect who master planned Stapleton for Forest City. A helicopter tour of the site, as well as a driving tour, showed the incredible expanse of the project, and the potential developments that could take place at Mesa del Sol.

The first major retail development will be at the northwest corner of the property, where Mesa del Sol abuts Interstate 25. A new interchange is planned for this area, which will give the retail direct freeway access. Since the development is not planned until 2010, only general planning and idea gathering is being done for the center. It is anticipated to be an open-air, combination power and lifestyle center that services the community as well as residents of other nearby areas.

“There are no clear rules when you build something new,” says Daly. “The market will drive what we do and when we do it, with regard to commercial development.”

A second boost for major retail in the area is Kirtland Air Force Base, which is located on the northeast side of Mesa del Sol. There is already an existing south gate from the Air Force Base to an area near Mesa del Sol, which will provide access through Mesa del Sol to I-25 for workers on the base. Forest City Covington is working with the base to create a new gate that will adjoin Mesa del Sol, allowing those on base even easier access to the services and residential easily.

Because Mesa del Sol is a project that will be developed over the next 30 years, retail will be something that grows with it. No one can predict retail trends that will exist 30 years — or even 10 years  from now — so Forest City is not planning retail for areas that will be developed that far in the future. Instead, it plans to grow the retail with the master plan. As houses are built, and as retail evolves, so to will the retail at Mesa del Sol.

“Retail follows rooftops,” says Brian Jones, president of Forest City West Commercial Group. “There will be a number of retail projects. What we decide is going to happen now will change over the time period. Retail is forever changing. We will know on a macro scale where the retail will be, but the uses will evolve with the nature of retailing over time and be developed as needed.”

Support From The Top

One of the biggest fans of Mesa del Sol is Albuquerque’s mayor, Martin Chavez. Mayor Chavez has been supportive of the project from the start, and has been instrumental in luring some of the first employers to the project. He recently took a several hours of his schedule to spend time with a media company who is considering building a facility at the project.

“The jobs in Albuquerque are created by the private sector,” he says. “We have to grab them by the tail.”

He has been heavily involved in every step of Mesa del Sol, even insisting that the development have a sustainability plan and items like a bike trail to make it citizen-friendly.

“Mesa del Sol raises the bar [for development in Albuquerque],” says Mayor Chavez. “A lot of developers have set their sites low and had low expectations of the consumers. Developers are learning that if you build quality, which can be a little more expensive, you get a higher return. Mesa del Sol will force the [housing] developers to rethink their strategies to compete with high quality in the marketplace.”

A lot of what Forest City Covington is doing at Mesa del Sol is being compared to a similar project Forest City is creating in Denver — the redevelopment of the land that formerly housed Stapleton Airport, which Forest City started working on in the late 1990s. While the two projects can be compared — both are located minutes from their respective downtowns and both contain every property type — Stapleton is only 4,700 acres. Mesa del Sol is nearly twice as large. So Mesa del Sol represents an unprecedented challenge for Forest City and for Albuquerque.

“From Forest City Enterprises’ aspect, Mesa del Sol is the type of project we believe is the future of our company,” says Jones. “We like community projects which involve every aspect of the development spectrum over a long period of time. This is one of the greatest opportunities we have seen in a number of years.”

However, if Mesa del Sol can mirror Stapleton’s success, things will go incredibly well for Albuquerque. There is currently a 6-month wait for housing being built at Stapleton and the project has numerous retail developments open, among them a 1.2 million-square-foot lifestyle center called Northfield Stapleton, anchored by Macy’s, SuperTarget, Harkins Theatres, Bass Pro Shops and Circuit City. As mentioned, housing at Stapleton is in demand by residents. Housing ranges from lofts and townhomes to upscale single-family dwellings. Affordable housing is also in the mix. There are 18 homebuilders active at Stapleton. Similar housing types are in the works for Stapleton, and retail will grow with the project.

“I personally believe that Forest City Covington is the premier New Urbanism infill developer in the world,” says Mayor Chavez. “What they’ve done at Stapleton in Denver is phenomenal because it incorporates the best of everything in a market driven format. It is intensely livable. We see that as the base level for Mesa del Sol. Good entrepreneurs get better with experience. Mesa del Sol will raise the bar for everyone.”

The Future Will Tell

While major retail is a few years off, Albuquerque will be ready for it. The city recently opened its first lifestyle center, Hunt Building Corporation’s ABQ Uptown, which at 229,000 square feet is anchored by Pottery Barn, Williams-Sonoma, Bravo! Cucina, Soma, White House|Black Market and J.Jill, among others. The center has been successful, and the area’s two major malls, Simon Property Group’s Cottonwood Mall and General Growth’s Coronado Center, continue to serve as hubs for the area’s retail. With two of the nation’s national laboratories nearby, the area has a highly educated population.

“Albuquerque is a great city to be in for the long term,” says Jones. “It has very stable employment and a high number of federal dollars are spent in the city. The potential for the film production business is the same that Hollywood had 70 years ago.”

As the area around Mesa del Sol begins to develop, so too will the retail.

“The retail at Mesa del Sol is not going to happen overnight, but when it does happen it will happen at a much higher level than we are used to in Albuquerque,” says Feinberg. “Albuquerque is on the precipice of Phoenix and Las Vegas 20 years ago. The Californians and Nevadans are flocking here, as well as retirees. We are the last undiscovered area of the Southwest.”

GETTING THE LAND Assembling the 9,000 acres of Mesa del Sol wasn’t the easiest transaction for Forest City Covington. About 12,000 acres was owned by the State of New Mexico’s Land Use Office. In 2005, the Land Use Office transferred 3,000 acres to the University of New Mexico in exchange for 12,000 acres in different areas of New Mexico. The university, in turn, sold the land to Forest City. Mesa del Sol is a public/private partnership with Forest City Covington as the master developer. As such, Forest City has control over another 6,000 acres. Mesa del Sol actually consists of about 12,900 acres, but Forest City Covington is the master developer for approximately 9,000 of those acres. The master plan Mesa del Sol thus far includes 1,800 acres for industrial/commercial and office development; 4,700 acres for residential and supporting retail use; 3,400 acres for open space; and 800 acres for schools and universities. There is potential to acquire more land in the future, so as the project builds out in the future, its size may grow as well. Covington Capital identified the opportunity for Mesa del Sol and brought it to Forest City. The two formed the joint venture, Forest City Covington NM, and sought the bid from the city. After winning, the two companies made the University of New Mexico a minority partner in Mesa del Sol. Forest City has a 42.5 percent stake in the venture, as does Covington Capital, and the University of New Mexico has 15 percent. — Randall Shearin

©2007 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.