REAL ESTATE
Future of Sawmill hotel uncertain as local developer advances Journal Center project
Community concerns deferred a tax incentive for the Hilton-branded project near Old Town
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A local developer is moving full steam ahead with one Albuquerque hotel development, while pumping the brakes on another.
A few weeks ago, Albuquerque-based Sun Capital Hotels had plans to bring two new hotels to Albuquerque 鈥� one at a vacant Journal Center parcel at 5910 Jefferson NE and the other in the Sawmill area at 1010 18th NW, currently the site of a 25,000-square-foot office building.
The company told the Journal this week that it is reevaluating its Sawmill hotel plans after community concerns about the Hilton-branded project prompted City Council to delay a decision on awarding the development with $40 million in industrial revenue bonds last month.
Council members said they wanted to give Sun Capital more time to meet with the community and iron out the project details before deciding on the IRBs 鈥� a tax-abatement tool the city uses to spur economic development. IRBs sometimes make the difference on whether or not a project is doable.
Now, Sun Capital says it has relisted the office building for short-term lease 鈥渂ecause of the uncertainty surrounding the project鈥檚 feasibility,鈥� said Sun Capital Finance Manager Sahil Kholwadwala.
鈥淲e will continue operating the property as an office building until it becomes feasible to move forward with the hotel,鈥� Kholwadwala said. 鈥淲e remain interested in developing the hotel, but the timeline will depend on the IRB process, the economics of the project and leasing activity at the existing building.鈥�
Concerns surrounding the Sawmill project 鈥� a dual-branded Hampton Inn and Home2 Suites hotel with 143 rooms 鈥� included worries that a national brand would diminish the local character of the Sawmill area, just minutes away from historic Old Town.
But Kholwadwala contended the hotel would be developed with local expertise and a design that would match the colors and aesthetics of the Sawmill area.
鈥淭he hotel will operate under the Hilton flag, but the project itself is locally owned, locally developed and will be locally managed,鈥� Kholwadwala said, adding that his father and Sun Capital鈥檚 president and CEO, Deepesh, grew up in Albuquerque鈥檚 North Valley. The project鈥檚 owner, Dreamcatcher, is also led by Albuquerque residents.
鈥淭he project will take inspiration from the industrial Southwestern character of the Sawmill District, including brick and metal elements,鈥� Kholwadwala said. 鈥淚t will not be a generic box that could be placed along any interstate. Our goal is for the hotel to enhance the district, not detract from it.鈥�
Kholwadwala added that Sun Capital intentionally excluded a full-service restaurant and bar from the Sawmill plans to prompt guests to spend money at the area鈥檚 local restaurants and businesses instead. The goal is also to offer a cheaper price point to bring more visitors to the area.
鈥淲e want the hotel to support the neighborhood鈥檚 success,鈥� Kholwadwala said.
Despite slowing the Sawmill project, Sun Capital plans to continue soliciting feedback from the community as the project鈥檚 design work and feasibility unfold. If the project鈥檚 economic outlook improves, Kholwadwala said Sun Capital would target an early 2028 groundbreaking.
Journal Center update
As for the Journal Center hotel, that project is slated to begin construction before the end of this year 鈥� a timeline supported by the City Council approving $25 million in IRBs for the development last month. Pending permit approval, the developer is targeting a 2027 opening.
The hotel, a Home2 Suites by Hilton, will feature 135 rooms, totaling roughly 54,000 square feet. City documents show the project is expected to create up to 37 permanent full- and part-time jobs.
The hotel is also expected to generate nearly $4.3 million in taxes by 2045 and roughly $1 million in expenditures on taxable local goods and services, according to a fiscal impact analysis from the University of New Mexico鈥檚 Bureau of Business and Economic Research.
Like the Sawmill project, the Journal Center hotel鈥檚 design will also mimic its environment, featuring a modern design Kholwadwala said will suit the Journal Center鈥檚 鈥渂usiness-district鈥� aesthetic.
鈥淥ur goal is to create quality hotels that support Albuquerque鈥檚 continued growth as both a business and leisure destination,鈥� Kholwadwala said.
Kylie Garcia covers retail and real estate for the Journal. You can reach her kgarcia@abqjournal.com.
