The five-year, interest-only loan was provided by Goldman Sachs. The refinancing offers the borrower extended flexibility, enabling a strategic exit from the investment under more favorable market conditions, according to JLL.

The two-building complex was completed in 1981 and comprehensively renovated in 2019. Its amenities include shared outdoor spaces, lounge space and a conference center, as well as ample parking. Currently, it’s 95 percent occupied with a diverse tenant mix, including the California State Lands Commission and Mutual of Omaha.

100 Howe is between Sacramento’s Campus Commons, Highway 50 and Sierra Oaks office submarkets. This location provides ready access to University Village, Howe Avenue and East and Midtown Sacramento, as well as to major freeways, public transportation and the American River Bike Trail.

READ ALSO: When Office Meets Hospitality

The JLL Capital Markets Debt Advisory team that represented Fenway Capital Advisors was led by Director Olga Walsh and Vice President Bharat Madan.

Fenway acquired the property from KBS Realty Advisors in late 2017 for $11.5 million, according to information provided by CommercialEdge, which rates the property as Class B.

Smaller government

Ongoing consolidation and relocation of offices by the state government has been a big factor in occupancy losses in the Sacramento office market, which have now gone on for 16 straight quarters, according to a third-quarter report from JLL. Overall office vacancy is now 21.2 percent, and although Class A direct asking rent continues to rise, so too are concessions, as overall direct asking rent declines.

Just two months ago, Manulife US Real Estate Investment Trust sold 400 Capitol Mall, a 501,308-square-foot office tower in downtown Sacramento. The asset traded for $117 million. The buyer was an entity related to Buzz Oates Real Estate, a Sacramento-based privately held commercial real estate investment management company.

The post Fenway Capital Secures Refi for Sacramento Office Property appeared first on Commercial Property Executive.

Manulife US Real Estate Investment Trust has sold 400 Capitol Mall, a 501,308-square-foot office tower in downtown Sacramento, Calif. The asset traded for $117 million. The buyer is an entity related to Buzz Oates Real Estate, according to Sacramento County records.

The property last changed hands in 2019, when MUST purchased it for $198.8 million from Starwood Capital Group, according to CommercialEdge information.

MUST will use the net sales proceeds to repay a $130.7 million loan, with a maturity date set for 2025, by the end of this year.

The all-cash sale is part of the company’s recovery strategy, implemented to allow it to make early repayments of debt maturities and to mitigate risks amid the ongoing challenges in the U.S. office market, said CEO & CIO John Casasante in prepared remarks. Following the acquisition, the REIT now owns nine properties in the country, totaling nearly 4.6 million square feet.

READ ALSO: You Bought an Office Building. Now What?

The tenant roster includes Wells Fargo, Deloitte, WeWork, Cushman & Wakefield and Morgan Stanley among others, the same source shows.

A downtown Sacramento office building

Also known as The Wells Fargo Center, the 29-story Class A+ office building came online in 1992 and features 34,000-square-foot floorplates, 13 passenger elevators, 20,000 square feet of first-floor retail space and 1,094 parking spots across five levels.

The amenity package includes a fitness center with sauna and locker rooms, a tenant lounge, a conference room, a common lobby, an outdoor deck with a heated swimming pool, an on-site Italian restaurant, concierge and 24-hour security services. Additionally, the high-rise is the only building in Sacramento with a WiredScore Gold certification.

Located in Sacramento’s central business district, the property has access to Interstate 5, Tower Bridge and to multiple light rail and bus stations. Sacramento International Airport is some 10 miles northwest.

The post Manulife Sells Sacramento Office Tower for $117M appeared first on Commercial Property Executive.

Welltower has acquired 1201 Alhambra, a 103,652-square-foot medical office building in Sacramento, Calif. NexCore Group sold the asset for $45.6 million, according to Sacramento County records. Colliers U.S. Healthcare Capital Markets facilitated the transaction.

The property previously traded in 2011 for $21.3 million, when the former owner bought the facility from AKT, CommercialEdge data shows.

Transaction activity in the medical outpatient sector has slowed down, showing a 40-basis-point contraction year-over-year as of March, a Marcus & Millichap report shows. According to the research, sales in the lower price range have affected the average sale price, leading to the need of having to find alternative financing for smaller assets.

READ ALSO: These Markets Top MOB Investment Activity

Completed in 1990, the four-story building underwent cosmetic renovations in 2013. The property features 26,000-square-foot floorplates, three passenger elevators, controlled access and has 415 car parking spaces at a ratio of 4.1 spots per 1,000 square feet.

At the time of the sale, the facility was 80 percent leased by Sutter Health. Medical services include family medicine, internal medicine, bariatrics and PT/ST/OT, urgent care, on-site laboratory and an infusion clinic. The ambulatory surgery center features three operating rooms and specializes in orthopedic, spine, neuroscience, podiatry and rheumatology surgeries.

Located at 1201 Alhambra Blvd., the property is in downtown Sacramento, having access to U.S. Route 50. Other medical providers in the surrounding area include Sutter Medical Center, Mercy General Hospital, Concentra Urgent Care and Fort Sutter Medical Complex, among others.

The post Welltower Buys Sacramento MOB for $46M appeared first on Commercial Property Executive.

GPR Ventures has purchased Capitol Industrial Center North & South, a 335,701-square-foot, two-asset industrial portfolio in Sacramento, Calif. BKM Capital Partners sold the properties for $42.7 million, public records show. City National Bank issued a $25.6 million acquisition loan, according to the same source.

BKM had purchased the assets in 2020 as part of a $425 million portfolio deal. Following the transaction, the firm implemented $7.2 million in capital improvements for maintenance and cosmetic renovations. GPR plans to further invest in enhancing the facilities.

READ ALSO: Why 2024 Is the Year to Invest in Industrial Real Estate

Capitol Industrial Center North & South debuted in 1986 and 1988, respectively. Spanning close to 23 acres, the two multi-tenant properties encompass 16 buildings and 83 different suites, ranging from 1,600 to 22,000 square feet.

The South property measures 114,471 square feet across four buildings with 37 suites presenting an 88 percent occupancy rate at the time of sale. The North one spans 221,230 square feet in 12 buildings with 46 suites and 93 percent occupancy. The facilities include 14- to 16-foot clear heights, as well as grade-level doors in most suites.

The campuses are within walking distance of each other at 9881-9969 Horn Road and 9828-9960 Business Park Drive. U.S. Route 50 is less than 1 mile away, and the facilities are some 2 miles from Sacramento Mather Airport.

GPR Ventures Co-Founder & Managing Principal Phil Rolla stated in prepared remarks the company’s presence in Sacramento dates back to the early 2000s, with an industrial footprint of 1.2 million square feet in the area prior to the current purchase.

Industrial sale activity in Sacramento

According to a recent report by Colliers, Sacramento’s industrial sales volume clocked in at $148.8 million at the end of this year’s first quarter, marking an increase from the same period in 2023 when assets traded for some $100 million.

Meanwhile, the average warehouse sale price declined by 10.6 percent year-over-year. Moreover, the average industrial cap rates increased by 100 to 150 basis points over the 18 months ending in March.

The post BKM Capital Sells Sacramento Assets for $43M appeared first on Commercial Property Executive.

Chavez Management Group Inc. has acquired two office assets within Natomas Corporate Center in Sacramento, Calif., for $44.5 million. Bannon Investments Ltd. sold the 319,325-square-foot building at 2020 W. El Camino Ave. and the 86,872-square-foot property at 2555 Natomas Park Drive.

Chavez Management purchased the assets using a $32 million note issued by the seller, according to public records. Avison Young Principal Matt Havelock and Vice President Max Kelly worked on behalf of the seller, while MJA Equity Investments President Michael Anthony represented the buyer.

Two LEED-certified office buildings

The 12-story building at 2020 W. El Camino Ave. came online in 2009 and was the first privately funded LEED Gold-certified development in the area. The property features floorplates averaging 28,500 square feet, 1,200 parking spaces and five passenger elevators, along with conference rooms and 1,000 square feet of retail space.

The building was fully leased at the time of sale to six tenants, including Department of Housing & Community Development, Lewis Brisbois Bisgaard & Smith LLP and the Department of Health Care Access and Information.

Completed in 2020, the office building at 2555 Natomas Park Drive rises three stories and has floorplates averaging 29,000 square feet and 350 parking spaces. The LEED Silver-certified facility is adjacent to 2020 W. El Camino Ave.

The North Sacramento assets are close to several retail options, including the Discovery Plaza shopping center. Downtown Sacramento is within 5 miles, while Sacramento International Airport is some 9 miles away.

The post Chavez Management Picks Up Sacramento Office Assets for $45M appeared first on Commercial Property Executive.

Fairfield Industrial Center’s Building One totals 205,223 square feet. Image courtesy of Trammell Crow Co.

Trammell Crow Co., in joint venture partnership with Clarion Partners, has completed construction on the first phase of Fairfield Industrial Center in Fairfield, Calif.

Building One is a 205,223-square-foot, Class A facility, currently available for lease. CBRE and Cushman & Wakefield are the project’s exclusive leasing agents.

The development team included FCL Builders as general contractor and HPA Architecture as architect of record. The project received a $23.3 million construction loan originated by Cadence Bank, according to CommercialEdge.

Located at 2725 Low Court, the industrial building features 36-foot minimum clear heights, ample column spacing, a 4,000-square-foot office component, two grade-level doors, ESFR sprinkler system, 32 dock doors with 16 docks, 40,000-pound levelers and seals, 156 vehicle parking spots and 44 trailer parking spots. Additionally, the facility includes exterior glass entries, canopies and a landscaped site with water-efficient planting. The development is expected to receive LEED Silver certification.

READ ALSO: Multistory Warehouses’ Future is Looking Up

The 11-acre property is situated within Busch Corporate Center, close to Interstate 80 and State Highway 12. It is also situated 38 miles from Oakland, Calif., 44 miles from Sacramento, Calif., 45 miles from San Francisco, 47 miles from Oakland International Airport and within 77 miles of San Jose, Calif.

Construction on Fairfield Industrial Center’s second phase is scheduled to begin next year. Plans call for two Class A buildings totaling 328,553 square feet at 300 Chadbourne Road.

Cushman & Wakefield’s Executive Managing Director Brooks Pedder and Executive Director Tony Binswanger, together with CBRE’s Senior Vice President Kevin Hatcher will be marketing Building One for lease.

Recent developments in the area

Other projects in the area include Seefried Properties and USAA Real Estate‘s 334,157-square-foot speculative warehouse in Tracy, Calif. The companies purchased the development site earlier this year. In late 2022, Trammell Crow Co. and CBRE Investment Management commenced construction on Cochrane Technology Center in Morgan Hill, Calif. The five-building project will total 500,000 square feet At the time, it was the largest speculative industrial development to break ground in Silicon Valley.

Earlier this year, Trammell Crow Co. also broke ground on Cotton Lane Commerce Park’s first phase in Goodyear, Ariz. The approximately 1 million-square-foot industrial park’s first two building will total 542,873 square feet and are slated for delivery in September 2024.

The post Trammell Crow, Clarion Deliver 1st Phase of Industrial Project appeared first on Commercial Property Executive.

Quail Pointe was 94 percent leased at the time of sale. Image courtesy of JLL

Phillips Edison & Co. has purchased Quail Pointe, a 98,314-square-foot grocery-anchored retail center in the Sacramento suburb of Fair Oaks, Calif., for $44.3 million. JLL represented the seller, Madison/Sunrise Associates, a subsidiary of The Voit Co. This is the first time the property has changed hands in 36 years.

Completed in 1987, the property was 94 percent leased at the time of sale. Trader Joe’s, the anchor tenant, has been occupying the space for more than 30 years and has recently signed an early 5-year extension bringing its remaining lease term to 9 years. The tenant roster includes various retailers such as Calico, Willo and Starbucks, according to CommercialEdge data. The average tenancy length at the property is 20 years.

Located at 5329 Sunrise Blvd., Quail Pointe is about 1 mile north of central Fair Oaks and some 19 miles from Sacramento, Calif. The center serves a population of more than 131,000 people within a 3-mile radius with an average household income of $112,015, according to JLL.

Sacramento retail market holds steady

JLL Managing Director Eric Kathrein and Director Warren McClean, along with Analyst Andrew Spangenberg, led the Retail Capital Markets team that arranged the deal. The same brokers were recently involved in the $29 million sale of another retail center in California.

In 2023’s third quarter the total vacancy rate for retail assets in the Sacramento market clocked in at 5.5 percent, according to a recent CBRE report. Meanwhile, the average asking rate on a monthly triple-net basis registered a slight decrease from the second quarter’s $1.66 per square foot to $1.64.

The post Phillips Edison Pays $44M for Sacramento-Area Retail Center appeared first on Commercial Property Executive.

Pacific Town Center came online in 1967. Image courtesy of Brixton Capital

Brixton Capital has purchased Pacific Town Center, a 143,217-square-foot retail center in Stockton, Calif. Hanley Investment Group arranged the off-market transaction on behalf of the seller, identified by CommercialEdge as CORE Commercial.

Completed in 1967, Pacific Town Center encompasses two buildings on a 10-acre site. Anchored by Michael’s, Smart & Final Extra, Mancini’s and Pier 1 Imports, the property was 42 percent leased at the time of sale.

Its tenant roster also includes Smart & Final, Aaron’s, Sketchers, Round Table Pizza, Panda Express, Subway and other neighborhood-serving retailers and restaurants. The new owner plans to re-tenant the spaces previously occupied by Toys ‘R’ Us and T.J. Maxx, by bringing new retail offerings.

Pacific Town Center occupies more than 10 acres at 718-760 W. Hammer Lane, in an Opportunity Zone of the Central Valley market. The property is near Interstate 5, which provides direct access to downtown Sacramento, Calif. According to Colliers, the shopping center serves approximately 164,446 residents within a 3-mile radius, with the average household income of $60,166.

Hanley Investment Group has recently brokered the $15.8 million sale of an 80,877-square-foot shopping center in Fresno, Calif. The firm worked on behalf of the seller, JL Management.

The post Brixton Capital Buys Central Valley Shopping Center appeared first on Commercial Property Executive.

Completed in two phases in 1997 and 2007, Dixon Commerce Center underwent a cosmetic renovation in 2019. Image courtesy of CommercialEdge.

Nearon Enterprises has obtained $30 million in refinancing for Dixon Commerce Center, a 447,042-square-foot industrial asset in Dixon, Calif. CBRE secured the fixed-interest, non-recourse loan through PNC Bank, according to CommercialEdge data.

Nearon Enterprises purchased the warehouse in 2015 from Giraffe Holding for $26.8 million, the same source shows. In 2018, the property became subject to a $18 million CMBS loan, with Wells Fargo Bank as a trustee.

Completed in two phases—in 1997 and 2007—the distribution center underwent a cosmetic renovation in 2019. The one-story building features 27.5- to 32-foot clear heights, 30 dock doors, two grade-level doors, sky lights, insulated ceiling and approximately 425 parking spaces.

The State of California has been the sole tenant of the property since 2010. The owner has recently negotiated a lease extension.

Dixon Commerce Center is at 2299 Commerce Way, in Eastern Solano County. The 26-acre site is near the intersection of State Route 113 and Interstate 80, which provides direct access to downtown Sacramento and San Francisco.

Executive Vice Presidents Shaun Moothart, Bob Ybarra, Nick Santangelo and Jim Korinek, Vice Chairman Bruce Francis and Senior Vice President Doug Birrell led the CBRE Capital Markets Debt and Structured Finance team in securing the financing.

Another CBRE team has recently represented Invesco Real Estate in the sale of an approximately 1.4 million-square-foot, two-building industrial portfolio in Jacksonville, Fla. Hillwood Investment Properties acquired the Class A cross-dock bulk distribution buildings.

The post Nearon Enterprises Lands $30M Refi for Sacramento-Area Asset appeared first on Commercial Property Executive.

The Ridge at Town Center West

Health-care provider Marshall Medical Center and insurance company PATRA have agreed to occupy 75 percent of the office space vacated by Blue Shield of California at The Ridge at Town Center West in El Dorado Hills, Calif.

Blue Shield, which previously occupied the entire 246,000-square-foot, four-building campus, has reduced its space to two buildings, following a sale-leaseback deal with ProEquity Asset Management and Solaris Capital. The $49.3 million transaction closed in July 2022. According to CommercialEdge data, the property also became subject to a $40 million acquisition loan, provided by Walker & Dunlop.

Currently, Marshall Medical Center is under contract to purchase one of the vacant buildings within The Ridge at Town Center West. According to Village Life, the sale of the 50,000-square-foot property is expected to close in the summer of 2023. Marshall Medical Center plans to transform the office structure into a clinic and begin offering medical services by mid-2024.

Marshall Medical Center was represented by Managing Director Tom Conwell of Newmark, while Executive Vice Presidents Tom Walcott and Jason Rutherford with Colliers International assisted PATRA in its lease of an entire floor at the campus. ProEquity Asset Management was represented by Executive Vice President Michael Stassi and Vice President Daniel Baker from the JLL Capital Markets Sacramento office, in the lease negotiations with PATRA.

From office use to medical services

Completed in 2003, the low-rise Class B office property covers 29 acres. The buildings feature open floorplates of 26,000 square feet, controlled access and 1,514 parking spots. The covered parking area includes 31 Tesla solar power generation rooftop arrays that provide low-cost power to the campus.

The Ridge at Town Center West is located at 4201 Town Center Blvd., 27 miles from downtown Sacramento, next to the El Dorado Freeway. The property is situated between the retail center El Dorado Hills Town Center and the master-planned community of Folsom Ranch.

With Marshall’s occupancy, the property will house medical services, including family practice, orthopedics, cardiology, laboratory and physical therapy, among others. And following PATRA’s lease of one full floor, with a move-in scheduled for the summer of 2023, the campus will be 90 percent leased, with a vacancy of just 25,000 square feet.

A fourth quarter 2022 Colliers report on the Sacramento office market shows that the last two years have seen the lowest net absorption levels since 1998, influenced by the remote-work trend.

Leasing activity between 2020 and 2022 was 41 percent below the average recorded between 2017 and 2019. Such factors have led to rising vacancy levels, with the average rate in the fourth quarter at 18.7 percent, a slight increase from the previous quarter and up 670 basis points since the first quarter of 2020.

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Image by EFAFLEX_Schnelllauftore via PIxabay.com

Seefried Properties and its capital partner and real estate investment manager USAA Real Estate have purchased a 19-acre plot in Tracy, Calif. The sale price was not disclosed. Plans for the site include the development of a Class A distribution warehouse, expected to break ground in late 2023.

Situated in Tracy’s Northeast industrial submarket, the speculative office and warehouse building will comprise 335,157 square feet. HPA Architecture is in charge of design, while Kier & Wright is the civil engineer for the upcoming facility. Plans for the industrial building include trailer parking, car parking, 36-foot clear heights, ESFR sprinklers and LED lighting.

Mike Goldstein and John Steinbuch with Colliers represented the buyer in the deal and will handle leasing efforts at the new property.

READ ALSO: Development Financing Slowdown is Real

In prepared remarks, Jason Quintel, senior vice president of Seefried’s Western Region, said that the site was one of the last remaining plots of land for sale in the east Tracy submarket. The area is known for being a distribution hot spot in the Central Valley.

The site is located on the northwest corner of Grant Line Road and Chrisman Road, with access to interstates 205, 5 and 580, offering tenants a variety of transportation routes to the Western U.S. and larger Bay Area. The Port of Oakland is some 54 miles west of the land, while Sacramento is approximately 65 miles north. The Union Pacific and Burlington Northern Santa Fe Intermodal facilities are in close proximity to the anticipated project.

In November, Seefried begun work on another distribution facility in Savannah, Ga. The logistics center, anticipated to comprise five build-to-suit buildings ranging from 252,000 to 1.4 million square feet, is rising on 287 acres. Completion is anticipated for the end of 2023.

The post Seefried, USAA to Build Spec Warehouse in California appeared first on Commercial Property Executive.

925 L St.

A partnership between Seagate Properties and Cottonwood Group has acquired 925 L St., a multi-tenant office building totaling 168,844 square feet in downtown Sacramento, Calif. A joint venture between Soma Capital Partners and Hazelview Investments sold the asset for $55.1 million. JLL represented the seller and procured the buyer.

According to CommercialEdge data, the property previously changed hands in 2017, when it was acquired for $45.5 million and was subject to a $32.2 million loan originated by Wilmington Trust.

An office building next to the State Capitol

Completed in 1972, the office building rises 13 stories at 925 L St., adjacent to the State Capitol, featuring retail space on the first floor and floorplates averaging 12,500 square feet. Tenant amenities include a conference facility, bicycle parking and a 925L-branded bicycle share program available during office hours. The building was 94 percent leased to public and private tenants at the time of sale.

The property underwent cosmetic renovation in 2001, CommercialEdge data shows. Full renovation was completed in 2018, including lobby and exterior signage, having achieved LEED Gold certification.

The office building has major exposure to 10th and L streets in downtown Sacramento, just two blocks from Hyatt Regency and Sheraton Grand hotels, the Sacramento Convention Center and the Community Center Theater. Tenants have access to numerous dining options on K Street, around the Golden 1 Center.

Senior Managing Director Rob Hielscher, Senior Director Erik Hanson and Director Nick Deaver of JLL Capital Markets negotiated on behalf of the seller. In August, a JLL team assisted Blue Shield of California in the sale of a Class A, 244,983-square-foot office building in Dorado Hills, Calif., for $49.3 million.

The post Seagate, Cottonwood Pay $55M for Sacramento Office Asset appeared first on Commercial Property Executive.

4201-4207 Town Center Blvd.

Blue Shield of California has sold its Class A office space in El Dorado Hills, Calif., for $49.3 million. The transaction was a partial sale-leaseback as the firm plans to continue occupying two of the four buildings. A joint venture between Solaris Capital and ProEquity Asset Management Corporation acquired the asset.

Blue Shield will continue to occupy 60 percent of the space, or 146,834 square feet. The other two buildings, A and D, are currently vacant, although the office space has previously been fully leased since 2001. During its ownership, the firm invested some $1.6 million into the property. Upgrades included lighting, security, air quality sensors, window replacements and parking lot renovations.

Originally built in 2001, the total space is 244,983 square feet located on 29.2 acres. Amenities include a café and fitness center. Tenants are within walking distance to the town center featuring retail, restaurants and live music venues.

JLL Capital Markets negotiated on behalf of Blue Shield California.

Growing California markets

Located with Highway 50 frontage, 4201-4207 Town Center Blvd. is in proximity to downtown Sacramento and the larger San Francisco Bay area. Sacramento, one of the smaller California markets, has been growing gradually. 1.3 million square feet of office space came online in 2021, while another 1.8 million square feet were under construction as of June.

The Bay Area claims one of the best-performing office markets in the country, driven by the tech and life science sectors. 11.1 million square feet of office space was under construction as of June.

With mass displacement by tech giants and raising rental prices in the San Francisco and Sacramento metro areas, El Dorado Hills has become a more affordable office submarket. The surrounding area of 4201-4207 Town Center Blvd. hosts 44,000 workers within 5 miles. The average household income is $199,000.

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Following initial pandemic-induced woes, the office construction market has been finding its footing through the past year across all major U.S. markets. As of June, the U.S. office market saw roughly 151.1 million square feet of space under construction, with nearly 30 million square feet situated in the state of California, according to CommercialEdge data.

California remains the most populous state in the country, but the Golden State lost residents during the past two years. In 2021, some 117,552 residents were deducted from California’s population total, according to the California Department of Finance. Some of the complex components behind this decrease include lower birth rates, COVID-19 deaths and falling immigration rates, while relocation also played a significant role.

While companies return to work and reevaluate their long-term strategies, foot traffic in U.S. offices is up on a year-over-year basis, according to recent data from Placer.ai. In San Francisco, visits increased by 84.6 percent in June 2022, compared to the same period a year prior.

The top 5 markets listed below make up for roughly 95 percent of the under-construction office space within the Golden State.

5. Sacramento

Downtown Sacramento, Calif. Image courtesy of USFWS/Steve Martarano via Wikimedia Commons

The smallest market on the list, Sacramento has been gradually growing through the past cycle: in 2021, the metro area’s population reached nearly 2.2 million, 1.5 percent more than in 2020. In June, the state capital had 1.8 million square feet of office space under construction, while in 2021, more than 1.3 million square feet of office space came online in the market.

In February 2022, employment reached pre-pandemic levels and has been on the upswing. Unemployment has been constantly recovering as well, reaching 3.3 percent in April—less than half of the rate recorded a year prior and outperforming pre-pandemic levels.

The metro is also home to one of the largest office developments currently under construction in California, namely Richards Boulevard Office Complex. Developed by the California Department of General Services, the four-building project is slated to encompass nearly 1.3 million square feet.

4. San Diego

San Diego skyline. Image by Jill Wellington via Pixabay.com

Due to the high concentration of life science jobs within the metro, San Diego was among the U.S. markets that actually saw office vacancy go down during the past two years—along with Boston, the Bay Area and New Jersey. In June, the San Diego market had nearly 3.6 million square feet of office space underway, fourth in the state in terms of office construction.

In 2021, the metro added 1.4 million square feet of office product to its stock. So far this year, San Diego is falling behind last year’s numbers, with merely 157,263 square feet completed year-to-date through June.

As mixed-use projects prove their resiliency and gain popularity among developers nationwide, downtown San Diego’s first mixed-use tower also moved forward in its development back in February. The $400 million, 37-story tower dubbed West Downtown San Diego is set to encompass 270,000 square feet of office space, 19,000 square feet of retail and 431 luxury apartments, with delivery set for early 2024.

3. Los Angeles

Downtown Los Angeles skyline. Image courtesy of Adoramassey via Wikimedia Commons

Los Angeles’ office pipeline relative to existing stock was one of the lowest in the country in June, but the metro still had 5.2 million square feet of office space under construction. Last year, nearly 3 million square feet of space came online, while year-to-date through June already 2.2 million square feet delivered, outperforming last year’s figures through the same interval.

While L.A.’s development has been slow in the past months, office investment activity was one of the highest in the U.S. in the first five months of the year. Deals amounted to $1.9 billion, double the volume recorded within the same period last year.

Creative offices represent a significant portion of the Los Angeles office pipeline. In May, the Legendary Group announced its newest venture in the metro, a 350,000-square-foot speculative creative office tower to rise at 411 S Hewitt St, in the Art’s District. Gensler is behind the design of the 17-story Class A building.

2. San Francisco

San Francisco. Photo by Lili Popper via Unsplash

The San Francisco-Peninsula metro had 6.6 million square feet of office space under construction, comprising 6.0 million square feet of rentable space. In 2021, 4.9 million square feet of office space was completed, while year-to-date through June nearly 2.3 million square feet came online.

Foot traffic within San Francisco’s offices has also increased year-over-year, but lags pre-pandemic levels, according to Placer.ai. In June, foot traffic was 60.4 percent lower, compared to three years prior.

In 2021, the San Francisco market saw nearly 3 million square feet delivered, while year-to-date through June already 2.2 million square feet had come online. Life science pockets, such as Mission Bay and South San Francisco have been hotspots for office development, due to the heightened interest in lab space since the onset of the pandemic.

1. Bay Area

Bay Area. Image courtesy of Pixabay.com

East and South San Francisco Bay’s thriving office construction market is currently one of the best-performing in the country. The metro’s success is driven by its unmatched tech scene and thriving life science sector. Office vacancy is improving at a steadier pace than in the Peninsula and hit 15.3 percent at the end of May, down 320 basis points year-over-year. In June, Apple expanded its Silicon Valley footprint to a total of 800,000 square feet, committing to a newly constructed office campus in Sunnyvale, Calif.

In June, nearly 11.1 million square feet of office space was under construction within the Bay Area, nearly double the amount taking shape in San Francisco, the previous entry. In 2021, developers completed 4.1 million square feet of office product, while 1.3 million square feet came online year-to-date through June.

In early 2022, STC Venture moved into the final phase of development of Cityline Sunnyvale, a mixed-use, multi-phase project in downtown Sunnyvale, Calif. Construction broke ground on the third stage of the project, comprising two office buildings and a residential tower. Upon completion, the large-scale development is set to comprise 1 million square feet of office space.

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As the pandemic dramatically changed the office landscape, California’s office market took a deep dive, leaving owners and occupiers uncertain about what the future holds. Despite the lingering unpredictability, office construction did not come to a halt in California.

According to CommercialEdge, the state’s development pipeline encompassed some 38.5 million square feet of office space as of April, and nearly 3.5 million square feet was delivered year-to-date. The list below highlights the largest office projects underway across California, based on CommercialEdge data.

Source: CommercialEdge

5. CityView Plaza – 200 Park Ave., San Jose

Jay Paul Co.’s project in San Jose aligns with plans to revamp the city’s downtown. The 20-story office tower is one of the major downtown office projects that are poised to reshape Silicon Valley’s skyline. The 879,000-square-foot development broke ground in November 2019 and is slated for completion by the third quarter of 2023. The project also marks downtown San Jose’s first speculative building in more than a decade.

Jay Paul Co. purchased the site at 200 Park Ave., along with a parcel at 282 S. Almaden Blvd., for a total of $100 million. The two sites, at the corner of Park Avenue and South Almaden Boulevard, are located across the company’s Cityview Plaza redevelopment, a 3.8 million-square-foot project that will incorporate six interconnected office buildings.

4. The RaDD – Phase I, San Diego

The RaDD, San Diego. Image courtesy of IQHQ

IQHQ, a life sciences real estate development company, is developing the $1.5 billion San Diego Research and Development District, the first urban life sciences-centric waterfront campus in San Diego. The RaDD will include office, lab, and retail space and occupy more than 8 acres spanning three entire city blocks. At 937 N. Harbor Drive, the first phase consists of a 950,000-square-foot, 28-story office building, expected to come online in the third quarter of 2023.

The pandemic bolstered an already favorable environment for life sciences. The metro is the third-largest life sciences market in the U.S., with an existing inventory of some 19.6 million square feet at the beginning of 2020, according to Cushman & Wakefield. The life sciences hub is one of the major economic drivers in the metro, generating $39.4 billion in economic output and providing more than 65,500 jobs, Cushman & Wakefield researchers noted.

3. First Street Tower of Oceanwide Center, San Francisco

The 1.5 million-square-foot mixed-use development will feature more than 1 million square feet of office space. Upon completion, the 61-story tower will also include first and second-floor retail space and 110 residential units. The project broke ground in 2016 and was originally anticipated for completion by 2021, however, due to economic uncertainties the development timeline has been delayed until 2025.

Oceanwide Holdings purchased the 1.2-acre site in 2015 for $296 million for the development of First Street Tower, although as the company encountered financial difficulties, it planned to sell the project. Initially, SPF Capital International agreed to pay $1 billion for the development, but the deal failed to materialize after several delays. Oceanwide Holdings then entered a new agreement with Hony Capital, but that deal also fell through earlier this year, The Real Deal reported.

2. Richards Boulevard Office Complex, Sacramento

The California Department of General Services (DGS) is developing a nearly 1.3 million-square-foot office complex on the southwest corner of Richards Boulevard and Seventh Street in Sacramento’s River District, known for its industrial past. The office complex will encompass four buildings, spanning 17.4 acres, and will be connected by a three-story bridge.

DGS has selected Hensel Phelps and ZGF, in partnership with Dreyfuss + Blackford, to design the office complex. The team is focused on pursuing sustainable design solutions while keeping in mind the River District’s industrial character. The project is designed to achieve zero net energy and zero net carbon for the entire site and is pursuing LEED silver certification. The Richards Boulevard Office Complex is slated for completion by 2024.

1. Adobe North Tower, San Jose

Adobe North Tower. Rendering courtesy of the City of San Jose

Adobe’s project at 333 W. San Fernando St. in San Jose is the fourth tower of the company’s global headquarters. The 1.3 million-square-foot development will include first-floor retail space and five levels of parking. The North Tower will be an all-electric building, which means that the facility will be powered from renewable sources such as wind and solar energy. This also aligns with Adobe’s goal of relying on 100 percent renewable energy by 2035. Additionally, the asset is designed to achieve LEED gold certification.

According to initial plans, the 18-story North Tower will be connected to the firm’s existing buildings by a pedestrian bridge extending over San Fernando Street. However, due to the pandemic, the company put the construction of the sky bridge on hold. Adobe also expressed uncertainty about whether it will complete the building’s interior, pausing plans until the company has a clearer image of its future physical office space needs.

The post Top 5 Office Projects Under Construction in California appeared first on Commercial Property Executive.

LogistiCenter at Southport. Image courtesy of Dermody Properties

Dermody Properties has signed its first tenant for LogistiCenter at Southport, the signature industrial project in West Sacramento, Calif., that the company is developing in partnership with Tom Schaal and Mark Heavey of Schaal Realty Advisors.

LKQ Corp. preleased 152,900 square feet at the development, which will offer nearly 380,000 square feet in the high-demand Northern California market.

READ ALSO: Older, Multi-Tenant Industrial Assets Attract New Demand: JLL

Presently taking shape on a nearly 23-acre site, LogistiCenter will soon debut at 3520 Carlin Drive within the 650-acre Southport Industrial Park, a premier business campus that is currently home to the likes of General Electric and a host of other Fortune 500 companies. With vehicle parts provider LKQ’s new claim on space, LogistiCenter is now roughly 40 percent preleased. The early commitment is indicative of the high demand for industrial space in the Sacramento region, which Dermody claims exceeds that of any other market in Northern California currently.

For starters, the Sacramento region is a natural draw for industrial property users; its location at the intersections of I-80 and I-5 allows for convenient distribution of product to all four borders of North America, as noted in a fourth quarter report by CBRE, the firm overseeing leasing of LogistiCenter at Southport. However, the list of demand sources extends beyond the area’s coveted location.

“Companies are drawn to the region’s strong workforce and affordable rental rates relative to the Bay Area. We anticipate the demand to remain strong, especially with specific industries such as e-commerce,” George Condon, partner, West Region, with Dermody Properties, told Commercial Property Executive. “Plus, the average age of Sacramento’s industrial base is greater than most industrial markets in the country. E-commerce users, in particular, value the additional functionality of Class A buildings.”

Michael Lyons of CBRE represented Dermody in the lease transaction for the LogistiCenter space, while CBRE’s Jacob Bobek stood in for LKQ. Deacon Construction is overseeing the building of the project.

Answering the call

With marketwide vacancy at 4.2 percent in the fourth quarter of 2020, the metropolitan Sacramento industrial market is quite tight, according to the CBRE report, which also notes that a shortage of supply is translating into a great opportunity for speculative development. Dermody is capitalizing on the opportunity. “Sacramento’s economy continues to diversify,” Condon said. “We remain focused on finding well-located land to develop new Class A warehouses like LogistiCenter at Southport. For example, this summer, we anticipate breaking ground on LogistiCenter at West Sacramento, a two-building development on 22 acres of land.” LogistiCenter at West Sacramento will occupy land that is also within the Southport Industrial Park; Dermody acquired the acreage in December 2020 for the two-building, 387,000-square-foot project.

Dermody has been plugging in the gap between supply and demand across the country with new projects. In February, the company announced plans to develop LogistiCenter at Woolwich, a 1.2 million-square-foot facility in Gloucester County, N.J. And Dermody expects to deliver the 155,000-square-foot LogistiCenter at Miller Road, an e-commerce-ready property in metropolitan Atlanta, in the third quarter of 2021. Dermody and partners expect development of LogistiCenter at Southport to reach completion by the close of the first quarter of 2021.

The post Dermody Properties Lands First Tenant at Sacramento Project appeared first on Commercial Property Executive.

Elverta Crossing Shopping Center / Self-Storage

DealPoint Merrill has taken out a $19.4 million refinancing package for Elverta Crossing Shopping Center / Self-Storage, a mixed-use property encompassing 189,229 square feet of retail and 95,608 square feet of self storage space in Antelope, Calif. Voya Financial provided the mortgage, according to Yardi Matrix data. Life Storage oversees management for the asset.

The new senior note retires old debt, a $17.4 million acquisition and development loan that Benefit Street Partners provided for DealPoint Merrill in 2018. The company acquired two adjacent shopping centers for a total of $16.2 million and ultimately merged the two properties.

Following the acquisition, the firm converted 95,608 square feet of retail space into self storage units. Located on 16 acres at 8135 Watt Ave., the property provides 1,263 climate-controlled units ranging between 25 and 200 square feet. The facility has an on-site manager, video monitoring and RV/boat parking.

The site is across the street from a Walmart Supercenter and 5 miles from Interstate 80. Downtown Sacramento is 14 miles southwest. Additionally, there are at least 19 other self storage facilities encompassing 1.2 million square feet within a 3-mile radius, Yardi Matrix shows.

Earlier this month, DealPoint Merrill paid $4 million for a former Kmart shopping center in Urbandale, Iowa. The company will transform the property into a 131,000-square-foot self storage asset.

The post Suburban Sacramento Mixed-Use Asset Receives $19M Refi appeared first on Commercial Property Executive.

StorQuest Express. Image courtesy of The William Warren Group

The William Warren Group has opened a StorQuest Express self storage facility in the Sacramento, Calif., area. The project had broken ground in September 2019, financed with a $5.1 million loan from Tri Counties Bank, according to Yardi Matrix.

Located at 3005 Ramco St. in West Sacramento, the property’s units range from 25 to 200 square feet, with drive-up access and climate control. The single-story building is accessible 24 hours a day.

The property is in a dense industrial center, within 1 mile of more than 5.5 million square feet of warehouse space, Yardi Matrix shows. The facility is also less than 3 miles from a number of residential communities totaling approximately 2,300 units. Downtown Sacramento is 5 miles to the northeast.

Sacramento, given its steadily growing population in recent years, has seen a development boom in self storage assets. Despite some indications of oversupply, development is underway on some 2.7 million square feet, landing California’s capital among the most active markets for self storage development nationwide.

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110-120 Main Ave. Image via Google Maps

GPR Ventures has acquired a 33,719-square-foot flex/warehouse asset in Sacramento, Calif. This marks the company’s 24th acquisition in Northern California. According to Sacramento Business Journal, the transaction closed for $2.5 million.

Built in 1984, the property is currently occupied by seven tenants from a variety of industries. The asset also includes office and storage space. According to public records, the seller is a private investor that has owned the two-building facility for more than 30 years.

Located at 110-120 Main Ave., on 2.3 acres, the property is 2 miles from Interstate 80 and within 7 miles of the city’s downtown.

CBRE Senior Vice President Todd Sanfilippo worked with GPR to close the deal. This month, the brokerage also arranged the sale of Gold Pointe Corporate Center Building E, a 63,206-square-foot office property in Gold River, Calif. A private investor sold it for $14.3 million.

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2101 Arena Boulevard. Image courtesy of Graceada Partners

Graceada Partners has purchased 2101 Arena Boulevard, a 78,400-square-foot office building in Sacramento, Calif. through its Graceada Partners Fund II.

The property is fully occupied by the California Department of Business Oversight under a nine-year lease. According to Yardi Matrix data, The Lily Co. sold the Class B asset for $12.4 million and the buyer financed the acquisition with a note from California Bank of Commerce. The transaction is what Graceada Principal Ryan Swehla considers to be a smart investment in terms of fundamental value and replacement cost.

The two-story building at 2101 Arena Blvd. came online in 1999. The property was extensively renovated in 2020 to accommodate the Department of Business Oversight, as the state agency relocated its headquarters from 1515 K St. Improvement works included building gutting and complete interior renovations which brought the asset to Title 24 standards.

The 5.3-acre property is some 6 miles north of downtown Sacramento in the North Natomas submarket, near Sleep Train Arena. 

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11919 Foundation Place. Image courtesy of CBRE

CBRE has arranged the $14.3 million sale of Gold Pointe Corporate Center Building E, a 63,206-square-foot office property in Gold River, Calif. Executive Vice President Randy Getz negotiated on behalf of the seller, a private investor, while Kidder Mathews Senior Vice President Steve Tyrrell assisted the buyer. 

The new owner funded the purchase with a $4.5 million loan from U.S. Bank, according to Sacramento County records. The asset last traded in 2005, when Panattoni Development Co. sold it for $13.4 million, Yardi Matrix shows.

Located on 3 acres at 11919 Foundation Place, the two-story building is fully leased to eHealth Inc. The company has been at the site since the property first opened in 2003, signing a 19,000-square-foot lease expansion last year, making it the sole tenant in the building.

The asset is part of the Gold Pointe Corporate Center, a five-building campus encompassing 455,000 square feet. The park’s amenities include a gym, showers, bike lockers and a café. The site is 21 miles northeast of downtown Sacramento.

Earlier this month, CBRE represented BlackRock in the $43 million disposition of Pacifica Court, a 110,400-square-foot office property in Irvine, Calif. A partnership between Meridian and Harrison Street acquired the asset, with plans to convert it into a Class A medical office building.

The post CBRE Closes $14M Sacramento-Area Office Sale appeared first on Commercial Property Executive.

Sundance Self Storage

Seaview Financial has taken out an $8.6 million CMBS loan for Sundance Self Storage, a property encompassing 96,765 square feet of net-rentable space in Roseville, Calif. Wells Fargo provided the non-recourse mortgage, according to public records.

Note terms include an upper 3 percent fixed interest rate, cash out and 10 years of interest-only payments. The new origination replaces a $5.8 million financing package that Exchange Bank provided for the borrower in 2016, Yardi Matrix shows.

Located on 5 acres at 1351 Baseline Road, the property encompasses nine single-story buildings completed in 2003. The facility offers 688 drive-up access units ranging from 25 to 480 square feet. Additionally, the store has an on-site manager, security cameras, door alarms, moving supplies and truck rentals.

The owner has also started the development of Sundance Self Storage’s second phase on a 5-acre parcel right across the street from the property. In 2019, the company received an $8.1 million construction loan from Exchange Bank for the 92,660-square-foot project, according to Yardi Matrix data.

The brokerage team that facilitated the financing included Talonvest Capital Principals Eric Snyder and Jim Davies, along with Erich Pryor, Lauren Maehler and David DiRienzo. Last month, the company secured two mortgages totaling $19.2 million for two separate self storage companies.

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California’s self storage market has extremely high barriers to entry. Most metros in the state provide limited opportunities for new development due to restricted zoning regulations and land availability. As a result, almost every major metro in California is underpenetrated. As of March, there were some 16 million square feet—9.5 percent of existing stock—of storage space under construction or in the planning stages in the top California markets tracked by Yardi Matrix.

Although select metros saw an uptick in development activity in March, construction is expected to taper across California in the coming months, due to the novel coronavirus outbreak. While most cities in the state are allowing essential construction to continue, required safety measures for construction sites will likely slow deliveries.

The table below highlights the top five markets in California for underway and planned projects as a percentage of total stock, using Yardi Matrix data.

5. Los Angeles

Image via Unsplash.com

Despite several economic and demographic headwinds, strong demand for rental housing continues to persist in Los Angeles, which underscores the need for self storage space as well. High costs of living and a shortage of affordable housing may prompt residents to rent smaller apartments, further driving demand for self storage.

As of March, there were around 4.7 million square feet of storage space under construction or in the planning stages, accounting for 7.3 percent of the metro’s existing inventory and representing a 30-basis-point increase over the previous month. Los Angeles’ supply still lags behind demand—the storage inventory per capita is at 4.6 net square feet, below the 6.5 national figure.

However, limited supply is positively impacting rental rates in the metro. In California, Los Angeles registered the highest year-over-year rent growth in March—up by 1.1 percent for standard 10×10 non-climate-controlled units and 2.7 percent for climate-controlled units of similar size.

4. San Francisco

Thanks to its robust economy, San Francisco is one of the nation’s top attractions for both talent and employers. Despite elevated housing costs, the metro gained 18,791 residents in 2018, up by 0.4 percent and slightly below the 0.6 percent national rate. Demand for self storage is high, but there is little opportunity for new development due to strict zoning regulations. The metro has storage-space stock of more than 30.8 million square feet. Its per-person inventory is 5.5 net square feet, below the national average.

There were some 3.3 million square feet of self storage space under construction and in the planning stages as of March, representing 10.7 percent of existing stock. The metro’s new supply pipeline stagnated month-over-month and given the ongoing health crisis, this trend is expected to continue. Counties in the Bay Area have halted all construction except the development of health-care facilities that relate directly to the fight against COVID-19.

3. San Diego

Image via Pixabay.com

San Diego’s self storage market is benefiting from the metro’s healthy economy and steady population growth. The metro gained more than 240,000 residents between 2010 and 2018, a 7.7 percent uptick. Strong economic fundamentals boosted development activity across all asset types including residential, office, industrial and self storage.

In March, San Diego registered a substantial increase in self storage development activity. The metro’s new-supply pipeline accounted for 11.8 percent of existing stock, up by 150 basis points over the previous month. There were seven projects underway and 17 in the planning stage, totaling 2.1 million square feet. A cluster of projects is lined along Interstate 5, a major thoroughfare that provides access to the city’s downtown area and the San Diego International Airport.

2. San Jose

As the only California metro recognized in our national ranking earlier this year, San Jose’s new-supply pipeline has since slightly contracted due to a new wave of completions. The metro continues to be largely underpenetrated, as the per-capita inventory is still at 4.7 net square feet. As of March, San Jose had 1.5 million square feet of storage under construction and in the planning stages, which accounted for 16.4 percent of the metro’s existing stock.

San Jose’s economic profile is predominantly determined by giant tech employers such as Apple and Alphabet and other tech startups. Office-using jobs account for more than half of all employment, positioning San Jose among the metros least impacted by the COVID-19-related lockdowns. 

1. Sacramento

Image via Pixabay.com

The Bay Area’s spillover effect pushed Sacramento’s growth. The metro added more than 24,800 residents in 2018, a 1.1 percent increase and nearly double the 0.6 percent national figure. Despite healthy economic fundamentals, Sacramento’s self storage market is slightly oversupplied—the per-person inventory is 7.8 net square feet, above the national average of 6.5 net square feet.

Nonetheless, when it comes to self storage development in California, Sacramento proved most active in March. The metro ranks first with 10 projects underway and another 26 in the planning stages, totaling 2.8 million square feet. The new-supply pipeline represented 16.9 percent of Sacramento’s existing inventory. Despite being oversaturated, the development pipeline was up by 160 basis points month-over-month.

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630 K Street. Image courtesy of Cushman & Wakefield

Five years after acquiring the office building at 630 K St. in Sacramento, Swift Real Estate Partners has sold the asset to New York Life Real Estate Investors for $28.1 million, according to Sacramento County files. The company relied on Cushman & Wakefield to market the approximately 87,000-square-foot property and provide representation in the sale transaction.

A team from Cushman & Wakefield’s Northern California Markets Group—including Adam Lasoff, Seth Siegel, Steve Hermann, Ryan Venezia, Eric Fox Ron Thomas and Kevin Partington—facilitated the sale on Swift’s behalf. Located just across from the 17,500-seat Golden 1 Center sports and entertainment arena in downtown Sacramento’s burgeoning DOCO, or Downtown Commons, area, 630 K first opened its doors in 1956 as a retail building. In 1978, the property underwent a conversion and emerged as an office destination.

READ ALSO: Hines Sells Sacramento Tower for $166M

Today, the five-story structure is adorned with two wall billboard spaces and features roughly 62,300 rentable square feet of Class B office space, as well as 22,700 square feet of fully leased retail offerings on the basement and ground levels. Swift submitted the asset to a cosmetic renovation soon after the 2015 purchase. New owner NYL REI, which acquired 630 K on behalf of an institutional client, has its own plans for the asset. The firm will invest a substantial amount of capital in the repositioning of the property, where Cushman & Wakefield will oversee leasing and management activity.

Catering to a Hungry Market

The reintroduction of 630 K as a premier office asset with sizeable full floor and contiguous floor options will likely prove a timely move, as demand for space remains strong after the market’s solid performance in 2019.

The vacancy rate dropped to 8.3 percent in the fourth quarter and positive net absorption totaled 368,000 square feet, according to a report by Cushman & Wakefield. And experts predict that conditions will only get better in 2020. “Demand will remain strong and large requirements will struggle to find competitive options, particularly for tenants Downtown,” Cushman & Wakefield notes in the fourth quarter report. “Class A space in the CBD will be particularly hard to source as tenants remain willing to pay a premium to be close to the increasing amenities in the surrounding area.”

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Park Tower. Image courtesy of KBS

Singaporean capital has landed in the U.S. real estate market again, with a U.S. REIT listed in the Asian city-state snapping up a Class A office tower in downtown Sacramento, Calif., for $165.5 million. Prime US REIT acquired the 24-story, 489,171-square-foot Park Tower in concert with commercial real estate investor KBS, which serves as the U.S.-based asset manager of the REIT’s portfolio.

READ ALSO: Sacramento Office Report – Fall 2019

Built in 1992 and renovated last year, the LEED Gold-certified tower at 980 9^th St. is located within walking distance of California’s state capitol and other downtown landmarks. Hines Interests acquired the asset from CIM Group for $120.5 million in August 2017 and has served as the leasing manager of the building, according to Yardi Matrix.

CIM in turn acquired Park Tower from Nuveen Real Estate in a portfolio sale in 2009, after the asset was previously owned by Shorenstein and Grosvenor. Grant Lammersen, Steve Golubchik and Tyler Myerdirk of Newmark Knight Frank brokered the latest deal. KBS identified and sourced the asset on behalf of the $1.3 billion Prime US REIT portfolio, which included 11 prime office properties totaling 3.4 million square feet nationwide as of year-end 2019.

Growing in California’s capital

The move comes after Singapore’s Keppel Capital teamed up with KBS and other investors to launch Prime US REIT on the Singapore Exchange in August 2019. KBS and Keppel previously partnered to list the Keppel-KBS US REIT in Singapore in 2017.

Park Tower is 92 percent occupied and includes 11,500 square feet of ground-floor retail. The high-rise includes a parking area that was built in 1961 and renovated in 1998, as well as on-site amenities such as a conference center, tenant lounge and newly refurbished fitness center with locker rooms.

The Sacramento office market has less than 5 percent Class A vacancy and no new projects under construction in the downtown, Newmark Knight Frank reported in the fourth quarter of last year.

Singaporean investors have been active in the U.S. real estate market recently, with Ascendas Real Estate Investment Trust agreeing to buy 3.8 million square feet of U.S. business park assets as part of a $2.1 billion deal last October, while Singapore’s Mapletree Investments inked $1.4 billion in U.S. data center acquisitions from Digital Reality in September.

The post Hines Sells Sacramento Tower for $166M appeared first on Commercial Property Executive.

Image via Pixabay.com

Phillips Edison & Co. (PECO) has expanded its Northern California footprint with the acquisition of Del Paso Marketplace, a 59,796-square-foot shopping center in Sacramento, Calif. The property marks the company’s fifth retail center in greater Sacramento.

The retail center is anchored by a 29,296-square-foot Sprouts Farmers Market and features a mix of local and national tenants, including T-Mobile, Chipotle, Club Pilates, Cookie Cutters, Ono Hawaiian BBQ, State Farm and Jersey Mike’s Subs. 

Del Paso Marketplace is situated at the intersection of Del Paso Road and East Commerce Way, in Sacramento’s North Natomas neighborhood. The area is densely populated; there are more than 9,600 rental units within a 3-mile radius and the average income is about $90,000.

Substantial job and population growth provided the opportunity for further growth in the area, according to David Wik, senior vice president of acquisitions at PECO. The new Sacramento facility fits the company’s acquisition strategy. In the past year, the company targeted other high population and business growth areas such as Naperville, Ill., and the suburbs of Washington, D.C. 

The post Phillips Edison & Co. Expands Sacramento Footprint appeared first on Commercial Property Executive.

100 Waterfront. Image courtesy of JLL

California State Teachers’ Retirement System (CalSTRS) has hired JLL to lease six floors incorporating 150,000 square feet of office space at 100 Waterfront Place in Sacramento, Calif. The 17-story building features a total of 409,000 square feet space and currently serves as the headquarters of the owner, CalSTRS. The office space will be available by the fall of 2022.

Situated at 100 Waterfront Place in West Sacramento, the office building is alongside the Sacramento River and within 2 miles of downtown. The property is near major roads, including Interstate 5 and Freeway 275, which grant access to the city’s international airport. The location is qualified as an Opportunity Zone, according to Yardi Matrix data.

Completed in 2009, the LEED Platinum-certified office tower occupies 5.8 acres and features 32,000-square-foot floor plates. Other characteristics include below and standard ceiling heights, five stories of parking spaces and a fitness center. CalSTRS has begun the construction of the second phase of its campus, a 10-story building encompassing 510,000 square feet, adjacent to the existing property.

The post JLL Tapped to Lease Sacramento Office Building appeared first on Commercial Property Executive.

Strawberry Creek. Image courtesy of Marcus & Millichap

Pacific Castle Management Inc. has sold Strawberry Creek, a 57,373-square-foot retail center in Sacramento, Calif., for $21 million. Marcus & Millichap represented the seller and procured the buyer, a local private investment group, in the transaction.

Located at the intersection of Cosumnes River Boulevard and Bruceville Road, the shopping center is near Freeway 99, roughly 1 mile from Cosumnes River College and Kaiser Permanente South Sacramento Medical Center. The area is densely populated—approximately 180,442 people live within a 3-mile radius, with an average annual income of roughly $75,800.

Constructed in 2007, the four-building retail asset occupies 7.4 acres and features a vacant parcel that provides the opportunity for expansion. Strawberry Creek is leased to a mix of national tenants, including Starbucks, Jamba Juice and Subway and it’s shadow-anchored by a 133,000-square-foot Target.

Marcus & Millichap’s brokerage team included First Vice President Edward Nelson and Senior Managing Director Nicholas Scelsa. In October, the firm also arranged the sale of a 24,635-square-foot retail center in Kissimmee,  Fla.

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Natoma Station Corporate Center. Image courtesy of Voit Real Estate Services

Buzz Oates Real Estate—one of the top Sacramento office owners— has sold Natoma Station Corporate Center, a 102,750-square-foot, Class A property in Folsom, Calif., for $23.7 million. Voit Real Estate Services arranged the sale on behalf of the buyer, Iron Point LLC, with Cushman & Wakefield representing the seller.

Natoma Station Corporate Center occupies nearly 7 acres alongside Freeway 50 at 950 Iron Point Road, some 20 miles from downtown Sacramento and within 15 miles of the Sacramento McClellan Airport. The asset is near two bus routes and one of the city’s light rail lines. The office building is also adjacent to the Folsom Premium Outlets retail center.

Constructed in 1999, the two-story structure comprises 54,164-square-foot floor plates and has parking at a ratio of four spaces per 1,000 square feet. The property is leased to several tenants including DeVry, General Dynamics and Allstate, and the new owner plans to bring the asset to full occupancy by relocating two of its businesses—Mountain F and Mountain G Enterprises—into the building.

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1201 J St.

CENTRL Office, a coworking company, is set to open approximately 30,000 square feet of office space in Sacramento, Calif. In August, the firm purchased 1201 J St. in a partnership with Green Light Development for $7.7 million, according to Yardi Matrix data. The new location will open its doors by early 2020.

The news comes on the heels of Turner Construction Co. topping out its $520 million office tower in downtown Sacramento earlier this month.

The coworking space will be in the heart of Sacramento, near major roads, such as 15th Street and Lincoln Avenue. The 40,358-square-foot building is also located within a 2-minute walk of 12^th & I station, which provides access to the city’s blue light rail line. Additionally, the location is qualified as an Opportunity Zone.

Constructed in 1960 and renovated in 2012, the three-story asset occupies less than 1 acre and features floor plates ranging between 11,476 and 12,979 square feet, as per Yardi Matrix. CENTRL will transform the space to be able to accommodate growing businesses. Characteristics of the new space will include private offices—with the ability to accommodate up to 20 people—flexible common areas, sit-stand desks, meeting rooms, phone booths and a shared rooftop deck. Additional amenities will include a Loyal Legion beer hall and Cora Coffee. 

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New Natural Resources Headquarters. Rendering courtesy of Turner Construction Co.

A year after breaking ground on the $520 million headquarters for the State of California Natural Resources Agency in Sacramento, Calif., Turner Construction Co. has topped off the 838,000-square-foot office building one month ahead of schedule.

The State of California Department of General Services tapped Turner and partner AC Martin to serve as the design-build team for the Natural Resources headquarters in March 2018. Roughly one year after breaking ground, the partners have placed the final piece of structural steel atop the building at 344 feet above the ground. Upon completion, the structure will stand 22 stories in downtown Sacramento and hold the distinction of being the tallest building erected in the city since 2009.

READ ALSO: JV Kicks Off 1.3 MSF Los Angeles Project

Turner and AC Martin are on track to complete development of the tower by the summer of 2021. The partners have not divulged the financial details of the design-build contract. However, the State noted in the RFQ for the project that it would establish a stipulated sum of approximately $480 million to $490 million for the designated design-build team.

In addition to Class A office accommodations, the Natural Resources headquarters will feature 10,000 square feet of retail space, a health center, a 300-seat auditorium and a pedestrian plaza. Turner and AC Martin’s work on the project also includes the development of a freestanding childcare facility for 120 students and improvements to the exterior of the adjacent Heilbron House, a historic mansion owned by the State.

Government gigs

A team consisting of Arup, CO Architects and FXCollaborative are behind the design of the building, which will not only be the headquarters of the Natural Resources Agency but home to offices of the Department of Water Resources, the Department of Forestry and Fire Protection and the Wildlife Conservation Board as well.

Turner’s wide variety of clients has included a bevy of government offices of late, from the local level to the federal level. The company and joint venture partner Flatiron Group are managing the construction of a $700 million, two-concourse expansion of Denver International Airport on behalf of the City and County of Denver. Additionally, Turner is serving as general contractor for the U.S. Navy’s new San Diego headquarters, a $200 million project that reached the upper deck two months ago.

The post $520M Tower Tops Out in Sacramento appeared first on Commercial Property Executive.

1130 K St.

Fox Creek Fund has purchased a 140,908-square-foot historic office building in Sacramento, Calif., for $20 million. JLL represented the seller, UC Regent, and procured the buyer in the transaction. JLL was also appointed as the leasing agent.

Located at 1130 K St., the office property is situated within the Government Affairs district, in the heart of Sacramento. The area offers access to several amenities, including restaurants, cafés, hotels and entertainment options. In addition to that, the office asset is located within an Opportunity Zone established through the Federal Tax Reform passed in 2017.

Originally constructed in 1924, the historic building served as a retail facility until 1975, when it was converted into an office. In 1982, the property underwent cosmetic renovations, according to Yardi Matrix data. The four-story building occupies less than one acres and features floor plates ranging between 28,000 and 28,900 square feet. The asset is 30 percent leased to a mix of tenants, including UC Regent. 

JLL’s brokerage team included Senior Vice Presidents Erik Hanson, Cheri Pierce and Kristina Wollan, Managing Directors Rob Hielscher and Michel Seifer and Associate Nick Deaver.

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Greg Levi, Managing Director, JLL. Image courtesy of JLL

Renewed interest in the urban core is pushing Sacramento’s office sector towards healthy and steady growth. Major projects, such as a new MLS stadium in The Railyards could significantly push demand upwards in the city’s downtown.

JLL’s Sacramento-based Managing Director Greg Levi provides insight into the city’s office sector and reveals how an area once filled with dull government offices is now turning into an attractive and lively hub.

What drives demand for office space in Sacramento?

Levi: There are two major factors that drive demand in Sacramento. One is the State of California, which is the largest tenant in the city. As the state’s population grows, the demand grows with it, as many businesses downtown work with and for the State of California. The second major factor is tenants having a desire for a more urban feel in our downtown area. The biggest catalyst of that has been the opening of the Golden One Center.

New employers are coming into the area because of the new amenities that have developed as a result of the new arena. All these new amenities, including restaurants, shops and residential developments have caused an increase in demand for office space. Before the new arena, the downtown area was filled with sleepy government offices and law firms.

READ ALSO: Top 10 Sacramento Office Owners

Which Sacramento submarkets are the most sought after?

Levi: The main submarkets that are the most sought after are Downtown/Midtown, Folsom and Roseville. Downtown and Midtown are the leading submarkets due to the new amenities previously mentioned. Roseville is a high-end suburb of Sacramento that has an affluent community where many business decision-makers live. Folsom also has a strong decision-maker presence, and many choose to have their office in the same area that they live in. There are also a number of tech companies in Folsom, including Intel, which employs about 6,000 people.

What kind of assets are investors looking for? Tell us about the most in-demand amenities, locations.

Levi: Core properties in Sacramento are very sought after. An example of this is the recent sale at 300 Capitol Mall. Value-add opportunities are in-demand as well, particularly in opportunity zones. No significant office buildings have been built in the last 10 years, so people are looking to reposition older office buildings for the current market and add value with strong leasing activity.

How do economic trends impact the office sector in Sacramento?

Levi: Sacramento is not as impacted as most major cities by economic fluctuations. The government is a stabilizing force that helps create a steady market without the fluctuations that other cities can experience. A risk to Sacramento would be if the state government cuts its budget. However, currently, there is a surplus.

What are your predictions regarding the future of office investment? What do you expect from the sector?

Levi: Sacramento will continue to get more institutionalized and buyers will look to come to the city. The top tier markets are extremely expensive, and investors can buy in Sacramento for a much better cap rate. The cost to build the product is significantly more.

The post What Pushes Sacramento’s Office Market Ahead appeared first on Commercial Property Executive.

Yardi Matrix compiled a list of the top five deals completed in the first half of 2019. Four of the top five properties sold in the first months of the year are Class B assets with strong tenant rolls, while the largest deal on our list closed in Sacramento’s Central Business District.

5. Prospect Park Commons

Prospect Park Commons

A Menlo Park individual investor expanded its Sacramento inventory this year with the acquisition of the 154,000-square-foot Prospect Park Commons. Callahan Property Co. sold the Rancho Cordova asset for $18.7 million in a deal subject to a $13 million loan provided by Rabobank.

The new owner selected B & Z Properties to handle property management duties and West Hawk Commercial Real Estate to be responsible for leasing the asset. The seller purchased Prospect Park Commons back in 2005 and renovated it the next year. Located at 10989 Trade Center Drive in the Highway 50 Corridor submarket, the four-building property is fully leased by the California Employment Development Department. Some 4.4 million square feet of office space is within a mile of the property—30.4 percent of the submarket’s total office stock. Downtown Sacramento is roughly 16 miles away from Prospect Park Commons.

4. 10730-10734 International Drive

After entering the metro in 2015 with the acquisition of a 42,500-square-foot building within the El Dorado Hills Business Park, Wonderful Real Estate expanded its Sacramento office footprint by purchasing two buildings totaling 178,600-square-foot in the Highway 50 Corridor submarket. RREEF Property Trust sold the two-floor properties for $37 million 13 years after acquiring them from BentleyForbes as part of a $125 million portfolio transaction.

The asset is situated at 10730-10734 International Drive in Rancho Cordova, roughly 1 mile from Mather Airport. Completed in 2001, the buildings are fully leased by Centene Corp.

3. Parkway Corporate Plaza

Parkway Corporate Plaza – 1640 East Roseville Parkway

Anchor Health Properties paid $79 million, or $274.35 per square foot, for the four-building Parkway Corporate Plaza in the Roseville-Rocklin submarket. Broe Real Estate Group sold the roughly 288,000-square-foot campus, which is the buyer’s sole Sacramento office asset.

The property came online in 1999 and features a parking ratio of six spaces per 1,000 square feet. Tenants include Kaiser Permanente, Sutter Imaging and UC Davis Health. Parkway Corporate Plaza, located at 1620-1680 E. Roseville Parkway, is about 1 mile from Kaiser Permanente Roseville Medical Center, 2 miles from Interstate 80 and 20 miles from downtown Sacramento.

2. 1515 S Street

A partnership between Hines, JMA Ventures and Oaktree Capital Management sold the two-building, 377,600-square-foot 1515 S Street for $115 million, or $304.55 per square foot, to Boyd Watterson Asset Management. This represents a 67.9 percent increase from what the sellers paid for the property back in 2016.

Situated in downtown Sacramento, the property is adjacent to multiple public transportation, shopping and dining options. Completed in 1987, the property features some 850 parking spaces. Tenants include the California Department of Human Resources, the California Department of Corrections and Rehabilitation and Papered Iris Café. More than 18 million square feet of office space is within a 1-mile radius of the property.

1. Emerald Tower

Emerald Tower

Hines—which continues to be one of Sacramento’s top office owners—sold the 383,200-square-foot office building in downtown Sacramento to the Evergreen Co. for $127 million, or $331.39 per square foot. The seller remained the property manager for the 1984-built asset, which underwent cosmetic renovation in 2000 and 2009.

Tenants at the 18-story building include the California Department of Insurance, Perkins & Associates and Westamerica Bank. The property, which was roughly 12 percent vacant as of June, features 24,000-square-foot floorplans and a parking ratio of nearly 2 spaces per 1,000 square feet. Located at 300 Capitol Mall, the building provides convenient access to Interstate 5 as well as multiple public transportation options and dining, shopping and entertainment venues#top.

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Emerald Tower

A joint venture between The Evergreen Co. and UAIC Development Corp. has acquired Emerald Tower, a 385,844-square-foot Class A office asset in Sacramento, Calif., for $127 million, according to Yardi Matrix. JLL Capital Markets worked on behalf of the seller, a partnership between Hines and Sterling Equities.

Located at 300 Capitol Mall, the office building is next to the intersection of Lincoln Highway and Interstate 5 in downtown Sacramento. The property is 10 miles from Sacramento International Airport.

The 18-story tower was constructed in 1985 on 2.4 acres and was most recently renovated in 2009. The asset achieved LEED Platinum certification in 2015, owing to a wide array of green features implemented by the previous owner. At the time of the sale, the building was 91.8 percent leased to a mix of tenants including the California State Controller’s Office, Department of Insurance and Public Utilities Commission.

The JLL Capital Markets team included Managing Directors Michel Seifer and Rob Hielscher, Senior Vice Presidents Erik Hanson and Senior Vice President Cheri Pierce and Associate Michael Manas. In June, the firm secured a $68 million loan on behalf of Levcor Inc. to refinance a Houston entertainment center.

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North Bay Logistics Center. Image courtesy of Cushman & Wakefield

24Seven Enterprises, a logistics and distribution solutions company, has leased a 404,950-square-foot warehouse space at North Bay Logistics Center, an 843,000-square-foot facility in Vacaville, Calif. Cushman & Wakefield represented both the landlord, LDK Ventures, and the tenant in the leasing transaction.

24Seven is the parent company of Vingo LLC and Pack n’ Ship Direct. The new space will house operations for the two business lines. The remaining 434,000-square-foot space is occupied by Serena & Lily.

Located at 700 Crocker Drive, the industrial building is alongside Interstate 505 and near Interstate 80, which offers access to San Francisco and the Bay Area. Moreover, the facility is around 32 miles from downtown Sacramento and roughly 36 miles from Sacramento International Airport.

Built in 1975, North Bay Logistics Center is positioned on 124 acres. The building features 40 dock doors upgraded with lights and hydraulic levelers and eight additional knock-out dock doors, four grade doors, 23- to 36-foot clear height, sprinklers and climate-controlled areas. Besides these, the industrial facility has upgraded elevation, newly painted exterior and interior walls, new entry and monument signage, upgraded store fronts and new offices to suit.

Managing Director Brooks Pedder, Executive Managing Director John McManus and Executive Director Tony Binswanger of Cushman & Wakefield represented the landlord in the transaction, while Pedder, with Director Scott Bertrand, also of Cushman & Wakefield, worked on behalf of the tenant. At the beginning of June, Cushman & Wakefield negotiated three office leases At Sabre Center I in Boca Raton, Fla.

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Image via Pixabay

Lendlease Energy Development and Sacramento County Municipal Utility District have signed a 30-year power purchase agreement for Rancho Seco Solar II, a new 160-megawatt solar facility. The project marks Lendlease’s first energy development in California and the fifth one of its type in the country.

The plant will be located on the premises of the decommissioned Rancho Seco Nuclear Generation Station and, upon completion, will be the largest solar facility in the county. It is scheduled to begin construction this year, with completion slated by the end of 2020.

Lendlease’s current project pipeline exceeds 2 gigawatts. Among its development projects is the 60-acre Cooperative Solar Farm One Facility in Clark County, Ky.—a solar farm with 32,300 solar panels capable of producing up to 8.5 megawatts of electricity. In addition, the company has started construction of the Island Palm Communities Energy Services Project in Hawaii, a $150 million energy modernization and security project powering 5,800 military homes.

The post Lendlease, SMUD Sign 30-Year PPA appeared first on Commercial Property Executive.

Parkway Industrial Crossing. Photo via Google Maps

HFF has arranged $16.9 million in refinancing for Parkway Industrial Crossing, a 302,400-square-foot, value-add industrial project in Sacramento, Calif. The firm worked on behalf of the borrower, The Bendetti Co., to arrange the two-year floating rate loan with three one-year extension options. The borrower aims to convert the single-tenant building in the West Sacramento submarket into a multi-tenant industrial facility.

Located at 3689 Industrial Blvd., the facility is in Sacramento’s emerging industrial market, just off the intersection of Interstate 80 and Freeway 50, around 5 miles from the city’s downtown. Additionally, Parkway Industrial Crossing is within 14 miles of Sacramento International Airport.

The industrial asset features 47 dock-high doors with levelers, 22- to 26-foot clear heights, grade-level access, concrete aprons and a truck court. Besides these, the facility also includes 14,000-square-foot office space and a 1.5-acre vacant development site.

HFF’s Senior Director John Chun led the firm’s debt placement team in the transaction.

The post HFF Secures $17M Refi for Sacramento Facility appeared first on Commercial Property Executive.

10730-10734 International Drive

RREEF Property Trust sold a 178,555-square-foot Class B office property near Sacramento, Calif., to Wonderful Real Estate for $36.9 million, according to Yardi Matrix. The asset, fully leased to the Centene Corp., last changed hands in April 2006, when BentleyForbes sold the buildings as part of a 605,000-square-foot portfolio transaction valued at $125 million.

Located at 10730-10734 International Drive in Rancho Cordova, the two two-story buildings are approximately 13 miles from downtown Sacramento in the Highway 50 Corridor submarket. The asset is 1.5 miles from the Lincoln Highway, just north of Mather Airport. More than 3.6 million square feet of office space fall within 1 mile of RREEF’s acquisition, Yardi Matrix data shows.

The buildings, constructed in 2001, were formerly a Verizon customer service center, until the tenant shuttered its Sacramento operations in January 2017, according to the Sacramento Bee. Centene moved into its space in September that year.

Over the past year, RREEF has traded some 1.4 million square feet across several markets. In April, the firm sold a 383,000-square-foot LEED Silver office property in a suburb of San Francisco for nearly $115 million.

Image courtesy of Yardi Matrix

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3771 Channel Drive

LBA Logistics has acquired 3771 Channel Drive, a 624,356-square-foot warehouse/distribution center in West Sacramento, Calif., from Sacramento Foodco Investors, in what is the largest industrial sale of 2019 so far.

Colliers Sacramento represented both parties in the transaction, while Newport Real Estate Services’ President Glen Allen served as asset manager for the seller, orchestrating a multimillion-dollar restoration of the property.

“It’s inarguably one of the best submarkets in our region,” Tommy Ponder, Colliers’ vice president, told Commercial Property Executive. “We’re seeing a lot of institutional money circle our market as one of the last places for affordable property and value-add opportunities like this.”

This was a private sale, with Colliers coming up with a list of 20 logical buyers, from which five offers emerged.

Upon closing, the property was 63 percent leased. Colliers Sacramento brokered a 389,000-square-foot lease to TK Classics last year, the largest in the area. Today, the furniture company takes up the majority of the building’s space. The property also has an approximately 180,000-square-foot cold storage facility that Colliers has been trying to lease. That component will need to be completely rebuilt to get it up and running again.

According to Ponder, the 50-acre site also includes opportunities for expansion and future development of up to 300,000 square feet.

“A big appeal was the value-add aspect,” he said. “There’s a 10-acre site that’s available immediately for development. You can go vertical on approximately 350,000 square feet with the additional land.”

A rising market

Colliers’ most recent industrial market report for West Sacramento noted that the region is the second-largest industrial submarket in the Sacramento area, with more than 19 million square feet of existing inventory and a record-setting year of absorption in 2018. 

In fact, Colliers International named Sacramento one of 10 emerging industrial markets to watch in 2019. This is spurred by an influx of institutional-grade investment companies coming into the area.

“It’s a great location because of being close to all access points and all major freeways and interstates, so from a logistics standpoint, it’s really strong,” Ponder said. “That definitely played into the opportunity.”

In December, a joint venture between Bixby Land Co. and an institutional partner received $180 million in credit to purchase a four-building, Class A industrial portfolio totaling 982,493 square feet in San Bernardino, Sacramento and Phoenix.

Image courtesy of Colliers Sacramento

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Located at 9950 Mills Station Road, the facility is alongside Freeway 50, around 13 miles from downtown Sacramento as well as from Sacramento McClellan Airport. Additionally, the facility is situated near residential areas; there are roughly 7,400 units completed within a 3-mile radius. Built in 2018, the storage asset encompasses a total of 1,029 climate-controlled units, ranging from 25 to 600 square feet. The facility is gated and features 24-hour video surveillance, on-site management and kiosks.

“We expect to achieve significant value with this facility, which should command significant demand given its exceptional location, accessibility and modern design,” said Michael Schwartz, chief executive officer of Strategic Storage Growth Trust II, in prepared remarks.

Last year in October, Strategic Storage Trust II Inc. and Strategic Storage Growth Trust Inc. merged in a $340 million deal.

The post SSGT II Pays $16M for Sacramento Asset appeared first on Commercial Property Executive.

This latest round of projects brings Envoy’s total number of EVs deployed at partner sites to more than 100. Its current pipeline totals 1,800 vehicles to be launched in Portland, Ore.; Seattle; Austin, Texas; Chicago; New York; Boston; Miami, Fla.; and Washington, D.C.

Across California, beyond

Both Southern and Northern California will benefit from the firm’s expansion: In the greater Los Angeles area, Envoy will deploy EV Charging stations to more than 30 communities owned by Equity Residential. In Northern California, Envoy will have a Tesla Model S, two Volkswagen e-Golfs and two EV chargers at the Kimpton Sawyer Hotel in Sacramento, Calif., available for guests, full-time residents and the offices for The Sacramento Kings. In November, as part of Electrify America’s Sac-to-Zero initiative, Envoy launched more than 20 Volkswagen e-Golfs at more than 10 multifamily properties across the city.

This new deal is also preparing the firm for countrywide expansion: Alliance Residential is set to work with Envoy throughout its nationwide portfolio of properties. In addition, Emet Capital’s College Suites in Brooklyn, New York, will also offer student residents the ability to use Envoy EVs and infrastructure.

“Alliance Residential’s expanded partnership with Envoy speaks to a joint commitment to bring highly accessible, eco-conscious mobility options to tenants,” Alliance Residential Vice President of Corporate Social Responsibility Kelly Vickers said in a prepared statement. “Together, we have the ability to serve as a model for other developers and municipalities looking to welcome electric vehicles into their communities and drive down total vehicle miles traveled.”

From Los Angeles to Boston

These deployments come shortly after the signing of a Memorandum of Understanding with Eversource Energy—together with the commonwealth utility, Envoy plans to bring hundreds of EVs and complementary infrastructure to Massachusetts by the second quarter of 2019. The five-year deal syncs with Eversource Energy’s commitment of $45 million to support the installation of new level 2 and DC (direct current) fast-charging sites over the same period.

Awards for growth

Envoy’s expansion plans are backed by a series of wins:

• a $439,000 grant offered by the Bay Area Air Quality Management District. The firm intends to use the funds to deploy 48 Envoy EVs within the East Bay Area, as part of the West Oakland Zero-Emission Grant Program;
• Peninsula Clear Energy awarded Envoy a $70,000 grant to introduce its on-demand EV sharing platform to a local disadvantaged multifamily community;
• The Green Fleet Award from Sacramento Clean Cities Coalition, backed by $1.5 million from the California Energy Commission and a portion of Electrify America’s $44 million investment in the region;
• The best of the Shared Mobility category in the L.A. New Mobility Challenge, a pitch competition sponsored by NewCities Foundation and Los Angeles Cleantech Incubator.

Image courtesy of Electrify America

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Ritz-Carlton, Lake Tahoe

Kennedy Wilson has sold Ritz-Carlton, Lake Tahoe for $120 million, nearly seven years after acquiring the 170-key hotel in Lake Tahoe, Calif., in a $74 million deal that also included 23 condominiums and a 3.4-acre development parcel.

During its ownership, Kennedy Wilson increased the ADR of the hotel by 63 percent and revenue per available room by 100 percent as a result of a number of capital and operational improvements. The company expanded the property’s culinary and wellness offerings, and enhanced outdoor attractions, children’s activities and summer programming.

“When we and our partner acquired the property in 2012, the Ritz-Carlton, Lake Tahoe was the premier highlands resort west of the Rockies,” William McMorrow, Kennedy Wilson’s chairman & CEO, told Commercial Property Executive. “Situated mid-mountain on the Northstar California ski area, it was well-located and we saw significant potential for operational upgrades and capital improvements to take it to the next level.”

Lake Tahoe is one of the country’s most popular tourist destinations, which has undoubtedly benefitted from the tech boom in San Francisco and the upswing in that economy.

One of the big changes the company made to the resort was installing a new multi-level dining and bar facility called Lake Club, which transformed the Ritz-Carlton, Lake Tahoe from a primarily winter resort into a year-round destination.

“Our experience with the Ritz-Carlton, Lake Tahoe is a great example of our opportunistic and value add investment strategies—buying where we see strength in the local market at a discount to replacement cost and with the potential to grow revenues through operational and capital improvements,” McMorrow said. “We also provided guests indoor and outdoor lakefront amenities and new recreational opportunities through the development of Lake Club, which has been very well received.”

Kennedy Wilson also sold out all 23 condo units at The Ritz-Carlton Residences in 2016 for a total gross sales price of approximately $50 million. “We also saw opportunity in the sales of the 23 penthouse units at the Ritz-Carlton Residences as the Bay Area economy and housing market were on the upswing,” McMorrow said. “Importantly, we had the opportunity to acquire the property at a significant discount to replacement cost.”

The company plans to recycle the proceeds from the sale of the Ritz-Carlton, Lake Tahoe into new strategic investment opportunities.

Deals across the pond

The global real estate company has been busy. Just last month, Kennedy Wilson sold a portfolio of hotels located across the U.K. for $54 million. Between the two deals, the company made a profit of $73 million over the lifespan of both investments. In that deal, Kennedy Wilson sold the remainder of a loan portfolio backed by six hotels totaling 864 keys, obtaining a 45 percent return on cost over the life of its investment.

In November, Kennedy Wilson signed two of the largest European deals in the company’s history with two major tenants—WeWork and ASOS—in its London-based properties.

Image courtesy of Kennedy Wilson

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Colliers International closed the sale for nearly 91 acres of vacant land zoned for a solar farm located on W 6^th St. in Rio Linda, Calif. The location is south of W Elverta Road in Sacramento County, about 10 miles east of Sacramento International Airport. The lot sold for $1.5 million.

Jim Dennis of Colliers Sacramento brokered the sale on behalf of the seller, Bernik Family Trust. The new owner is San Francisco-based Lightsource BP, formerly known as Lightsource Renewable Energy, which at the end of 2017 has formed a partnership with BP to increase the capabilities of solar projects across the U.S. The newly formed company rebranded as Lightsource BP in early 2018.

The four Sacramento County parcels received approval in 2010 for a 10-megawatt solar farm. So far, no new plans have been submitted to Sacramento County for the solar plant. The company, however, announced a collaboration with the Sacramento Municipal Utility District and the future development of Wildflower Solar I, which will support SMUD’s community solar program SolarShares with about 16 megawatts.

The post Colliers Arranges Land Sale for Solar Farm in Sacramento appeared first on Commercial Property Executive.

Roseville Innovation Park

Global health-care company Penumbra has signed a new lease for 157,518 square feet of Class A office space at the Roseville Innovation Park in Sacramento, Calif. A joint venture between Farallon Real Estate Partners and Strada Investment Group owns the property.

Located at 630 Roseville Parkway, Penumbra’s lease expansion marks the company’s first entry into the Sacramento region and its second office within Northern California and the U.S. The office asset features 20-foot ceiling heights and retail, entertainment and housing within a short distance. Outdoor recreation, dining and breakout space is currently in the works at the property.

Roseville Innovation Park is part of the Hewlett Packard | Campus Oaks Master Plan, a mixed-use community of more than 375 acres. The campus offers easy access to Highway 65, Interstate 80 and other major thoroughfares in the area. It is situated approximately 20 miles northeast of downtown Sacramento and the State Capitol and 25 miles from Sacramento International Airport.

A Cushman & Wakefield team of Ron Thomas, Chris Schwarze, Bruce Hohenhaus and Kevin Partington represented the landlord in the deal, while Cushman & Wakefield’s Ed Grammens represented the tenant. Earlier this year, the same team brokered the transaction of a three-building industrial portfolio in Sacramento.

Image courtesy of Cushman & Wakefield

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Kevin Dalton, Senior Vice President, RagingWire

RagingWire Data Centers, an NTT Communications company, has hired Kevin Dalton as its new senior vice president of construction and critical facilities engineering and design. He will be based in the company’s headquarters in Sacramento, Calif.

Dalton will oversee the company’s newest data center projects. A new design, dubbed V2, will use modular construction techniques and a robust supply chain management system to lower building and maintenance costs. V2 will allow for multi-story, high capacity data center deployments which can support hyperscale and cloud services at a much lower cost and shorter cycle time, according to RagingWire.

The company is currently engaged in several expansion projects, including two 250,000-square-foot data centers in Ashburn, Va., a 42-acre campus in the Dallas-Fort Worth metro and a wholesale 19-acre property in western Chicago, for which it is pursuing building permits.

Prior to joining RagingWire, Dalton worked for 12 years at Digital Realty Trust, where he held various technical and senior management positions, such as senior sales engineer and director of engineering. There, he oversaw teams to design and deliver data center services for global customers. Dalton also worked at MGE UPS Systems for 10 years and at the McClier Corp. for nine years. He holds a Bachelor of Science degree in electrical engineering from Illinois Institute of Technology.

Photo courtesy of RagingWire

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Basin Street Properties has acquired three office assets, totaling 345,775 square feet, from Hines in Sacramento, Calif., for $44.5 million. The seller, Hines, had purchased the buildings from Equity Office Property Trust in 2007 as part of a $755 million, 2.4 million-square-foot transaction, according to Yardi Matrix.

All three assets are positioned near the Capital City Freeway in Sacramento’s Point West submarket, within 1 mile of more than 3 million square feet of Class A and B office space. The portfolio is 78 percent occupied to a mix of tenants.

The first asset, Point West Commercenter, is located at 1610 Arden Way, a block from Kaiser Permanente’s Point West Medical Offices. The two-story building, constructed in 1984, is home to both medical and office tenants, with an 800-square-foot café on the first floor, Yardi Matrix data shows.

The second property is located immediately south of the first, at 1601 Response Road. Known as the Exposition Center, the asset is occupied by a range of tenants including Zenith Insurance, Premier Healthcare Services and Stewart Ward & Josephson.

The third property, the Point West Corporate Center, is situated at 1545 River Park Drive, half a mile west of the first two assets in the portfolio. The five-story building, constructed in 1984, is home to the American Cancer Society, Benefit Resources and UBS.

In August, Hines traded a nearly 410,000-square-foot Class AA office tower in Texas for $83.2 million.

Images courtesy of Yardi Matrix

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Aerial view of 6300 S. Watt Ave. (Image courtesy of Cushman & Wakefield)

Nearon Enterprises has purchased a three-building industrial portfolio in Sacramento’s Power Inn submarket. The facilities total approximately 518,000 square feet and are fully leased to American Building Supply Inc., a subsidiary of Jeld Wen.

Massie & Co. sold the portfolio for $34 million with the assistance of Cushman & Wakefield. The facilities are located at 6300 S. Watt Ave., 8360 Elder Creek Road and 8920 43rd Ave.

A desirable submarket

Built between the late 1980s and 1990s, the facilities are situated on almost 30 acres and can be accessed via interstates 50 and 99. According to Cushman & Wakefield data, the Power Inn submarket is one of the most sought-after industrial areas in Sacramento, which is otherwise known for its dynamic retail activity. Vacancy in Power Inn was 3.7 percent in August, below the city’s overall industrial vacancy of 4.4 percent.

8360 Elder Creek Road (Image via Google Street View)

“The tenant still has several years of term remaining on their lease. This long tenure, coupled with in-place rents approximately 30 percent below market standard will provide stable cash flow and also a value-add component at renewal,” said Executive Director Kevin Partington in a prepared statement.

The team of brokers arranging the transaction included, in addition to Partington, Matt Cologna, Bryce MacDonald, David Nicholson, Ron Thomas, Bruce Hohenhaus, Chris Schwarze, Adam Lasoff, Seth Siegel, Steven Hermann and Eric Fox.

“With limited entitled land options and skyrocketing construction costs, the properties are pretty well-insulated from downside risk,” added Partington.

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Woodland Crossroads

Woodland Crossroads TIC-Engstrom Properties has sold Woodland Crossroads, a 167,000-square-foot retail center in Woodland, Calif. A private capital investment group, affiliated with El Tigre Holdings, acquired the property for $18 million. Cushman & Wakefield represented the seller, while a Keller Williams Realty team acted on behalf of the buyer.

Woodland Crossroads is on the northwestern corner of Matmor Road and East Main Street, less than a mile away from Interstate 5 and the Vic Fazio Highway. The 1985-built property originally had K-Mart as its anchor tenant. Previous ownership implemented a considerable redevelopment program, transforming the asset into a Grocery Outlet-anchored, mid-sized box promotional center. Other national tenants include Ross, Party City, Harbor Freight and Tractor Supply.

“Woodland Crossroads was ideally tenanted to thrive in the era of e-commerce. The property combines value retailing in Ross and Grocery Outlet with the style of hands-on product merchandising of Harbor Freight and Tractor Supply that cannot be replicated online,” said Wald in a prepared statement.

Nearby big box retailers include Walmart, Costco, Target and Home Depot. Executive Managing Directors Dan Wald and Don LeBuhn of Cushman & Wakefield’s Retail Investment Advisors Group represented the seller in this transaction.

Image courtesy of Cushman & Wakefield

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The Summit at Douglas Ridge

Vectra Management Group (VMG) has purchased The Summit at Douglas Ridge, a 185,541-square-foot Class A office campus outside Sacramento, Calif., for $44.5 million. The buyer financed the acquisition with $32.2 million in financing provided by Umpqua Bank. 

The seller, Ellis Partners, picked up the two buildings in December 2012 as part of a nearly 700,000-square-foot office portfolio valued at $73 million from Hines Interests, according to Yardi Matrix. Earlier this year, an Ellis-led joint venture broke ground on a Class A office development in Oakland, Calif. 

Located at 3721 and 3741 Douglas Blvd. in Roseville, the two three-story buildings are situated among a number of other low-rise office properties. Approximately 2 miles from Interstate 80, the asset is additionally accessible via a local bus route.

The two buildings opened its doors in 2005 under the ownership of The Westerra Group. The campus is home to Care Innovations, McCarthy Building Cos. and Charles Schwab. The structures have a combined vacancy rate of 14.4 percent, according to Yardi Matrix data from August 2018.

“Roseville has experienced significant absorption and rent growth in recent years, with limited addition to supply,” said Raju Shah, managing director of VMG, in a prepared statement. “We view this acquisition as a unique opportunity for us to acquire two best-in-class buildings in a highly sought after, supply constrained, dynamic submarket.”

The new owner has chosen Cushman & Wakefield to manage the two buildings.

Image courtesy of Yardi Matrix

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Natomas Shopping Center

Hanley Investment Group Real Estate Advisors has brokered the sale of Natomas Shopping Center, a 50,168-square-foot retail center in Sacramento, Calif. The property sold for $10.3 million with a 6.3 percent cap rate in a 1031 exchange. 

Built in 2007, the asset is anchored by CVS Pharmacy, Ace Hardware and Dollar Tree. Spreading across a 7-acre site, the center is located at 2000-2050 Club Center Drive, at the intersection of Club Center Drive and Natomas Boulevard.

Hanley Investment Group Executive Vice Presidents Kevin Fryman and Bill Asher represented the seller, a private investor from Bakersfield, Calif., while the buyer, a private investor from the San Francisco Bay Area, represented himself. The asset was fully leased at the time of the deal.

“We achieved an aggressive market cap rate and structured a successful closing to satisfy the buyer’s 1031 exchange requirement five days prior to the buyer’s exchange deadline while obtaining a premium value for the seller,” Fryman said in prepared remarks.

In March, Hanley Investment Group Real Estate Advisors arranged the sale of Westlake Village, a 31,980-square-foot retail center in Sacramento, Calif., located at 3501-3511 Del Paso Road. 

Image courtesy of Hanley Investment Group Real Estate Advisors

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Elk Grove Commons

Acadia Realty Trust acquired Elk Grove Commons, a 241,926-square-foot shopping center in Elk Grove, Calif. Donohue Schriber, a West Coast-focused retail REIT, sold the fully leased property for $59.3 million. The sale was the largest single asset retail transaction in the past three years in the Sacramento area, according to NKF Capital Markets Vice Chairman Nicholas Bicardo and Managing Director Brandon Rogoff, who represented the seller.

Acadia, a Rye, N.Y.-based REIT, said in its second-quarter 2018 earnings report that it acquired Elk Grove Commons through its Fund V. “During its hold period, the fund expects to have an opportunity to re-anchor certain spaces to further strengthen the tenancy at this high-performing shopping center. This investment combines ‘high-yield opportunistic’ and ‘value-add’ strategies,” the REIT noted in the earnings release.

Located at 9624 Bruceville Road, Elk Grove Commons is the dominant retail center in the Sacramento region and is anchored by a high-performing Trader Joe’s, Home Goods and Kohl’s. Other tenants include Cost World Market, GameStop, Tillys, Lane Bryant, Justice, GNC, Dressbarn, Orangetheory Fitness, Mattress Firm, Verizon and Carl’s Jr. Approximately 83 percent of the tenants, including the anchors, have been operating at the center since it was developed in 2004.

“Elk Grove Commons is positioned on one of the most dynamic intersections in a submarket that has excellent fundamentals in regards to retail vacancy, residential and employment growth. Given the stability of the asset, coupled with where the capital markets are pricing today, this opportunity presented levered cash on cash returns that are hard to find on the West Coast for this quality of retail,” Bicardo said in a prepared statement.

Acadia acquires, owns and redevelops retail properties in high barriers-to-entry, dense populations and constrained retail supply markets, primarily along the East Coast, as well as Chicago and San Francisco. Properties include street retail, urban/infill and suburban shopping centers. In March, the company acquired Trussville Promenade, a 463,836-square-foot shopping center in Birmingham, Ala., from Kite Realty Group Trust.

Busy and affluent trade area

Elk Grove Commons serves an affluent and dense trade area where average incomes are approximately $100,000 in a region with a population of 160,000 people. Located at the corner of Elk Grove Boulevard and Bruceville Road, more than 71,000 cars pass the shopping center daily. The Kohl’s at Elk Grove Commons is one of the top-performing locations in the region.

“There were multiple bids on the property, highlighting that investors are still willing to make large retail investments in the Sacramento market as long as the asset is well-located with high-performing tenants as is the case with Elk Grove Commons,” Rogoff said in prepared remarks.

Top lenders and mortgage brokers recently told Multi-Housing News that secondary markets such as Sacramento have seen increasing activity from multifamily investors, on both acquisition and refinancing fronts. Jeff Burns, managing director at Walker & Dunlop, noted that secondary markets including Sacramento have seen multifamily rent growth and higher cap rates. 

Image courtesy of NKF Capital Markets

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Chris Lemmon, NKF

Newmark Knight Frank has promoted Chris Lemmon to Executive Vice President, replacing Devon Atlee. In his new position, Lemmon will oversee the company’s Sacramento and Roseville offices. He will also be responsible for leasing and selling office space in Placer County, while working toward buying new assets. NKF Senior Managing Director John Frisch hired Lemmon back in 2006.

Lemmon serves on the board for Opening Doors Inc. and is vice president of The California Automobile Museum. He is also part of the Jesuit High School Alumni Council, the Association of Commercial Real Estate and the Sutter Club. The Roseville Chamber of Commerce named him the Young Profession of the Year in 2014, the same year NKF offered him the Network Award. Lemmon received his bachelor’s degree from San Diego State University in 2004.

This March, NKF also named Jack Hoskins senior managing director of its Tampa office.

Photo courtesy of NKF

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Rendering of California Military Department’s Consolidated Headquarters Complex in Rancho Cordova, Calif.

A ceremonial groundbreaking was held for the California Military Department’s new $135 million Consolidated Headquarters Complex (CHQC) in Rancho Cordova, near Sacramento, Calif.

The 285,000-square-foot, multi-building campus will be home to all four of the CMD’s “four pillars”: the California Army National Guard, California Air National Guard, California State Military Reserve and California Youth and Community Programs.

(The California State Military Reserve has a headcount of nearly 1,300, according to a CMD spokesperson. About 20 states have such state guard or militia forces, which, unlike National Guard units, are wholly state controlled and cannot be federalized).

Rendering of California Military Department’s CHQC in Rancho Cordova, Calif.

The design-build team of Walsh Construction Co. II and Stantec will develop the new CHQC, which is scheduled to open in 2020.

The complex will sit on a 31-acre site adjacent to Sacramento Mather Airport and will host a headquarters office building, a warehouse, an emergency operations center, a utilities building, a badging center and an access control point.

Security, understandably, will be significant. The compound will be secured by fences and designed to comply with federal Anti-Terrorism Force Protection guidelines, a Stantec spokesperson told CPE.

Personnel at the access control point building will screen visitors and vehicles. Secure identification will be required to enter the complex, after which individuals will proceed through pedestrian or vehicular gates.

The project is targeting LEED Gold certification and will include on-site renewable energy generated by a photovoltaic array that will also serve as shade for parking structures.

“The design of each of the facades is specific to the building orientation and aids with the daylight harvesting….” William Ketcham, a Stantec principal, said in a prepared statement.

The CHQC is one of the first large new zero-net energy (ZNE) projects to be undertaken by the State of California after the issuance of Gov. Jerry Brown’s Executive Order B-18-12 to reduce greenhouse gas emissions and improve energy efficiency in the state.

Zeroing in on zero energy

By 2025, the global market for zero-net energy buildings is predicted to reach about $78.8 billion, according to a November 2017 report by Grand View Research Inc.

Both advances in technology and organizations’ interest in sustainability and carbon emission reductions are driving this growth, the report stated, adding that the Golden State is a leader in ZNE buildings.

One sizable example is a new headquarters in Sacramento for, fittingly, the California Department of Natural Resources. The $520 million, 20-story, 838,000-square-foot building aims to meet LEED Platinum and ZNE standards and will feature radiant floor heating and reclaimed-water systems.

Image courtesy of California Military Department

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The shopping center at 318 N. Sunrise Ave.

A San Francisco-based investor has acquired a 24,750-square-foot retail center in Roseville, Calif., for $4.5 million. Starboard Commercial Real Estate arranged the transaction.

Located at 318 N. Sunrise Ave., the 1992-built property spreads across a 2 acres. Interstate 80 is easily accessible from the property and downtown Sacramento is 22 miles away. Several apartment communities and hotels are nearby. According to Property Shark data, the asset last traded in 2016 for roughly $3.8 million. Pet Club is currently the only tenant of the 100 percent leased NNN investment.

“Conditions are still favorable to find NNN-leased investment properties. Cap rates have improved and financing is still readily available at attractive rates. Investors who are experiencing challenges with rent control, management or excessive operating expenses should consider whether a NNN-leased investment is more appropriate to their investment goals,” said Starboard Commercial Real Estate Associate Broker Richard Gumbiner, in prepared remarks. Gumbiner led the deal.

Considered a regional shopping destination, Roseville’s retail market is vital to the city’s economy. Westfield Galleria at Roseville is the main shopping center of the area and the second largest shopping mall in Northern California.  

Photo via Google Street View

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John Austin

Kidder Mathews has hired John Austin as the senior vice president of its Roseville, Calif. office. Austin specializes in retail brokerage, including tenant/buyer representation, leasing, development, strategic planning, lease restructuring, dispositions and investments throughout northern California and the Central Valley.

With more than 30 years of industry experience, Austin contributed to the development of several major shopping centers, while also negotiating more than 800 transactions representing landlords, developers, tenants and investors.

Before joining Kidder Mathews, he worked as a broker for Core Commercial and CBRE, where he was awarded the National Retail Corporate Service Award for his work as the national accounts manager for Kmart. According to Kidder Mathews, Austin oversaw a national team of more than 80 brokers, covering 26 states. His current tenant representation clients include Jo-Ann Fabrics, Sport Chalet, Fantastic Sams, Gentle Dental, McDonald’s and ARCO. From 2006 to 2013, Austin also acted as the senior vice president of Cornish & Carey Commercial NKF, where he represented developers, landlords and tenants.

Photo courtesy of Kidder Mathews

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Westlake Village

Donahue Schriber Realty Group has sold Westlake Village, a 31,980-square-foot retail center in Sacramento, Calif., located at 3501-3511 Del Paso Road. The sale also included an additional 4-acre site prone to future development.

Hanley Investment Group Real Estate Advisors Executive Vice President Bill Asher, President Ed Hanley and Ten-X represented the seller, while Associate Eric Vu represented the buyer, a family trust from San Francisco’s East Bay which traded out of a northern California-based retail property to fulfill a 1031 exchange.

Situated in the North Natomas community, the one-story property was built in 2007. According to Property Shark, the Sacramento County assessor’s office most recently evaluated the property at approximately $5 million. The asset was 92-percent occupied at the time of the sale. Anchored by Walgreens, other tenants include Chase Bank, Allstate Insurance, AIM Mail Center, Creative Nails Spa, Donahue Schriber, Subway and Westlake Hair Studio.

“Westlake Village offered a unique opportunity to acquire a shopping center featuring a historical stable income stream with a value-add component to lease-up the remaining available space of the existing center,” said Asher in prepared remarks.

Golden State Highway and West Side Freeway are both easily accessible from the property. Natomas Pacific Pathways Prep School and Avanti Apartment Homes are also located nearby.

Image courtesy of Hanley Investment Group Real Estate Advisors

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Rendering of California Department of Natural Resources headquarters in Sacramento, Calif.

Turner Construction Co., in partnership with architectural firm AC Martin, just landed a big fish in the Golden State. The team secured a design-build contract with the State of California Department of General Services for the new 838,000-square-foot Department of Natural Resources headquarters. The downtown Sacramento office development carries a project cost of approximately $597 million, with $520.5 million dedicated to construction, which is expected to commence in early summer.

Referred to as the P Street Building in some State records, the 20-story office tower will rise on the site of a former surface parking lot on the block of O and P streets and 7th and 8th streets. The new development will have enough elbowroom to accommodate more than just the Department of Natural Resources. The building will also be home to seven other state agencies.

Ultimately the tower, which will also encompass a 300-seat auditorium, will be the workplace of 3,500 state employees. But the P Street Building will also be a new destination for the public, offering 10,000 square feet of ground-level retail space, a multi-vendor food court and a pedestrian plaza. However, the most defining characteristic of the development will be its greenness. The property is designed to meet LEED Platinum and zero-net energy standards, with such features as radiant floor heating and mechanical chilled sails, as well as reclaimed water systems. The P Street Building is expected to use at least 50 percent less water than a typical, comparable office building.

“AC Martin has proposed an iconic building that will enrich the Sacramento skyline and increase the street-level engagement,” Daniel Kim, director of the State of California Department of General Services, said in a prepared statement.

The joint venture’s contract also calls for upgrades to the exterior of the neighboring historic Heilbron house, in addition to the construction of a childcare center that will be the largest such facility constructed by the state.

Teamwork

Turner and AC Martin have a partnership that goes back 45 years. The Department of Natural Resources headquarters marks the 13th California project the companies have taken on together. Previous partnerships between Turner and AC Martin yielded other developments in the state capital, including the 950,000-square-foot California Environmental Protection Agency headquarters building. The firms also teamed up on the $1.1 billion Wilshire Grand Center, a 73-story Los Angeles mixed-use tower that holds the distinction of being the tallest building in the Western United States.

Image courtesy of Turner Construction Co.

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The Landing Resort & Spa

DiamondRock Hospitality Co. has purchased The Landing Resort & Spa, a 77-key luxury resort in Lake Tahoe, Calif. for $42 million or $545,000 per key. The acquisition represents a 7 percent yield on 2017 Hotel Adjusted EBITDA. The company funded the acquisition with existing corporate cash.

At 4104 Lakeshore Blvd., The Landing occupies a lakeside location within two minutes of the Lincoln Highway, which provides access to Lake Tahoe Airport, offering 120 flights per day. Besides this, the hotel is close to the city’s nightlife venues including casinos, restaurants and shopping centers, as well as Heavenly Village and the Heavenly Mountain Ski Resort gondola. Amenities of the resort include:

• spa and fitness center
• indoor and outdoor function space
• rooftop deck
• outdoor pool and hot tub
• restaurant

“This acquisition is well-aligned with our capital allocation strategy and increases our portfolio’s exposure to resorts, West Coast markets, and independent operators. Furthermore, we see numerous opportunities to enhance performance through the implementation of our asset management best practices and our ROI capital plan,” said Mark Brugger, president & chief executive officer of DiamondRock Hospitality Co., in prepared remarks.

Image courtesy of DiamondRock Hospitality Co.

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Merryhill Schools

A private San Francisco Bay Area family trust has sold Merryhill Schools, a single-tenant private educational office building in Sacramento, Calif., for $7.9 million. Hyland Investment Properties Inc. Co-Founder & Partner Tom Hyland represented the buyer, a 1031 exchange investor from Silicon Valley, Calif. Hanley Investment Group Real Estate Advisors Associate Eric Vu represented the seller. Merryhill Schools’ absolute triple-net lease was guaranteed by Nobel Learning Communities Inc.

Located at 9036 Calvine Road, the property features a 12,578-square-foot building for the elementary school, an 8,049-square-foot building for the preschool, an athletic field, a pool and two playgrounds spread across a 4.6-acre site. The tenant is also planning to renovate the building.

“Merryhill Schools has been at this location for more than 20 years and we assisted the seller with extending the tenant’s lease to achieve a better return. The tenant has more than 10 years remaining on the new lease term plus two five-year renewal options,” said Vu in prepared remarks.

Last month, Hanley Investment arranged the sale of Roosevelt Plaza at Carlsbad Village, a 19,950-square-foot, mixed-use property in Carlsbad, Calif., for $8.1 million. 

Image courtesy of Hanley Investment Group Real Estate Advisors

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Prospect Green Campus

Pacific Coast Capital Partners LLC (PCCP)—a real estate investment management company specializing in debt and equity financing—has granted a $44.5 million senior loan to S&P Co. and Basin Street Properties for the acquisition of Prospect Green, a Class A, 518,156-square-foot, two- and three-story building office campus in Rancho Cordova, Calif.

Ranging from approximately 72,300 to 126,000 square feet, the buildings were developed in several phases between 1992 and 2001, and were purchased in prices ranging from $99 million to $179 million. Situated on a 32.5 acre-site, the property’s major tenants include the State of California, Liberty Financial Home Equity, Allstate Insurance and NEC Solutions. According to PCCP, the property was 73 percent occupied at the time of the sale. Located at 10877 to 10951 White Rock Road, 10850 and 10860 Gold Center Drive, Prospect Green also features a workout facility and a café. 

“PCCP’s loan includes funds for the property acquisition as well as capital for future capital improvements and leasing expenses,” said Jim Galovan, partner with PCCP, in prepared remarks. “This is a quality asset with strong in-place cash flow and a significant opportunity to add value over the coming months through renovation and leasing.”

In the last few years, office-space development in this metro area went towards a downward spiral. Nevertheless, suburban markets have recorded an impressive gush of transactions thanks to the employment’s sector recovery and a growing demographic. Moreover, start-up companies are constantly searching for cheaper options as compared to larger metro areas.

Photo courtesy of Google Maps

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Development of office space dropped in Sacramento in the past few years, with no new deliveries in 2014 and 2015. The following two years witnessed some development activity, but at a level nowhere near the pre-recession era. Thus, it comes as no surprise that the office inventory of all the owners on our list was completed before 2010. However, transaction activity was steady in the last few years, with suburban submarkets seeing the most significant surge in deal volume since 2014. Moreover, as tenants look for cheaper alternatives to Los Angeles or San Francisco, the Sacramento office market gains momentum.

This list highlights the metro’s top 10 private, REIT and institutional investor office owners, based on square footage, according to Yardi Matrix data. The total number includes only projects larger than 50,000 square feet, that were completed or were under construction as of January 2018.

10. The RMR Group

Renaissance Tower in Sacramento, Calif.

The Newton, Mass.-based REIT owns seven Sacramento properties totaling nearly 1 million square feet. Nationwide, The RMR Group ranks as the second largest of the 10 companies included in our list, with a portfolio of 247 office properties (36.5 million square feet). In 2016, the REIT paid $80 million to acquire the LEED-certified Renaissance Tower at 801 K St. from USAA Real Estate Co. At the end of the same year, the company also purchased an 83,000-square-foot office building at 11020 Sun Center Drive in Rancho Cordova from an individual investor for $10 million.

9. Ethan Conrad Properties

Ethan Conrad Properties owns and manages 13 office properties, all in Sacramento, totaling nearly 1.1 million square feet. Last year, the local company acquired a 170,000-square-foot campus at 1111 Howe Ave. from Karlin Real Estate for $10 million. The previous year, in separate deals, Ethan Conrad purchased One Capital Center, a 124,000-square-foot office mid-rise situated at 3100 Zinfandel Drive in Rancho Cordova, Calif., and California Center, a 119,000-square-foot building at 8880 Cal Center Drive in Sacramento. These assets rank as the company’s largest properties.

8. AKT

Cannery Business Park in Sacramento, Calif.

With only six properties in the metro, AKT owns 1.2 million square feet of office space. The company acquired its largest asset—Cannery Business Park—in 2006 from an individual investor. The six-building complex was completed in phases for industrial use in 1975, 1994 and 2008 and later converted to office. In 2004, AKT purchased Esquire Tower, a 248,000-square-foot high-rise, from Lankford & Associates for $70 million. The same year, the Sacramento-based firm bought the nearby Meridian Plaza, a 229,000-square-foot asset, from The Allen Group for $75 million.

7. Basin Street Properties

The Nevada-based firm owns 10 office properties in Sacramento totaling 1.2 million square feet, and DivcoWest is the manager for half of them. Basin expanded its local portfolio in January with the acquisition of the five-building, 546,479-square-foot Prospect Green campus from DivcoWest for $58 million. In 2016, in a deal with USAA Real Estate Co., the firm purchased the LEED-certified, two-building Harvard Corporate Center for $19.2 million. Basin plans to expand the 305,000-square-foot campus with two new phases totaling 253,750 square feet.

6. CalPERS

Lincoln Plaza East & West in Sacramento, Calif.

CalPERS owns three urban office properties in Sacramento totaling about 1.25 million square feet. The 528,000-square-foot Lincoln Plaza East & West, located at 400 Q St., ranks as CalPERS’ largest completed property in the metro. Built in 2005, the two-building mid-rise development includes 25,000 square feet of retail space and 1,000 parking spaces. Situated nearby, at 400 P St., is CalPERS’ Lincoln Plaza North, a 492,900-square-foot property completed in 1986 and renovated in 2010 and 2014. The local company has plans to build 301 Capitol Mall, a downtown mixed-use high-rise.

5. Pappas Investments

After expanding its Sacramento portfolio last year, with the acquisition of two office assets from KBS Realty Advisors, Pappas Investments currently has eight properties in the metro, totaling nearly 1.4 million square feet. The two properties the company purchased in 2017 are part of the Gateway Corporate Center and are located at 160 and 180 Promenade Circle. Pappas Investments also has plans to add three new buildings: Eureka Gateway Medical Office Building in Roseville, the fourth phase of Laguna Springs Corporate Center, as well as Big Horn Professional Center in Elk Grove.

4. The Buzz Oates Group of Cos.

Plaza 555 in Sacramento, Calif.

Coming in at No. 4 is the local Buzz Oates Group of Cos., which has 13 office properties in the metro, a little more than 1.5 million square feet. In 2014, the firm acquired Plaza 555, a 16-story building in downtown Sacramento from Teichert Construction for $63.1 million. Completed in 1970, the 376,000-square-foot asset was renovated in 2002 and 2004. Currently, the company awaits city permits for the 110,000-square-foot Riverpoint Corporate Center, located at 700 Riverpoint Drive in West Sacramento.

3. Kaiser Permanente

Although only the third largest Sacramento office company in terms of office square footage, the Oakland-based firm has about 190 office properties nationwide (24 million square feet). The company owns and operates 13 Sacramento office properties totaling a little less than 1.6 million square feet. Kaiser Permanente expanded its local portfolio in 2016 with the acquisition of 2155 Iron Point Road in Folsom, a 125,000-square-foot office building, from Stoneridge Realty & Investment for $21.5 million, which it converted to medical use. Currently, the firm awaits city approvals and final plans for Cibry Medical Office Building, a 210,000-square-foot property at 1001 Riverside Ave. in Roseville. The five-story building is set to include 16,000 square feet of retail space.

2. Hines

Park Tower in Sacramento, Calif.

The largest company on this list, Hines has a national portfolio of more than 160 office properties totaling 47.8 million square feet. In Sacramento, the San Francisco-based firm has nine buildings and a total of nearly 1.9 million square feet. Last year, Hines paid $120.5 million to purchase Park Tower, a 447,000-square-foot Sacramento office building at 980 Ninth St. from CIM Group. The previous year, the company expanded its Sacramento footprint with the acquisition of Prospect Park Center, a 163,000-square-foot office mid-rise in Rancho Cordova, and the 60,000-square-foot building of Crown Corporate Center, located at 2890 Gateway Oaks Drive, for $30.3 million.

1. California Department of General Services

With 15 properties totaling 8.1 million square feet, the government agency has four times more office square footage than Hines. The California Department of General Services’ largest property is the 1.8 million-square-foot Franchise Tax Board Office Complex, completed in phases in 1984, 2002 and 2005. The seven-building campus is LEED Gold and includes 57,000 square feet of industrial space, solar panels and more than 3,500 parking spaces. The agency also plans to develop O Street Building, a 360,000-square-foot high-rise.

Images courtesy of Yardi Matrix

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Robby Perrino

Robby Perrino is NKF’s new senior managing director and market leader for the firm’s Valuation & Advisory Group practice in Northern California. In his new role, Perrino will be responsible for growing the company’s current client relationships, driving new business development and recruiting top valuation and consulting professionals. He will be leading an expanding team currently consisting of nine professionals in four Northern California offices including San Francisco, San Mateo, Santa Clara and Sacramento.

With almost 30 years of experience in valuing and advising on institutional and corporate real estate throughout the U.S., Perrino has served as a fiduciary advisor providing strategic advice to corporations, institutional clients, developers and investors. Perrino previously served in a variety of management roles at Cushman & Wakefield’s Valuation & Advisory Services Group. Most recently, he was an executive managing director with regional responsibilities, focusing on everyday operations for the company’s NorCal offices (San Francisco, San Jose, Walnut Creek and Sacramento).

This was in addition to prior responsibility for leadership of the Pacific Northwest offices (Portland, Denver, Seattle and Salt Lake City) and Pacific Southwest offices (Phoenix and Las Vegas). Perrino also served as national director of corporate solutions, focusing on valuation and advisory opportunities with corporations and advisory firms.

Additionally, he was responsible for developing and managing institutional relationships in the Americas with public and private plan sponsors, investment managers, REITs and life insurance companies. Finally, Perrino also served as the firm’s national relationship manager and single point of contact for the California Public Employees’ Retirement System, Deutsche Asset Management/RREEF and Stockbridge Real Estate Funds.

Just last week, Newmark Knight Frank hired a new market leader for its Phoenix office: Michael Garlick. He will take on the role of executive managing director, replacing Pete Bolton in overseeing office and brokerage operations, as well as growth initiatives in the Phoenix metropolitan area.

Image courtesy of NKF

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Office-using employment in Sacramento, click to enlarge

Sacramento’s office market is picking up, fueled by a recovering office-using employment sector, growing demographics and increasing leasing activity. Demand is bolstered primarily by public initiatives—such as the Mayor’s Office for Innovation and Entrepreneurship’s multimillion-dollar programs—that aim to transform the metro into a startup- and entrepreneur-friendly market.

Some 15,500 jobs were added year-over-year through October 2017. Office-using jobs account for 20.5 percent of Sacramento’s total employment pool of more than 970,000 jobs. Job growth has been moderate in the metro; gains in the leisure and hospitality sector (5,900 jobs added year-over-year through October 2017) and education and health services (4,500) have been offset by losses in other sectors, such as manufacturing and construction.

A shortage in development in recent years pushed down the vacancy rate across the metro to 13.9 percent. Vacancies are highest in suburban submarkets, which account for 72 percent of the metro’s office inventory. Meanwhile, vacancy rates in the submarkets of Elk Grove (5.0 percent) and Roseville–Rocklin (9.9 percent) are well below the metro average.

Overconstruction in the late 2000s led to a significant slowdown in development in recent years. Only 110,000 square feet of office space is scheduled for completion by the end of 2017, and less than 170,000 square feet is under construction. However, office development is expected to pick up, as companies continue to look for cheaper alternatives to Los Angeles and San Francisco.

Read the full Yardi Matrix report.

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U.S. Bank Tower in Sacramento

A fund sponsored by Shorenstein Properties has acquired the U.S. Bank Tower, a 25-story Class A office high-rise in Sacramento, Calif., from a joint venture of David S. Taylor Interests and Britannia Pacific Properties.

JLL’s capital markets team represented the seller in the transaction, who completed the development of the building in 2008. 

“621 Capitol Mall is one of highest caliber assets in Sacramento and the West Coast,” Rob Cole, JLL’s executive vice president in Sacramento, said in a prepared release. “David Taylor and his team have done a phenomenal job creating and maintaining a world-class asset.”

Joining Cole on the JLL team were Managing Directors Rob Hielscher and Michel Seifer, and Vice President Alan Stevenson. 

Strong location

Located at 621 Capitol Mall, the 366,000-square-foot office tower is situated just south of the Golden One Center and is just three blocks west of the state capitol. According to JLL, the prime location of the building, combined with the high quality of the asset resulted in great interest in the property.

The building’s tenant roster includes law firms, government agencies and tech companies.

“David S. Taylor Interests has been a great long-term partner and developed a best-in-class property,” Hector Caldera, Britannia Pacific Properties’ managing director, said. “Sacramento has been a great investment market for the group and we look forward to recycling the proceeds into other local developments over the next few years.”

The property also boasts more than 23,000 square feet of fully occupied retail and restaurant space and offers a large parking structure that services both the property and the Golden One Center. 

In June, Shorenstein acquired a recently renovated 54-unit apartment building in Manhattan’s East Village neighborhood for $57 million. That same month, the company signed luxury retailer Vince Camuto-owned VCS Group LLC to a 42,748-square-foot, 10-year lease at 1407 Broadway, its Midtown Manhattan office and retail high-rise.

According to Colliers’ latest Sacramento Office Report, overall average asking rates rose to $1.90 for all classes, an increase of 4.4 percent year-over-year, while average asking rates for downtown Class A assets reached $2.91 per square foot, just 5.8 percent shy of the pre-recession peak of $3.08 in Q4 2007.

Image courtesy of JLL

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Erickson Construction’s former headquarters, at 250 N. Beck Ave.

Marcus & Millichap has arranged the sale and leaseback of a two-property industrial portfolio, with the assets located in Roseville, Calif. and Chandler, Ariz. STORE Capital Corp. acquired the properties from Erickson Construction for $21 million.

The properties are a 56,000-square-foot lumber yard and industrial building at 8350 Industrial Ave. in Roseville and a 79,000-square-foot manufacturing facility, which served as Erickson’s corporate headquarters, at 250 N. Beck Ave. in Chandler.

Both properties feature railroad spurs and are in areas with quick access to major thoroughfares. The Chandler facility is about 11 miles from Phoenix Sky Harbor International Airport and less than a mile of Interstate 10 and Loop 202. The property features office, production and manufacturing, and warehouse space, with the possibility to expand. The Roseville asset is near U.S. Route 65 and Interstate 80 and features an active Union Pacific Rail segment. It is 12 miles from Sacramento McClellan Airport.

“Throughout the marketing process, STORE Capital demonstrated that it was qualified and motivated to acquire both sites and work with Erickson to ensure a quick and seamless closing,” said Ryan Sarbinoff, vice president & regional manager at Marcus & Millichap’s Phoenix office, in a prepared statement.

Earlier last year, STORE Capital was involved in a similar transaction, the acquisition of a rehabilitation facility in Austin.

Image courtesy of Marcus & Millichap

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400 Capitol Mall in Sacramento, Calif.

Jackson Lewis P.C. has expanded its footprint with more than 16,000 square feet of space at 400 Capitol Mall in Sacramento, Calif. NKF Senior Managing Director Dan Chamberlain represented Jackson Lewis P.C. in the expansion.

Sacramento’s 400 Capitol Mall is a 507,264-square-foot office tower designed by award-winning Hellmuth, Obatta & Kassabaum and was completed in 1992. The building, which is owned by Starwood Capital Group, houses premier law, accounting and other professional service firms.

“Jackson Lewis had relocated to 12,748 square feet of space at 400 Capitol Mall in 2015. We are excited to announce their recent expansion and growth representing a 30 percent increase for the firm,” said Chamberlain in prepared remarks. “It further demonstrates the demand for quality space and the increased presence of professional service firms in Sacramento.”

In December, NKF negotiated the sale of Redondo Beach Business Court, a 124,400-square-foot office building in Redondo Beach, Calif., to Miramar Capital for $36.7 million.

Image courtesy of NKF

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Sacramento International Airport has opened a solar facility that is anticipated to provide more than 30 percent of the airport’s electricity. The project is the largest on-airport solar facility in California.

The 7.9-megawatt solar farm is located on 35 acres on Aviation Drive. It consists of more than 23,000 LG solar panels, mounted on NEXTracker racking, which tracks the sun’s path, maximizing efficiency and energy production. The electricity generated by the facility is sufficient to power 1,600 homes a year.

Bountiful benefits

The capital investment was provided by NRG Energy, who owns and operates the facility, while Borrego Solar Systems handled the installation process. The airport had no costs for construction. NRG signed a 25-year PPA with the airport, in a deal that is expected to cut airport energy costs by $850,000 per year.

“Over 10 million travelers (that) fly in and out of Sacramento Airport each year will now be able to see the value of solar at work and witness the airport’s commitment to clean, reliable, renewable energy,” NRG Renewables Senior Director of Business Development Kevin Prince said in prepared remarks. “The airport and county had the vision to embrace solar technology. With this system now operational, we can offset one-third of the airport’s annual load and, on certain days like today, offset the entire electricity needs of the airport.”

“By adopting solar, Sacramento Airport has not only made a prudent financial decision, but has also taken action to reduce its environmental impact. The solar energy produced over the life of the system will offset nearly 289,000 metric tons of harmful carbon dioxide equivalents—this is the same amount that would be offset by taking nearly 62,000 cars off the road,” added Jackie Pitera, a senior member of Borrego Solar’s project development team.

California is one of the leading states investing in renewable energy like solar. Earlier this month, two firms announced their planned elviver of the first-ever solar project to power oilfield operations in the San Joaquin Valley.

Image courtesy of Borrego Solar

The post Sacramento Nabs Largest On-Airport Solar Facility in CA appeared first on Commercial Property Executive.

Laguna Village in Sacramento, Calif.

Hall Equities Group has sold Laguna Village, a 120,893-square-foot community retail center in the North Laguna area of Sacramento, Calif. for $32.5 million.

Newmark Cornish & Carey (NCC) Senior Managing Directors Mike Zylstra and Forrest Gherlone represented the seller, while NCC Executive Vice President Tom Fehr, Senior Managing Director Anthony Pappageorge and Director Zachary LeBeouf represented the buyer, Laguna Village Investors LLC, a private investor from the Sacramento area.

Anchored by a 12-screen Regal Cinemas movie theater and a 24 Hour Fitness center, the property was 98 percent occupied at the time of the sale. Regal Cinemas is currently undergoing a $3 million upgrade to include stadium and lounge chair seating with upgraded food and beverage options. Other tenants include Subway, Papa Murphy’s and My Gym. 

“Laguna Village is an excellent asset with a majority of its tenancy comprised of destination and entertainment retail including restaurants, fitness and a movie theatre which are more resilient to the on-line retail disruption. This tenant-mix, along with the center’s quality and stabilized occupancy, made it an attractive investment,” said Mike Zylstra, senior managing director at NCC, in prepared remarks.

Located at the intersection of 8755, 8785, 8759, 8765, and 8775 Center Parkway and Bruceville Road, the property— built in several phases between 1996 and 2003—spreads across a 15-acre site. Highway 99 is just one mile away.

Image courtesy of Newmark Cornish & Carey

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Madison Marketplace, Fair Oaks, Calif.

NewMark Merrill Cos. acquired Madison Marketplace, a 258,981-square-foot shopping center in Fair Oaks, Calif., previously owned by TA Realty. The company obtained a 10-year fixed-rate loan provided by John Hancock Insurance for the purchase. Pacific Southwest Realty Services arranged the financing.

“Madison Marketplace provided us an opportunity to acquire the dominant grocery-anchored center in the area with strong demographics, great co-tenants and an amazing location. Fair Oaks is rapidly growing, has a great employment base, retail and housing options,” said Sandy Sigal, president & CEO of NewMark Merrill, in a prepared statement.

Strong tenant mix

The shopping center, which adds to a portfolio counting more than 78 retail properties, is located at the corner of Madison Ave. and Hazel Ave. and is anchored by Raley’s Supermarkets. It is 93 percent leased to several national and local retailers and restaurants including TJ Maxx, Petco Pet Supplies, Dollar Tree, Chipotle and Starbucks.

NewMark Merrill was represented in-house by Sigal, CFO Sandra Kist. Senior Vice President Jim Patton, Vice Presidents Brad Pearl and Susan Rorison. Palmer Capital Inc.’s President & CEO Bill Palmer and Roman Benvenuti, one of the investment partners, closed the deal on behalf of the owner. Kostas Kavayiotidis, principal with Pacific Southwest Realty Services, arranged the loan.

Image courtesy of NewMark Merrill Cos.

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Bank of the West Tower in Sacramento, Calif.

Buchalter signed a 12,000-square-foot lease at Bank of the West Tower in downtown Sacramento, Calif. The law firm recently entered the Sacramento market and has already built a team of 13 lawyers.

Located at 500 Capitol Mall, the 445,000-square-foot Class A office building sits less than a mile from Interstate 5. The 26-story asset offers easy access to multiple bus stations, restaurants and hotels, including Il Fornaio Sacramento, Capitol Park Hotel and Hotel Sequoia. Completed in 2009, the property also features 800 parking spaces and is LEED Platinum. Tenants at Bank of the West Tower include the California Housing Finance Agency, KPMG and Regus.

 Greg Levi, managing director at JLL, represented the landlord, Tsakopoulos Investments. Scott Bennett, senior vice president with Colliers International’s Sacramento office, negotiated the lease on behalf of the tenant. Last month, Colliers represented Weiss Realty in welcoming two new tenants to its 162,000-square-foot Highpoint Corporate Center in Fairfield, N.J.

“Buchalter is well-established in the California market and I am happy to help them make Bank of the West Tower their new home for years to come,” George Tsakopoulos said in a prepared statement.

Image courtesy of Yardi Matrix

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Walmart Central Shopping Center, Folsom, Calif.

Nazareth Enterprises Inc. acquired the Walmart Central Shopping Center in Folsom, Calif. for $39.6 million. This brings the company’s acquisitions volume in the third quarter over the $100 million mark, according to Chain Store Age. Marcus & Millichap represented the seller of the 139,277-square-foot asset, a private investor, while Landmark Real Estate Services worked on behalf of the buyer.

A Super Walmart shadow-anchors the shopping center located at 1002-1016 Riley St. The eight-building asset was built in 1992 and is anchored by a 24-Hour Fitness, SuperSport Gym, 99 Cents Only Store and Western Dental. The property is three miles north of State Route 50 and less than two miles west of Mercy Hospital of Folsom. Folsom has a population of more than 77,000.

Tyler Stevens, an associate director of Marcus & Millichap’s National Multi Housing Group in Denver, represented the seller.

Folsom retail market

Blue Oaks Marketplace, a 100,000-square-foot Class A shopping center in Rocklin, Calif., located 13 miles north, also changed hands recently for $19.2 million. Retail vacancy in Folstom stood at 5.48 percent in the first quarter, with an average asking rent of $1.81 and 116,636 square feet under construction, according to a Tri Commercial report. The vacancy rate in Folsom is lower than the Sacramento retail market average of 7.26 percent.

Image via Google Earth

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The Sacramento Republic FC launched the first phase of its $245 million soccer stadium at the Railyards, the largest urban infill project in the country. This is well ahead of the Major League Soccer’s decision, which is not due until December 2017. The MLS-hopefuls have submitted a bid to be one of the next four MLS expansion teams, alongside 11 other cities. Owned by Downtown Railyard Ventures LLC and developed by LDK Ventures LLC, the Railyards is transforming 244 acres and will double the size of downtown Sacramento, bringing housing, retail, dining, business, entertainment and other services.

Located between 8th and 10th Streets and Railyards Boulevard and North B Street, the privately-financed stadium will rise on a 14.9-acre site and will have a 20,000-seat capacity with the potential to expand to 22,000. The 406,000-square-foot facility has easy access to Interstate 5, with a 194,000-vehicle daily count. Construction is scheduled to begin in spring of 2018 as part of phase two, following site preparation and infrastructure. Designed by HNTB, the stadium is slated for completion in February 2020, in time for the opening of the 2020 MLS season. Another MLS stadium is underway in St. Paul, Minn., for the Minnesota United FC soccer team.

$5.3 billion redevelopment

The City Council approved the original Sacramento Railyards project in December 2007. Downtown Railyard Ventures LLC purchased the property in September 2015, which marked the beginning of the $5.3 billion public-private redevelopment plan. The site once served as the western terminus of the 1860s Transcontinental Railroad.

Current plans call for:

• a Major League Soccer stadium;
• an 18-acre Kaiser Permanente hospital campus;
• five million square feet of business space;
• half a million square feet of retail space;
• 100,000 square feet of inclusive housing;
• a 175,000-square-foot museum;
• a 1,000-key hotel;
• 30-acres of green open space and parks; and
• a transportation hub.

Designed by BCV Architects, the Central Shops District will include eateries, entertainment, art galleries and retail shops around a central plaza and is slated for completion in 2018. Housing of up to 10,000 units will cater to all income levels, bringing more than 23,000 new residents, when there are about 30,000 residents currently living in downtown Sacramento. The Kaiser Permanente facility is not expected until 2021/2022.

Images courtesy of HNTB and The Railyards

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Sacramento rent evolution, click to enlarge

Although multifamily rents across the country have been decelerating in recent months, Sacramento continues to outperform. While no longer in the double digits, its rent growth continues to lead major metros, and was up 9.0 percent year-over-year as of April. Investors have taken notice, with transactions ballooning during the second half of the cycle, leading to consecutive annual sales volumes topping the $1 billion mark.

While employment growth continued at above-trend levels, there is still concern that high-paying manufacturing and information jobs are lagging in Sacramento. Education and health services, and leisure and hospitality, drove gains in 2016, while a decline in construction jobs following the completion of Golden 1 Center hurt overall employment. However, after Kaiser Permanente acquired an 18-acre site in the city’s Railyards with the intent to build a new medical center, the conversation moved toward the potential for additional development in the area.

The impressive rent gains come from the combination of a strong demand and a dearth of deliveries, resulting in high occupancy rates. With 1,500 units underway, short-term supply growth is unlikely, but 10,000 units in the planning stages demonstrate a significant increase in developer interest. With affordability not yet a concern despite rapid growth, we expect rent hikes to continue at roughly 9.5 percent in 2017.

Read the full Yardi Matrix report.

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Blue Oaks Marketplace, Rocklin, Calif.

Soma Capital Partners, in a joint venture with Toronto-based Timbercreek Asset Management, acquired Blue Oaks Marketplace, a 100,000-square-foot Class A shopping center located in Rocklin, Calif., for $19.2 million. The seller of the property is Diamond Creek Properties, a developer based in Sacramento.

Located at 6815-6851 Lonetree Blvd. at the northeast corner of Blue Oaks and Lonetree boulevards, Blue Oaks Marketplace is in a prominent Sacramento retail node with surrounding median incomes of more than $120,000. The single-story asset was built in 2004 for an estimated $32 million to accommodate a large grocery business.

At the time of the transaction, the property was 81 percent leased. The new owner plans to develop and reposition two hard-corner pad sites and implement general capital improvements to attract a business in the food service space.

Second CA Acquisition This Year

The acquisition is the second purchase for SCP this year. In February, the company acquired a fee-simple ownership on Automation Parkway, a 250,000-square-foot office building located in San Jose and signed a lease for 82,000 square feet with Quantenna Communications.

“This will be a very active year for us as we estimate opening Quantenna in October 2017 and start renovation work at Blue Oaks, which is very well positioned in Rocklin to attract notable pad and grocer tenants,” said David Smith, partner with SCP, in a prepared statement.

“We have been very disciplined over the past two years evaluating a tremendous number of opportunities on the West Coast. It’s a competitive landscape with value-add real estate funds looking to put capital out the door and we are very pleased with these two new acquisitions in the Bay Area, which both offer compelling risk-adjusted returns,” added SCP Partner Jordan Caspari.

Image courtesy of Gallelli Real Estate

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Park Tower, Sacramento

Hines recently snapped up Park Tower, a trophy office property in Sacramento. The company purchased the asset from CIM Group in a transaction valued at, according to the Sacramento Business Journal, $120.5 million.

The 25-story Park Tower, as Cameron Falconer, senior managing director with Hines, said in a prepared statement, is “a best-in-class office asset in a very desirable location.”  The transaction included not just the Kaplan McLaughlin Diaz-designed downtown office building at 980 9th St., which opened in 1991, but the attached 800-space parking structure and the 350-space parking facility at 1010 8th St., as well.

Property History and Tenants

The office building and accompanying parking facilities last changed hands in 2009 when CIM purchased it from TIAA-CREF for $97 million, as noted in a property appraisal report by Integra Realty Resources. In 2005, it traded for $159 million, when TIAA-CREF acquired it from Shorenstein.

Today, Park Tower is home to the likes of the California Department of Managed Health Care, Deloitte, flexible workspace solutions provider Regus and the Sacramento County Employees’ Retirement System, and it also features Starbuck’s as a ground-level retail tenant.

Park Tower marks Hines’ second acquisition announcement this month. In a joint venture with European real estate investment platform Henderson Park, the international real estate firm made its entrée into the Greek hospitality market with the purchase of the 315-room Athens Ledra Hotel in Athens for €33 million, or approximately $36.9 million. And June isn’t over just yet.

Image courtesy of Hines

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Rendering of Dignity Health medical office building, Citrus Heights, Calif.

Dignity Health Medical Foundation broke ground on a 68,000-square-foot medical office building in Citrus Heights, Calif. Panattoni Development Co. is developing the $30 million project on a former city hall site. The opening ceremony of the three-story property is anticipated for spring 2019.

Services

Located at 7115 Greenback Lane, the three-story property has easy access to Interstate 80 and retail amenities at San Juan Plaza Shopping Center. The team of 50 physicians will provide primary and specialty care services including allergy, behavioral health, dermatology, endocrinology, family medicine, geriatrics, internal medicine, ophthalmology, optometry, pain management, pediatrics and rheumatology. Dignity Health operates six acute care hospitals in the Greater Sacramento Area.

Panattoni has developed more than 266 million square feet of industrial, office and build-to-suit projects in the U.S., Canada and Europe.

Image courtesy of Dignity Health Medical Foundation

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Sacramento rent evolution, click to enlarge

As the only remaining metro with year-over-year rent appreciation in double figures, Sacramento seems unfazed by the national downward trend. Completions have been added at a slow pace throughout the cycle, and with only 1,600 units under construction, the supply-constrained market is expected to see occupancy continue to dwindle.

As the capital of California, Sacramento relies on the public sector, with roughly a quarter of the active population employed by the state and local governments. Job growth has been consistent over the past few years. The city’s core is spawning new development projects with entertainment options, while companies are in need of updated office and retail space. Although little progress has been made on the Downtown Riverfront Streetcar project, the $3 billion transit project would galvanize the city’s downtown, especially as new major mixed-use developments are coming to the Capitol Mall, near the newly completed Golden 1 Center sports arena.

Going forward, Sacramento’s multifamily market is expected to remain steady. Despite the recent growth, the metro’s rents are affordable relative to nearby San Francisco and are incentivizing the creation of new households. Investors have also taken note of the improvement, with more than $2 billion in multifamily assets trading since 2015.

Read the full Yardi Matrix report.

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Zinfandel I & II, Rancho Cordova, Calif.

Sacramento—Capri EGM caps off a busy summer of acquisitions with the purchase of a two-building office property just outside of Sacramento in Rancho Cordova, Calif. The investment company bought the 175,000-square-foot mission critical corporate office campus, leased in its entirety to Blue Shield of California, from Strada Investment Group. According to Sacramento County records, the asset commanded just over $39.7 million.

In a prepared statement, Shelby Pruett, co-chairman & CEO of Capri EGM, said, “The acquisition is consistent with our established strategy, providing durable cash flows, escalating annual rents, and attractive risk adjusted returns over time and across a variety of market conditions and economic cycles.”

This latest addition to Capri EGM’s portfolio is comprised of Zinfandel I & II, which carry the respective addresses of 3300 Zinfandel Drive and 10834 International Drive. Developed in 1997 and 1998, respectively, Zinfandel I & II last traded in 2014, when Strada shelled out $12.2 million on what was then two vacant Class B buildings. The low-rise structures have come a long way in the last two years. In 2014, Strada commenced a massive renovation of the Zinfandel complex and quickly leased it to Blue Shield, which signed a 10-year agreement for the property in 2015. For Capri EGM—which focuses on corporate sale-leaseback and build-to-suit financing, and the acquisition of institutional quality single-tenant properties—the office asset fits its criteria like a glove. The company has mastered the art of finding what it wants—and getting it.

“While the market is competitive, it is also highly fragmented in terms of ownership, information, and transaction origination, creating significant opportunities for investment,” Pruett told Commercial Property Executive. “Capri EGM is relationship-driven and maintains a broad network from which it is able to source acquisition opportunities not necessarily seen by its peers. A local ‘ground-up’ sourcing and ‘top-down’ approach through industry contacts combined with a multi-sector platform enhances our market intelligence and proprietary opportunities.”

The proof is in the purchases. Recently, Capri EGM acquired a build-to-suit distribution facility in the Pittsburgh area for the North American subsidiary of global technology company Philips, and it snapped up a suburban Denver build-to-suit office property for Alliance Data. Those transactions only marked Capri EGM’s summer activities; the investment concern has been busy buying all year.

Image courtesy of Yardi Matrix

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Sacramento rent evolution, click to enlarge

Spurred by an improving job market and extremely low levels of new supply, Sacramento rents are growing at the fastest rate in the nation. Low vacancy and a weak completion rate will keep pushing rents higher. However, the job market is less robust than in other major California metros, signaling that renters may have difficulty keeping up with the cost of living.

The capital of California continues to rely heavily on its government job sector, which is rebounding, while growth is also strong in construction, health care and education. The Golden 1 Center multi-purpose arena is slated to open this fall, and city officials hope that it will help to drive growth in the city’s core, along with the Downtown Commons mixed-use development. Opportunities also await just north of Sacramento’s central business district. The Railyards master-planned project is one of the largest undeveloped urban sites in the U.S.

Going forward, supply growth is expected to pick up, with roughly 9,000 units in the planning and permitting stages. Until inventory expansion catches up to demand, investors will remain active. Nearly $1.6 billion worth of multifamily assets have traded during the last 18 months and prices have rebounded to pre-recession levels. With occupancies high, we expect robust rent growth to continue, but affordability issues will moderate gains to 8.8 percent for the full year.

Read the full Yardi Matrix report.

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