S A CR A M E N T O CO M M E R CI A L R E A L E S TAT E , DE V E L O P M E N T, A N D CU LT U R E
What your workers want and why it matters!
MADE BY THE TURTON TEAM
Unsure if you should buy or rent? Ask a flowchart!
The value of MidCentury Modern architecture!
TURTON AU T UM N 2017
AVAILABLE MARCH 2018 916.573.3300 - TURTONCOM.COM TURTON
Sac rament o is a w ork of a rt. How do YOU contri b ute to the pie c e ?
ANSWER: ESSENCE OF TURTON MARKETING MATERIALS
02: THIS PAGE 03: A WORD FROM KEN 06: NATIONAL vs LOCAL 09: BUILDING UP SACRAMENTO 10: WHAT WORKERS WANT 16: OWN vs LEASE 18: THE URBAN CORE’S DISTRICTS 22: WHAT A GREAT DEAL LOOKS LIKE 26: AN INTERVIEW WITH DANGBERG 28: THE NEW OFFICE SPACE 31: “MCM” ARCHITECTURE’S VALUE 32: THE PARKING RENAISSANCE 36: ABOUT TURTON COMMERCIAL
PRICE PER SMALL BLACK COFFEE FROM THE LOCAL FAVORITES! Old Soul
THE RIVER / GREAT OUTDOORS
-SNIFF SCRATCH-N HERE!
Real estate Scratch-n-sniff! Can you guess the real estate themed scent here?
WRITTEN BY TURTON TEAM
A WORD FROM
24 09 L S T RE E T, S T E 20 0 S ACR A M E N TO, C A 95 816
TURTONCOM.COM 916 . 5 73 . 3 3 0 0
WOW. The acronym for Sacramento’s recent mural festival “Wide Open Walls.” But also an appropriate description for the ongoing development occurring in the urban core. If you have had the opportunity to witness the creation of any one of these unique murals, then you have watched it evolve from an initial stage of character outlines, boundaries, renderings and color schemes resembling ancient hieroglyphics to a magnificent, detailed work of art for thousands to experience and enjoy. Metaphorically speaking, this also perfectly describes Sacramento’s urban core evolution. Today we see an increasingly clear transformation of Downtown, Old Sacramento in the Riverfront District, R Street, Midtown, and East Sacramento occurring at meteoric speed. In 2012, when Kevin Johnson decreed a goal of 10,000 residences in the urban core, many felt it to be a pipe dream. Today 2,000 are already built and another 2,000 will be completed in the next 2 years. There are entitlements and zoning in place for more than the balance already. The pipe dream is looking more like a pipeline every day. With the urban core architectural mosaic becoming clearer with each passing month, it may be hard for many to remember what the picture looked like back when it was simply hieroglyphic scribble. Not me. I remember when the MARRS building was a windowless State storage warehouse. I remember when the Maydestone Apartment building at 15th and J Street was a vacant, boarded up, fire damaged shell. I remember a vacant, broken condo project with a $2,000,000 power issue at 10th and K. I remember a vacant piece of land at 16th and P Street where today sits Sacramento’s finest multi-family residential project; 16 Powerhouse. I remember a windowless operation center at 12th and I where Mike’s Bikes now thrives. I remember a nondescript steel shaded office building at 24th and J Street now home to Rick’s Dessert Diner. I remember Midtown before Low Brau at 20th and K, Pushkin’s and Fieldwork at 18th and Capitol, and Temple at 22nd and K Street. I remember a funeral home at 20th and J Street where Sacramento’s first true high-tech software company, KlickNation, made their home before being purchased by EA. That was before we brokered and helped transform all these properties. And dozens and dozens more. There are no easy projects in the urban core. Urban property renovations are very rewarding and provide solid financial investments, but they are also complicated and involve many parties and moving parts. The mural we see taking shape today is exciting, inspiring, attractive and fun - especially if you remember when it was just a vision, scribble, and a color scheme. WOW.
KEN TURTON PRESIDENT
AARON MARCHAND VICE PRESIDENT
916.573.3305 A ARONMARCHAND@TURTONCOM.COM
SCOTT KINGSTON VICE PRESIDENT
916.573.3309 SCOT TKINGSTON@TURTONCOM.COM
VP - OPERATIONS & MARKETING 916.573.3301 BROOKEBUTLER@TURTONCOM.COM
SENIOR DIRECTOR 916.573.3302 JONL ANG@TURTONCOM.COM
JOHN MUDGETT SENIOR DIRECTOR
916.573.3306 JOHNMUDGET T@TURTONCOM.COM
JOSIE JERDE SENIOR DIRECTOR
916.849.1514 JOSIE JERDE@TURTONCOM.COM
TYLER JERDE SENIOR DIRECTOR
916.990.4949 T YLERJERDE@TURTONCOM.COM
PATRICK STELMACH DIRECTOR KEN TURTON - PRESIDENT
CREATIVE DIRECTOR Hong Kong muralist Caratoes works on her massive piece at 2131 Capitol Avenue.
916.573.3304 COREYL AU@TURTONCOM.COM
The Heywood building - 1003 2nd St - Old Sacramento
what it can be
BKWLD & WU - 120 K St - Old Sacramento
Creatively Reimagined Downtownâ€™s next frontier. Lease a space that embodies Sacramentoâ€™s past and celebrates its future. All of the amenities; a fraction of the cost. Walking distance to Golden 1 Center, DOCO, Capitol Mall, Railyards & Raley Field.
Does a l andl ord’s c hoi ce of tena nt ha ve a n i mp a ct on the cul t u ral n arrat iv e o f an area?
N AT I O N A L C R E DIT ALLURE VERSUS
LOCAL CHARM AARON MARCHAND - VICE PRESIDENT
Our urban core is in the midst of a transformation we have not seen before. Currently, we have the most technologically and architecturally advanced sports arena in the world - the Golden 1 Center. Within the next 6 months we will have a newly developed Kimpton branded hotel with new luxury condos. There are more mixed use development projects underway than ever before. Within the planned and under-construction mixed-use development projects, the most visible and talked about components of a project often is who will occupy the ground floor retail units. Sacramento owners/developers have a very challenging task in leasing urban retail. The difficulty is a bar set extremely high in the restaurant and bar scene where local operators have embraced Sacramento’s regional “farm to fork” movement. This movement has been so successful that the urban core is now recognized nationally for its locally-owned, best-in-class restaurants and bars. The present challenge for property owners is selecting the ideal retail tenants for their project. The success of our retail urban core is predicated on the talent of local operators. This, in turn, has attracted the regional and national credit that tenants owners, developers, and lenders find very attractive when financing a project. Within the urban core, Sacramento loves its local operators. And historically, the local operator has outperformed the regional or national tenant from an annual sales per square foot perspective. Yet, in almost every scenario, the local operator lacks the needed financial strength required to get a project financed. The aforementioned regional or national tenant could very well have the required financial strength to satisfy a project’s financing (to ultimately get built), yet lacks the “cool” local experience regional patrons have come to love. If the project is going to secure financing, the lender will view the project comprehensively, including the credit strength of the retail guarantors. The owner/developer has a tough challenge in finding the mix of the desired “cool” local tenants who can connect to the community but also has the financing strength necessary to satisfy lender underwriting. Success can come from a balance of careful-
ly curated local and regional operators who can create tenant synergy to allow both to flourish together. This targeted balance offers the project a viable local feel while allowing the owner/developer to have a stronger financial tenant base. This process takes time and a meaningful leasing strategy which requires the owner/developer to not only have patience, but a forward thinking mentality regarding the tenant’s effect on the tone for the project. Additionally, they must not favor the tenants above the community in which the project is located. In the urban grid, we have several examples of a carefully curated local/credit tenant mix which simultaneously connect to the community. The MARRS building, 16 Powerhouse, Legado De Ravel, and The Elliot Building are all great current examples of a healthy and thriving tenant mix which allows patrons a variety of uses and options to choose from. Coming soon is the Ice Blocks mixed use project on R Street and DOCO located downtown. Both are highly anticipated projects aimed to feature never before seen tenants within the urban core which will only add to an already exciting urban retail scene.
SOME WORDS FROM OUR FRIENDS O N T H E M AT T E R
“Local retailers showcase the talent, creativity, and character of our city to those we are lucky enough to have visit.” - Bay Miry D&S Development
“I love living in Midtown because everything is so individualized. There aren’t a lot of corporate chains, it’s the small businesses that really give midtown the culture that everybody loves.” - Quynn Meyer-Keller Arrows Digital Media & Design New Helvetia Brewing Co. Midtown Resident
Can you guess which Midtown coffee shops are pictured below?
ANSWER: Starbuck’s on J Street and Temple Coffee on K Street
How do national, high-credit tenants affect an area’s local charm?
Are you Midtownâ€™s next iconic business?
h igh - v is i b i li t y J S T R EE T corner LOCATI ON I N MI DTOW N 5,370 sf - 4 parking stalls - $1,650,000 - 2201 j street T U R T O N C O M M E R C I A L - 916 . 573 .33 0 0 - T U R T O N C O M .C O M
TURTON COMMERCIAL - 916.573.3300 - TURTONCOM.COM
F O R SA L E
Powerhouse HIGH-CLASS | RESIDENTIAL/RETAIL | IDEAL LOCATION
Ha v e y ou not ic ed how cool Sa cra mento i s b ecomi ng?
TH E M I D TOW N/DOW NTOW N VIBE:
BUILDING BLOCKS JOHN MUDGETT - SENIOR DIRECTOR
Electric. It’s apparent to residents and visitors alike that Sacramento is entering into a time of growth and transformation and the buzz is spreading. The Sacramento coffee scene is worldclass. The brewery scene is growing exponentially. Restauranteurs are capitalizing on fresh local ingredients and garnering large followings. Second Saturdays are filling Midtown art galleries and inciting rowdy block parties. There’s no denying it - we are building a rad city. Californians are taking note and developers are responding with renewed interest. As a result, both office and residential vacancies continue to decline while rental rates continue to trend upwards. With so many eyes on our city, demand for infill development is at an all-time high. With every new listing, sale, and tenant that occupies a building, we contribute to Sacramento’s trajectory. Our team is working overtime in identifying and securing new sites for the next phase of infill development. Turton Commercial is a trusted advisor to the City of Sacramento and represented the sale of the 800 Block on K and L Street. What is currently a vacant crater in the middle of the urban core will finally be enabled to develop and fill out Sacramento’s urban landscape. Thanks to our city’s increasing desirability, the hole in the ground will be replaced with a mid-rise mixed-use development with ground floor retail and 148 residential units above. Next door, our clients, D&S Development and CFY Development, are redeveloping the vacant 700 Block of K Street. This joint venture will deliver 137 residential units over a coffee shop, ice cream parlor, Jewish deli, underground brewery, and more. The developers are taking great care to preserve the faÇades of the buildings whose history led to the current wave of revitalization in Sacramento. Another catalyst project is The Ice Blocks. We are honored to be involved with the marketing and leasing of over 90,000 square feet of office space in this massive development by Heller Pacific. The high-quality office buildings featured here are among the most keenly designed spaces in the entire city. This project has already transformed
Opening day of Philz Coffee at the Ice Blocks Development. The line was out the door and around the block! PHIL GIARRIZZO, OWNER, Phil Giarrizzo Campaigns
“Midtown has a vibrancy that comes from having the right mix of commercial and residential properties. Everything you need is right here in Midtown.”
several blighted blocks of the central city and inspired the development of several nearby vacant lots. Hundreds of new residential units are being developed by SKK Development, Grupe Development, CFY, and Black Pine Builders. Getting a greater number of residents downtown will only fan the flames of Sacramento’s cultural growth spurt. Another blank canvas lies steps from the Ice Blocks at 17th & S Street. The empty half-block sat vacant for years due to complex contamination issues. Recently, our team facilitated a successful sale transaction and identified the highest and best buyer for the site. This was Capital Area Development Authority, a reputable organization with the expertise in remediating contaminated land and providing affordable housing options. CADA and CFY Development will build a mixed-use project with up to 159 residential units sitting above retail. We take a special interest in bringing these kinds of development opportunities to market not just because they’re great investments, but also because it’s a vector for providing meaningful change to our city we dearly love. We welcome the opportunity to partner with you to help make Sacramento the best it can be. One deal at a time.
HOW SOON IS
YOUR OFFICE MOVING TO
MIDTOWN? Start at zero. Add or subtract points for each answer.
1. YOUR BOSS PREFERS THEIR COFFEE: A) Still warm from the 7-11 they stopped at on the commute over. (-20) B) Topped with whipped cream and drizzled with caramel. (-5) C) Black. (+5) D) Cold-brewed and sipped from the mouth of a frosty mason jar. (+25) 2. HOW DOES YOUR COWORKER RESPOND TO THE PHRASE “BOHO-CHIC”? A) With utter disgust. (+0) B) “Huh? How dare you call me that!” (-15) C) By using the phrase over 30 times when thumbing through the new Ikea catalog. (-20) D) By stating that no one who uses that phrase seriously has any business designing interiors. (+15) CONTINUED ON PAGE 28
T h e desires of y ou r e mp loyees a re i mp orta nt to your comp a n y!
I T’ S WO R TH INVESTING IN YOUR
WORKERS’ WANTS BROOKE BUTLER - VP OF OPERATIONS & MARKETING
WHERE THEY WANT TO WORK
EN AM D OL
CO ST WE
EV OS /R
N LI CK
K EL RO
*Source: Decision Wise: “Show Me the Money: The ROI of Employee Engagement”
Increasing desirability toward downtown
How do we know what your employees want? We asked them. And we’ve found noteworthy trends in their preferences which you’ll want to keep in mind when choosing office space. Why? Because a disengaged employee costs an organization roughly $3,400 for every $10,000 in annual salary. Companies with engaged employees, on the other hand, grow profits as much as 3x faster than competitors and highly engaged employees are 87% less likely to leave their organization.*
Gen X (1965-80)
5 4.5 4 3.5 3 2.5 2 1.5 1
(Respondents were asked to mark on a 5-point Likert scale how much they agreed with the statement “I would like to work in ___ location” anchored by “1-Strongly Disagree” and “5- Strongly Agree.” Statistical significance reported at the 0.05 level using One-Way Anova testing. Post hoc analysis done using Tukey B.)
Your employees gravitate towards the urban core.
Office workers enjoying free pastry samples offered by Philz Coffee at Ice Blocks.
Millennials this, Millennials that. We have all seen the headlines either praising or hating on the generation. One thing is clear: Millennials have been flocking to urban centers across the nation and Sacramento is no different. But here’s the thing. It’s not just Millennials. Generation X and Baby Boomers also enjoy working in Sacramento’s grid. Midtown, Downtown, East Sacramento topped the chart as the most desired submarkets to work in with Millennials leading the pack. If you’re recruiting young pro-
fessionals aged 17 – 36, pay extra attention: Millennials have a statistically significant difference from previous generations when it comes to the desire to work in all urban locations in Sacramento (Downtown, Midtown, East Sacramento, Old Sacramento and West Sacramento). They even ranked “Company Culture” as a trait they value more when looking for a job than “Benefits” and “Work-life Balance.” Guess what plays a large role in establishing company culture? You guessed it: Location.
Hint: T he driving fac tor behind the de sir e to wor k in an urban envir onment is their pr opensit y to wor k in a live, wor k , play envir onment: walkable, bike -able and close to their favorite cof fe e shops, r e staurants and amenitie s. T he stats speak for themselve s.
W H AT T H E Y VA L U E I N A J O B L O C AT I O N Boomers (1946-64)
Gen X (1965-80)
Highest-valued by all age groups
3.5 3 2.5 2
(Respondents were asked “What aspects of the business’s location are important for you in a job? A 5-point Likert Scale was used, anchored by “1-Very Unimportant” and “5-Very Important.”)
Regardless of where they live, your employees would prefer to work in an urban environment.
Okay, maybe your goal isn’t to recruit new workers but to satisfy your existing workforce. Our statistics show that even if the majority of your workers currently live in a rural or suburban environment they prefer working in an urban environment. And if your workers currently live in an urban environment, they definitely don’t want to leave the core to commute to a rural or suburban environment.
WHERE THEY WANT TO WORK
WHERE THEY LIVE
COMMENTS FROM THE S U RV E Y- TA K E R S
Top: Office worker enjoying street retail at the Warehouse Artist Lofts on the R Street Corridor. Bottom: Creative office space at 2421 17th Street (For Sale).
“I desire private work space with isolated collaborative work space. Having worked in an open workspace environment, I found that distractions and noise deterred from staff completing work.” - 37 Year Old Male Desires to Work in a Suburban Environment
“My ideal office environment is one that is friendly and collaborative, where sharing of ideas and skills is encouraged.” - 24 Year Old Female Desires to Work in an Urban Environment
y B d e d n u o ! Surr new s t men
p o l e v e D
FOR SALE PREMIER MIDTOWN OFFICE BUILDING
2001 P STREET TURTON COMMERCIAL RE AL ESTATE 916.573.3300 - TURTONCOM.COM
W H AT T H E Y WA N T I N A W O R K S PAC E Urban
Top: Honey Agency’s creative office space at the MARRS building in Midtown. Bottom: Creative office space at 920 Reserve in Roseville - a unique find in the suburbs!
TECHNOLOGY WINDOWS PRIVATE OFFICES SNACKS CLASSIC DESIGN
Features more valued by suburbanites
GYM GAME ROOM SHOWERS ALCOHOL ART LOUNGE AREA
Features more valued by urbanites
UNIQUENESS INTERIOR DESIGN COLLAB. WORKSPACE BREAKROOM BIKE LOCKERS CREATIVE DESIGN
SOME CONCLUDING REMARKS
Your employees’ wants
NATURAL LIGHT 1
impact your bottom
(Respondents were asked “In an office environment, what aspects of the business’s office space are important for you? A 5-point Likert Scale was used, anchored by “1-Very Unimportant” and “5-Very Important.” Respondents were compared based on the mean response to “What type of location would you prefer to work in?”)
line. A happy employee yields increased profits,
What exactly they want in an office depends on what kind of area they want to work in.
Now you have identified where your employees want to work. So what do they value within their space? Well, it is actually different based on whether they want to work in an urban or a suburban environment and this impacts your buildout. Suburbanites value private offices whereas those that want to work in an urban environment prefer collaborative workspace. Urban workers have a stronger desire for modern and creative buildouts and the new office amenities popularized by Silicon Valley: greater emphasis on uniqueness and interior design, along with game rooms, art, bike lockers and showers. The latter make sense as urban workers value biking and walking to work. However, some classic items never change. People enjoy working in spaces with large windows and natural light, and technology incorporated throughout. A breakroom with snacks doesn’t hurt either.
All data based on a 100-person survey.
satisfied customers, and lowered turnover. Having the perfect office space for your company’s culture, or desired culture, is one of the most
to make your workers thrive.
Turton Commercial - 916.573.3300 - Turtoncom.com
730 I STREET
IN THE MIDDLE OF
EVERYTHING FOR LEASE R A R E L A N D M A R K S T RU C T U R E 1 B LO C K F RO M GO L DE N 1 CE NT ER
70,000 SF O F F I C E / R E TA I L 1 0 0 PA R K I N G S TA L L S
D E V E LO P ME N T O P PO RT U NI T IES Calvine Auberry – 3.67 AC 20th & R Street – 0.25 AC 65th Street – 1.45 AC Power Inn – 12.76 AC Royal Oaks – 4.57 AC Meadowview – 14,89 AC Florin Station – 20 AC Butterfield – 3.21 AC Gilman Walerga – 1.93 AC Poplar – 1.65 AC Swanston – 2 AC 10th & Stockton – 1.54 AC 9th & Stockton – 0.60 AC MLK Blvd – 0.26 AC
12th Ave – 0.257 AC Lexington – 1.41 AC 33th & S – 0.25 AC 425 G Street – 0.25 AC East Sacramento - 0.75 AC 0 B Street - 0.55 AC Folsom - Leidesdorff Village – 3 AC 58th and Broadway - 0.27 AC Fair Oaks Village – 1.01 AC 3131/3141 W Street - 0.33 AC Rocky Ridge Duplexes 1.2 AC Dixon HWY Retail – 1.8 AC 4330 Watt Avenue - 1.5 AC & More!
LAND DEVELOPMENT OPPORTUNITIES THROUGHOUT THE SACRAMENTO REGION 916.573.3300
TURTON COMMERCIAL REAL ESTATE
How mu c h money c ould you s a ve b y owni ng i ns tea d of lea s in g?
M A K I N G TH E
$1M DECISION KEN TURTON - PRESIDENT
Many tenants avoid purchasing their building out of frugality - but most don’t realize how much money they could save by owning. I had lunch the other day with a good client I met back in 2003. He wanted to discuss the market and potential purchase opportunities as he would likely need more space within the next 12 months. The client was an owner-occupant and this would be his third building purchase in 8 years. Their first, in 2009, was a 5,000 square footer in the heart of midtown with 12 parking spaces. They paid $1,000,000 for it and then sunk another $500,000 worth of improvements into the building. I’m not sure how many of you remember 2009 but that was about the time many of us were considering downsizing our homes to cardboard shacks on the street and evaluating YMCA’s for their shower facilities. Nobody was lending and even fewer people were borrowing, but this particular business (a lobbying firm) was
still doing well and they had a lease that was expiring in a Class A building and the time was now or never if they were going to purchase a building. It was a difficult decision but ultimately they bought a building and improved it to a level commensurate with their Class A lease space. Even then the finished space would warrant $2.00/SF net rent plus parking valued at $100 per space. As we reflected back on the success of their business the client commented that purchasing the building was one the best decisions they ever made and over the course
of 5 years between 2009 and 2014 they had effectively saved almost $400,000 versus renting. Had they extended their lease the rate would have been $2.75 per square foot plus annual increases plus parking costs for 5,000 square feet. Over a 5 year term they would have spent about $900,000. As owners during that same period their total expenses were $625,000 including debt and operating expenses. $140,000 of this $625,000 went towards reducing their principal loan balance so really they only spent $480,000. They also benefitted from $125,000 of depreciation and $25,000 in property management fees they paid themselves. You could effectively argue this firm has spent $330,000 versus a potential $900,000 and this does not even account for the building appreciation which has been quite substantial. At the beginning of 2014 they had outgrown their 5,000 SF building and now wanted to purchase a 12 – 15,000 SF building with a tenant or two that would provide space for additional growth. They executed that purchase and by the end of this year they will have saved another $500,000. Ironically they are basically acquiring real estate properties and building their investment portfolio with the money they would have otherwise spent leasing. The client thanked me for helping him make that first difficult decision at a difficult time. We guided him through the finance process as well the complicated architectural, permit and improvement process. On time and on budget. It was personally rewarding to hear his words but it was not the first time I had heard them. I have helped dozens of other owner occupants do the same thing over the years and all of them experienced similar results. I purchased my first building in 2014. I bought a 6,000 sf building of which I occupied 3,000 feet and had three 1,000 SF tenants. That decision helped me save over $250,000 in three years. Next year we will move our growing company to 5,000 SF in a new building. If owning your own building and saving a significant amount of money is interesting to you, I would encourage you to give us a call. There are many various financing mechanisms that make this option feasible for just about anyone with a viable business. We will be happy to discuss the economics and processes and determine if it’s right for you.
SHOULD YOU RENT OR OWN YOUR BUILDING? S TA RT H E R E
Own a business?
Like saving money?
Ha! Draining the accounts before the divorce?
Long or short term?
Oh. This is awkward.
“Purchasing my own building was truly one of, if not, the best business decisions I ever made. It literally made me an extra $1,000,000.” - Doug Stanley Owner, Levin’s Auto Supply
Turton Commercial’s owner-occupied building at 2409 L Street has been designed to match the company culture.
Turton Commercial real estate - 916.573.3300 - Turtoncom.com
St il l l earning t he l ay of the la nd?
FI E LD G U I D E :
THE DISTRICTS PATRICK STELMACH - DIRECTOR
YO U R
G UI DE
To Sacramento’s Best Neighborhoods to Work
Branding: Sacramento’s financial district, grand prestige, status, and perception of success. Culture: High-caliber corporate services industries: attorneys, bankers, CPAs... Park your Maserati in one of the high-rise parking garages, and never have to walk outside the building for coffee or lunch. Top 3 Amenities: Sweeping panoramic views of the Sacramento Valley, on-site gym facilities, stone’s throw to your box at Golden 1 Center/DOCO.
In this tightening labor market, competition is fierce to recruit the best talent and retain top performing staff. For young professionals with multiple job offers, an urban location surrounded by exciting amenities is among the most important considerations whether to take your company’s offer, or your competitor’s. For some, the choice of location is easy. But there are many nuances between districts and within districts. What is the difference between having an office space on K and 11th Streets, or K and 20th Streets; between the Handle District and the Sutter District; and what is the next up-and-coming district to invest in?
Hidden Gem: Rooftop terraces and swimming pools!
Left: The Capitol Mall skyline on a bright, sunny day. Right: Sacramentans rushing up to see Paul McCartney on the Golden 1 Center’s opening day.
Captiol Mall is Sacramento’s financial district of high-rises, reminiscent of the National Mall in Washington DC with it’s wide landscaped parkway. This district embodies the highest degree of grand prestige, status and perception - from the ostentatious lobby of polished marble, to the sweeping panoramic views of the Sacramento Valley. If your
industry requires those features in your office space, chances are you’re going into a Class A highrise on Capitol Mall, and you’ll likely never have to venture far, or even leave your building, for your amenity needs. Capitol Mall buildings often have on-site gyms, coffee shops, restaurants, multiple stories of parking, and other amenities.
Branding: Epicenter of entertainment and political theater. Culture: Hive of politicos - all vying to get their bills passed and win the next election. Top 3 Amenities: Capitol Park gardens, Concerts in the Park, pre-party/after-party at the office, giant Jenga at Coin-Op Game Room. Hidden Gem: Buzz Coffee Brewery Breakfast Burritos!
K Street is Sacramento’s lobbyist row and the promenade of nightlife, dining, and shopping. The halls of the historic mid-rise and high-rise buildings is where you’ll find political outfits, advocates, associations, and power brokers of the State legislative process. The greatest asset of
this location is the proximity to the State Capitol and the plethora of venues for political events and fundraisers. The Golden 1 Center/DOCO at one end of K Street and the Convention Center at the other, with new exciting retail in between, makes this a diverse, energetic district.
1 CAPITOL MALL 2 K STREET 3 LAVENDER HEIGHTS
4 HANDLE DISTRICT 5 SUTTER DISTRICT 6 OLD SACRAMENTO
7 R STREET
8 ALKALI FLAT 2
Drawn by Sacramento artist Caroline Dale.
OLD SACRAMENTO WATERFRONT
Branding: Versatile, young, and ahead-of-the-curve. Culture: Creative, open workspace and old school law firms. All manner of restaurants, from fine dining to fried whatevers on a stick. Downtown experience at half the price.
Top 3 Amenities: Ten22, The Firehouse restaurant, the cool river breeze.
Hidden Gem: Underground Tasting Room
Branding: Arts, music, culture. Exposed ceilings and exposed body parts - Sacramento’s gayborhood and arts mecca. Culture: Creative companies, diversity of marketing and design firms, ad agencies, technology companies, and business (causal) services. Block parties, busking musicians, art gallery openings, and farmers markets. Top 3 Amenities: Outdoor restaurant patios, national award-winning and penny-collecting Temple Coffee Roasters, brew bikes riding your own bike to watering holes. Hidden Gem: Motown Mondays - skip the line and take the interior passageway between LowBrau and Block Butcher Bar!
Midtown is the Grid’s phenomenal mix of communities with treelined streets, historic Victorians, boutique shops, hair salons, and renowned restaurants. Whereas Midtown is generally known as everything east of 16th to Business 80, the epicenter is K and 20th Streets in the Lavender Heights District. In Sacramento’s “gayborhood”, street festivals, music
stages, pop-up retail, and produce stands create an energizing environment to work in. Companies are leasing and buying buildings here to define their lifestyle culture and attract the best creative talent. Within steps of your office door, single-origin espresso is brewing in the morning and outdoor beer taps are flowing for the after hours huddle.
THE HANDLE DISTRICT
Branding: Polished shoes and polished concrete. Culture: Foodies, fashion shows, wine drinks, design geeks. Top 3 Amenities: Liestal Alley (Old Soul Coffee and Velo Trap Bike Shop), carnivores paradise at Mulvaney’s B&L, vegan savlation at Pushkins Bakery. Hidden Gem: Back patio at Aioli Bodega Espanola!
Top: 2nd Saturday crowds enjoy a DJ set performed for ‘This is Midtown’ at MARRS. Middle: Scout Living in the Handle District. Bottom: The patio at Centro on a Wednesday evening.
Like the handle of a frying pan, The Handle District is a hot spot for urban workers who love to eat and drink. This pocket of Midtown - 18th Street, 19th Street, L Street and Capitol Avenue - is defined by contemporary mid-
rise concrete and steel buildings. There are restaurants for a variety of palates, but there is a distinct concentration of European fare with paninis, crepes, gelato, canolis, fine wine, and the annual Bastille Day waiters race.
THE SUTTER DISTRICT
Bottom: The Creamery in Alkali Flat is drawing attention. Middle: Caroline Dale, the artist who created the featured fold-out Sacramento illustration, enjoying her favorite R Street mural. Top: Fine dining at Ten22 in Old Sacramento.
Locals deride the tourist traps; out-of-towners gawk at the gold rush theatrics; either way, 3 million visitors a year is nothing to scoff at. Rejuvenating Old Sacramento into a robust waterfront experience is a primary focus of the City administration, business leaders, and property owners. Retail and dining has always been strong here, and the American River Bike Trail is widely popular. But office spaces have remained vacant due to misconceptions and stereotypes of the area. Some savvy cost-conscious companies and
Branding: Industrial-chic bricks and murals: historic warehouses repurposed for creative office spaces. Culture: Builders, developers, architects, and artists work and live here. Top 3 Amenities: WAL Public Market, several light rail stops, Iron Horse Tavern. Hidden Gem: Open Studio tours!
R Street straddles both sides of the Midtown/Downtown “Invisible Wall” geographically, but the industrial arts district is distinctly different from any place in the Grid. Gritty warehouses are adaptively reused with glass and steel into modern office spaces, hip retail, and artist housing and work studios. Adjacent to the raw, authentic
Branding: Sutter’s Fort, Sutter Medical Center, and mid-century modern architecture. Medical, dental, and professional service-people enjoy some of the best happy hours in town.
new tech startups are taking advantage of the proximity to downtown at a bargain rate. Walking distance to Sacramento Valley Station/Amtrak Capitol Corridor, employees can catch a train to meet colleagues and clients in the San Francisco Bay Area, or vice versa. The Golden 1 Center and DOCO are connected to Old Sacramento via a pedestrian walkway. Parking is not an issue, with the City’s upgraded Parking Management System and Parkmobile app. There is no better up and coming opportunity.
brick and mortar, new commercial and residential projects reflect Sacramento’s heritage of manufacturing plants and the desirability of the dense urban work environment. The exposed architectural features and open floor plans of these spaces make the workplace so much more attractive, enjoyable, collaborative and social.
ALKALI FLAT/MANSION FLATS
Branding: Sacramento’s oldest neighborhood, smack dab between the Central Business District and the Railyards.
Culture: Live music, higher-end dining, city parks. Food trucks during the workweek.
Culture: Political and justice industries; new companies that want to be in downtown on a budget with public transportation options.
Top 3 Amenities: Harlow’s, Red Rabbit, Paragary’s.
Top 3 Amenities: Chando’s Cantina, Sandra Dee’s BBQ & Seafood, and Shine Sacramento Café.
Hidden Gem: Blue pool tables upstairs at Blue Cue.
Hidden Gem: The Red Museum art gallery and music venue!
The Sutter District is home to many of Sacramento’s healthcare industries, medical offices, and the internationally-known Sutter General Hospital and the Anderson Lucchetti Women’s and Children’s Center. Just as John Sutter established here in 1839 the center of trade and agricultural commerce for the Sacramento Valley, today’s local restauranteurs have
brought innovative food concepts to new heights in the Sutter District. Outdoor dining takes advantage of our perfect weather and tree canopy; the intimate patio at Paragary’s was ranked one of the best al fresco restaurants in the country, and the new B Street Theatre “The Sofia” under construction will offer even more entertainment and foodie options.
Historic Victorians are restored and reused, alongside construction sites for the Railyards redevelopment project (Kaiser Hospital and MLS Soccer Stadium), new super sleek contemporary townhomes (The Creamery and Indie Capital) and revival of mid-century modernism (The Clarion Hotel). Traditionally, the area has been dominated by State govern-
ment offices and legal industries. Now companies are relocating here that want to be in downtown but do not want to pay high-rise prices. The direct access to the Sacramento Northern Bikeway is a major plus, as well as entertainment venues: Memorial Auditorium, Convention Center, Wells Fargo Pavilion/Sacramento Theatre Company.
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TOWER C L AS S A R ETAIL SPACE FOR L EASE
TURTON Turton Commercial - 916.573.3300 - Turtoncom.com
E v er made $300,000 i n one yea r?
P LAY- B Y- P LAY OF A
DAMN GOOD DEAL JON LANG - SENIOR DIRECTOR
C Commercial real estate investing is hard. At Turton, we try to make it easy. As a buyer evaluating commercial properties in the grid, itâ€™s important to engage a trusted advisor. Turton Commercial has knowledge of a number of off-market investment opportunities that allow you, as our client, access to information before the rest of the market. Our client made 44% on their money in one year with that information. Read this to learn how.
Top: The subject property - 1030 G Street. Bottom: The lush tree canopy on G Street.
A week after identifying the property as a potential investment opportunity, we submitted an offer on behalf of our client for $1,525,000, which was slightly less than the asking price, with a 45 day due diligence period. Our offer took into account potential deferred maintenance as the buildingâ€™s mechanical systems and roof had not been serviced in over a decade. Given the credibility of our buyer, the Seller accepted our offer, executed a purchase and sale agreement, and the parties opened escrow immediately after.
We concurrently conducted our physical inspections of the building, during which our notions were correct, as we determined that the existing HVAC and roof were both near the end of their useful life and needed to be replaced within the next year. Fortunately, we had allocated approximately $70,000 in our underwriting for capital improvements, which would be paid for by the Buyer after closing escrow.
Begin here and follow the timeline to the next page!
WEEK 1 (JUNE 1, 2016)
We identified 1030 G Street as an intriguing value-add investment opportunity for a number of reasons: the vacant, 6,400 square foot, standalone office building was located in a rapidly improving pocket of Downtown Sacramento. Additionally, the building contained relatively modern tenant improvements, three sides of ample glass and most importantly, 13 covered and secured on-site parking stalls in an area where tenant parking was increasingly difficult to secure.
Shortly after opening escrow, Turton was hired to represent a local construction company in unrelated office relocation. The construction company was interested in moving from Gold River to Downtown to be closer to a number of existing and future construction projects and plant their roots in the epicenter of the urban redevelopment. The tenant needed approximately 6,000 square feet of office space, preferably in a contemporary atmosphere, approximately 15 on-site parking stalls, and if possible, building signage. On paper, 1030 G Street, although only available for sale, seemed like a perfect fit for this lease requirement.
A couple weeks after initially touring, the Tenant submitted an offer to our client (who was in escrow) to lease the entire 6,400 square foot building for five years; the offer was subject to our client ultimately purchasing the building. We structured the lease deal to provide a 7% return to our buyer, inclusive of a $76,000 tenant improvement allowance, $70,000 in capital improvements, a couple months of construction time and a short carry period. Furthermore, the base rent and parking expense would increase by 3% each year and operating expenses would be passed through to the Tenant over the base year.
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Left: Entrance from elevator. Middle: Lobby and reception. Right: Conference room.
45 days after opening escrow, our client waived the physical inspection contingency and their earnest money deposit went non-refundable. Escrow was scheduled to close 30 days following waiver of the contingency.
The Buyer closed on the building for $1,525,000 seventy-five days after opening escrow. Given the historically low interest rates, we encouraged that our client to finance the building, as well as roll the capital and tenant improvement costs (approximately $146,000) into the conventional loan. The total financed amount was just shy of $1,700,000. Our client made an initial 40% down payment, equal to $680,000, while financing the remaining $1,020,000. As an aside, we ensured the bank would not enforce a pre-payment penalty in the event the Buyer decided to sell the property in the near future.
With the property now fully stabilized and producing cash flow, our client agreed to sell the building off-market if we could target a buyer that would purchase the building at a 6% capitalization rate. At this disposition price, our client would realize a 100 basis point profit. We then began to market the building as a pocket listing to a select group of trusted clients.
With the Buyerâ€™s deposit non-refundable, the Tenant felt confident enough to execute a lease agreement with the pre-negotiated terms. Just 40 days after engaging the tenant, we had a fully executed, enforceable lease to take effect shortly after the close of escrow.
Five months after initially identifying the building as an attractive investment, the Tenantâ€™s five year commenced. The tenant, being a construction company, was given approximately sixty days prior to the commencement date to complete their tenant improvements. During that same time, the Buyer (and our client) replaced the roof and HVAC units, as well as, painted the building exterior and repaved the parking lot. When it was all said, the completely-renovated investment was procuring a 7% capitalization rate and 7.75% capitalization rate in year one.
We engaged a 10-31 tax deferred exchange buyer from the Bay Area who was looking for a stabilized commercial investment that required little maintenance. Since 1030 G Street was recently outfitted with all new mechanical systems, roof, and tenant improvements, the building marked all of those boxes. Furthermore, the Buyer would have guaranteed income for the next five years (and possibly longer) with the Tenant shouldering any operating expense and property tax increases over that period. The exchange buyer submitted an offer to purchase the building and we entered escrow on the building again, but this time, as a leased investment.
Fun Fact! After our client sold 1030 G Street, we helped them exchange the proceeds into another off-market investment!
90 days after opening escrow with the exchange buyer, the building sold again for $2,050,000. This sales price represented, after closing costs, a $300,000 profit to our client in less than one year. Our client, using debt to leverage their initial capital investment of $680,000, realized a 44% return over the same period of time. At the end of the day, the tenant secured a long term home at a sustainable rent rate, the seller (our client) was able to make a healthy profit, and the buyer secured a long-term, coupon-clipping investment for the foreseeable future.
Meet t he man w ho devoted hi ms elf to b ri ngi ng the Golden 1 Ce n t e r t o S ac ram en t o,
A TR A N S I TI O N, NOT FAREW ELL, FOR A S S IS TA NT CITY MA NA GE R
JOHN DANGBERG JON LANG - SENIOR DIRECTOR
J John Dangberg brings over 30 years’ experience to the public sector with an emphasis on community and economic development. Prior to assuming the role as Assistant City Manager in 2006, Dangberg served as the President of USA Properties Fund, Chief Executive for the Capitol Area Development Authority (CADA), and Director of Community Development with the Sacramento Housing and Redevelopment Agency (SHRA). Dangberg has spearheaded thousands of public works projects over the course of his career, highlighted by his role as Project Director for the Golden 1 Center in Downtown Sacramento. With his retirement from the City of Sacramento approaching this fall, we caught up with John to discuss his illustrious career.
Left: The Golden 1 Center lit up at night. Right: Assistant City Manager John Dangberg celebrating the success of Sacramento.
JON LANG: First off, congratulations on your pending retirement – what do you have planned next? JOHN DANGBERG: “Well, I prefer to call it a transition rather than a retirement, per se’. My hope is that I can take some time off, personally, and enjoy some things I haven’t been able to over the last few years. However, I very much want to stay engaged in projects in the urban development context. For me, that means I will be consulting on projects that I’m most interested in and that make a difference in the City.” What’s the single work-related item that you’re most proud of? “In a generic and general sense, it’s been very rewarding for me to have a career in public service. I’m very proud to have served in a number of professional capacities and to have been involved in projects that have positively impacted peoples’ lives. The big one, of course, has been Golden 1 Center though. Helping Sacramento reach the “tipping point” in the urban core was what I was recruited to do back in 2006 by Ray Kerridge, the City Manager
at the time. That has to be the highlight of my career so far.” What about your involvement in developing and implementing the infrastructure on R Street? Yes, another thing that I’m very proud of is getting legislation in place to expand the CADA boundaries to include the R Street Corridor. At the time, the boundary was right at the edge of R Street, and supplemented with public transit, the area ultimately became a new public gateway to Downtown. My involvement included some of the early planning work, along with the City, to secure SACOG grants to complete preliminary infrastructure along the corridor. So just seeing what R Street has become since is a very proud piece of my career, as well.” How did working with CADA, as well as, SHRA shape your outlook on development when you took over the role as Assistant City Manager? “I’d have to say, especially my days with SHRA, a great share of the work that I did was working with community groups; especially, some in really tough and
disadvantaged areas. That was really at the core of what we did - is neighborhood-based economic redevelopment and housing solutions. One of the most critical things that I gained in those prior years was the importance of working and listening to the community to formulate a vision, and then working through the long (actually, never ending) process of community improvement. In hindsight, one of the most important things I learned is the value of maintaining private/ public partnerships, and that the private sector cannot change the urban landscape on its own. Conversely, the public sector cannot change the scene on its own either. It really takes a committed partnership between the two sectors to make substantive change. Sometimes, in the public sector, it’s just clearing a path and making the economics feasible and reasonable for the private sector.” How do you see Sacramento’s willingness to work with developers and property owners today differ from 30 years ago? “Well, development today is so much different than it was 30 years ago. Today, there is much more attention paid to process and customer service because it is exponentially more complicated to develop today. If you think back 30 years ago, CEQA was only 15 years old, we were just off proposition 13, and both of those two major acts completely changed the develop-
ment landscape. And, since then, and within a few months, in CEQA has continued to evolve… conjunction with the new ownlet’s say, it surely hasn’t gotten ership, [the City] had a term simpler. Case law has continued sheet for the new arena that was to evolve and made it far more approved and executed by the complex in terms of how we go City Council. about developing and growing So you take that alignment... cities. JMA, a boutique developer, had So in terms of customer service studied the feasibility, the leadand easing the process, it’s conership of Kevin Johnson with stant. To combat the increased the support of the NBA, and the complication, City’s experiour City has emence putting “Sacramento had a long history of braced technology together a fito play a role in beating ourselves up about what nancing plan all streamlining the we are not, or what we can’t be. But came together at process. It’s our one moment – it job to invest in Golden 1 Center is just a shining was perfect timthat technology to example to the community of how we ing. continue to make Given Old Saccan be, how we can do, and how we new development ramento’s proxseamless for the can achieve big things in this City.” imity to Golden community.” 1 Center and Do you think Sacramento could DoCo, what do you think the have built the arena Downtown answer is to making the area a 20 years ago? 10 years ago? If national-class tourist attraction not, what culmination of things like the French Quarter in New occurred to allow the arena to Orleans or The River Walk in get built? San Antonio? “I can only speak on the last 10 “There is a great deal of attenyears, directly, but I would say tion being paid to the Sacrathere were a number of key facmento Riverfront today. And our tors that came into play. primary asset on the Riverfront First off, the political leadership is Old Sacramento. For Old Sacof Mayor Kevin Johnson was critramento to be successful over ical, including his relationship time, the rest of the Riverfront with the NBA Commissioner needs to be developed too. We David Stern. Johnson and Stern think of the Riverfront running shared a long-term commitment the length of Old Sacramento; to keeping the Kings in Sacrahowever, if I-5 wasn’t there, we’d mento. Another main factor was think of the Riverfront extendhaving an ownership group that ing at least another half mile was committed to building an in each direction. So we need to urban, Downtown arena that did think about it comprehensively. as much for the City outside of Unfortunately, unlike New Orlethe walls as it did for the team ans, we have a freeway that cuts inside the walls of the arena. off our Downtown and entire [The City] learned a lot in the Riverfront. So, we have special prior attempts to get an arena challenges there that require financed. And as painful as those reconnection. There have been failures were in 2006 with QNR a number of recent public inand many other attempts up frastructure projects that make through 2011, I’m thankful that those reconnections. We’ve got they didn’t go through. In retrothe new I Street Bridge coming spect, financially, they weren’t in, as well as, the new Broadway great deals for the City and the Bridge that would ultimately proposed locations would not connect Old Sacramento with have had the same “spin-off” West Sacramento. Having an benefit as the current facility. economic vibrancy on both sides As fate would have it, shortly afof the river is very important.” ter the last failed attempt, JMA Lastly, any advice for your sucpurchased the Downtown Plaza cessor? in 2012. JMA had been watching [Laughs] “Maybe…hire a very all of the City’s effort to bring knowledgeable consultant!” an arena Downtown, and unbeknownst to [the City], they had conducted a feasibility study to put an arena on the site. JMA finished that up in October 2012
Do y ou r empl oy ees e njoy the s p a ce they work i n?
R EA LI Z I N G TH E
NEW OFFICE AARON MARCHAND - VICE PRESIDENT
Tenants and landlords are designing office space for the modern, technical, competitive work environment in new and exciting ways! Today’s work space aims to be fun and collaborative. The old tired standard of perimeter private offices with staff space on the interior is a design style of the past. Principals are realizing that, in this demanding and competitive work environment, paying attention to trends like natural light, office flow, and company happiness are pivotal to maximizing the value of office space in the future. New types of buildout requests from tenant principals designing spaces are commonplace. The dated phrase of “creative” office space was once only thought of as space which techy tenants and architects utilized. Now we are hearing catch phrases such as “natural light,” “huddle space,” “phone rooms,” and “collaboration space” with almost every category of office users. The ultimate goal behind each of these buzzwords is to create a fun work environment, increasing open communication and productivity while retaining the current employee base by offering the most positive work place to the competitive recruiting pool. Historically speaking, the new work force is a very demanding one. But they are demanding in the sense that they want the optimal work environment. In return, principals are able to nurture and curate a work force who works harder while being happier throughout the day. The work space of the future is designed in a way where the employees who are working on daily tasks actually enjoy being at the office and willingly remain beyond normal business hours to complete projects. Principals are realizing that the employ-
ees are often spending more time at the office than in the past because they don’t feel entrapped. Considering new office space design is a chance to create an environment which helps define the company while offering a fun, comfortable sense of space. We are hearing more and more from principals say: “with the new office we really want a un collaborative work environment that brands our firm.” I want to emphasize that this does not have to be a wide open area and no private offices - it’s less about the features of the space and more about connectivity, functionality and productivity. Spaces are planned much more strategically, accounting for a comfortable sense of scale, flow of movement, natural gathering locations, and more. These work places are more purposeful and meaningful, resulting in a more effective recruitment and retention process. Overall, it is loud and clear that no one wants a bland, listless work environmentthat results in unhappy, unproductive employees. Workers are voicing their preferences more boldly than ever and business owners are listening. We will likely see a large-scale profileration of this new style of office - this trend is here to stay.
HOW SOON IS YOUR OFFICE MOVING TO MIDTOWN? CONTINUED FROM PAGE 9
3. YOUR COMPUTER FEATURES: A) A 1-terabyte flash storage drive. (+25) B) The entire Adobe Creative Suite (legal copy). (+15) C) Windows 2000™ optimization! (-15) D) A floppy drive. (-45) 4. THE #1 COMPLAINT AROUND THE WATER COOLER IS: A) The commute time. (+10) B) The lack of bike racks downstairs. (+15) C) Them damn college kids and their PC culture. (-40) D) Loss of sleep due to their beards scratching noisily on their pillows. (+30) CONTINUED ON PAGE 33
Left: Open office space at 3301 C Street. Middle: BKWLD’s creative space in Old Sac. Right: Rainforth Grau Architects offices at 2401 J.
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No t t o be c onf u sed w it h “Ma n-Crus h Monda ys. ”
TH E VA L UE OF
‘MCM’ DESIGN JOHN MUDGETT - SENIOR DIRECTOR
A tasteful and highly-valued architectural style from the 1940s-1970s is often overlooked, but can add great value when realized. They are the perfect backdrop for artwork, conversations and generating creative work product. They provide a unique work environment that is distinct, articulate and inspiring. When approached with the right vision and a creative design strategy, they are able to attract and retain value in a competitive market. So why then, is mid-century modern Architecture (commonly referred to as MCM) so often misunderstood, underappreciated and under-valued? Beauty is in the eye of the beholder. And a lot of times that beholder is more perplexed by MCM commercial real estate than confident in a building’s true potential. Residential MCM has long garnered a cult-ike following that continues to grow into the mainstream and interior design trends are now heralding the retro aesthetic. However, the commercial real estate community remains somewhat flat footed in their response. That disconnect creates opportunity for property owners and investors with a keen eye. Walls of glass, horizontal lines, geometric shapes, breeze blocks, clerestory windows, atriums with indoor gardens, and a playful sense of timeless style are hallmarks of a mid-century modern architecture. There is an ethos that extends into lifestyle, art, expression, and philosophy that can be channeled into productive and inspiring work environments. Once renovated, these buildings truly shine and have a magnetic quality that attracts higher quality tenants at rents that are often times above average.
Admittedly, there are a lot of mid-century modern properties that can be underwhelming and uninspiring. Stark, outdated, overgrown, run down and neglect can overshadow the value these buildings offer. But it’s not the architecture that is to blame. It’s a lack of understanding as well as the nomenclature to identify unique attributes that prevents appreciation. There lies a unique opportunity to recognize an under-appreciated asset with higher degree of upside with the right team in place. Commercial tenants are gravitating to creatively-styled properties and 1950-1970’s architecture provides a perfect canvas for a fusion of retro and modern design. These buildings are limited in number as well, creating a pent up demand for a finished product that is relatively scarce. With intuitive design plans and executable marketing strategies, we have helped dozens of property owners actualize true value from their mid-century modern properties by identifying the strongest and most unique design elements and leverage their building renovations. This has resulted in faster leasing of vacant suites and higher prices on building sales. Want to learn how you can leverage design and architectural elements in your building? Let’s discuss how we would be able to help.
SOME WORDS FROM OUR FRIENDS O N T H E M AT T E R
“The experience of working in such a unique environment has had more benefits than I can name, not the least of which is the joy of sharing such a special space with our visiting clients.” - Tim Foster Capitol Weekly Tenant of MCM building (1220 H Street)
“Sacramento’s unique midcentury modern buildings contribute to our city’s character, diversity, vibrancy and sense of place. Do not underestimate the power of and demand for a building with collective memories and connections to the past.” - Gretchen Steniberg SacMod
Left: Selland’s Market and Cafe. Middle: Awesome office space in Midtown. Right: A more natural take on MCM architecture on 28th and Alhambra. Top: Amazing lattice work of natural wood at 21st and V.
What c an w e do t o prep a re for the effects of s elf-dri vi ng ca rs o n o u r c it y?
AUTOPILOT SCOTT KINGSTON - VICE PRESIDENT
A Advocates of autonomous, electric passenger vehicles (AEPVs) focus on black-andwhite economics: vehicles sit idle 96% of the time – they are asleep 23 hours per day. When the average cost of owning a vehicle in California is nearly $850 per month, the attraction of on-demand AEPVs becomes undeniable. AEPVs cost only $300 per month which saves the consumer $6,600 per year. Urban transportation is teetering on the brink of a revolution. When everyone switches over to AEPVs, what possible changes will occur in Sacramento’s urban core?
Concept art of a self-driving car from “The Future of Self Driving Cars” by Mercedes-Benz on Vimeo.
When we think about the future choose to send them out like an of transportation, we imagine Uber. With those rides generatthat the autonomous cars of toing $0.35 per mile, a $30,000 AEPV morrow will all be alike: Small, could pay for itself in five years, round, and no sense of personalgiving the owner an additional ity – like a Jetson’s car with four annual benefit of $6,000. wheels. As we all know, changing a perUnlike Hollywood’s vision of son’s behavior is about incenmatching silver outfits and flytive – and saving $6,000 - $12,000 ing cars, the future of autonoper year is a big incentive. If mous transportation will look a the economics of AEPVs end up lot like the past. Consumers will even close to projections, the have options depending on the argument of adoption in Sacraneed. mento’s urban core will only be If style is important, hail a ride about “when” and not “if.” in a BMW. And when you want to AEPVs will completely transform go to Tahoe, request an autonoour commute, how the goods we mous SUV to take you up the hill. purchase are packaged, shipped When you arrive in Hawaii, the and delivered, and the real esautonomous convertible delivtate in Sacramento that is syners you to the beach. onymous with urban and suburZooming around Midtown? Then ban environments: parking. perhaps the “Jetson’s” car will do. Sacramento’s Leadership Gearheads will push-back against this “dystopian” autoFew cities are considering the motive future - but with Apple, impact AEPVs will have on urTesla, Google, Uber and many ban and suburban infrastrucother billions of dollars invested ture, development, land usage, into the development of autonretail, and employment in the omous electric transportation passenger vehi- OUR URBAN CORE HAS MORE sector. Fortucles (AEPVs) – it THAN 2,600,000 SQUARE FEET nately, Sacrais inevitable. mento is one of In addition to OF ABOVE-GROUND PARKING the few looking safety statistics, advocates of to the future of transportation. AEPVs look at simple economThe City recently announced the ics: vehicles sit idle 96% of the formation of the Autonomous time. The majority of passenger Transportation Open Standards vehicles are underutilized, and lab, positioning us as a center expensive to operate and store. for AEPV research. In addition When comparing the average to passenger vehicles, this lab cost of owning a vehicle in Caliwill provide a testing facility for fornia of nearly $850 per month, trucks, public transportation, the attraction of “on-demand” fleets and transit. AEPVs becomes undeniable with With leadership that has a clear an estimated cost of approxiautomotive vision, the real esmately $300 per month - saving tate community in Sacramento the consumer $6,600 per year. will be on the forefront of impleAccelerating the momentum, menting transformation in our those who choose to buy AEPVs urban core. (instead of “on-demand” use) can Transformation Opportunities There are more than 17,000 parking stalls in urban Sacramento, with the average stall totaling 275 square feet. In the next 20 years, experts estimate that
AEPVs will reduce parking needs by 75%. If we assume a 25% loss due to inefficiencies, our urban core has more than 2.6 million square feet of surface stalls and above-ground structures ripe for transformation. What will these spaces become?
Top: Dept. of Corrections parking garage next to the Ice Blocks on R Street. Right: A rendering of the interior of Ice Blocks demonstrating it’s similar structure which many parking garages could be structurally adapted to.
Res. / Commercial Mixed-Use Demand for and prices for urban housing is at an all-time high in Sacramento. Office rents are increasing. With the revitalizing of our urban core, many surface lots will see ground-up mixeduse developments to serve this demand. Developers will also find creative ways to adapt existing parking structures into apartments, offices and/or retail Retail AEPVs will also affect the types of retailers on the grid. Many of the big retailers – Amazon most notably – will use autonomous
delivery for same-day delivery of most goods (including food). This will put significant pressure on brick-and-mortar retailers to offer products, experiences and services that can’t be duplicated digitally. Before signing long term leases, landlords should understand the viability of a tenant’s business model in this changing landscape. Public Spaces It is important that the City of Sacramento dedicate some of their parking to public spaces. I envision a balance between topdown City driven projects like the CityArt Walking Sculpture Tour in Grand Rapids, Michigan, Balboa Park in San Diego, Bryant Park in New York City, along with a more “DIY urbanism,” with temporary parks, public furniture, art installations and urban farms. DIY urbanism is a bottom-up approach to create innovative uses for public space
QUIZ: HOW SOON IS YOUR OFFICE MOVING TO MIDTOWN? CONTINUED FROM PAGE 28
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You sure you don’t already work in Midtown? If not, get down here!
Likely moving soon, especially if your boss is smart.
May not be relocating to Midtown soon. Give your boss this magazine so they can learn why it’s worth it!
– and complements traditional urban public spaces. Regardless of implementation, community spaces serve as hubs for activity and magnets for urbanites, and a reason for suburbanites to visit the core. Road Infrastructure Metered parking stalls line our streets and occupy two lanes of space on almost every street in the grid. As an avid cyclist, I welcome the opportunity to transform these marked stalls into wide, safe lanes for cyclists and pedestrians. What other effects will AEPVs have on Sacramento’s landscape? Public Transit / Sprawl Tesla’s Model S can exceed 200 mph. If you were in your autonomous Tesla going from Roseville to Downtown, the commute would be 8 minutes, not 45 minutes as it is today during rush hour. In the future, an hour-long commute is not from Rocklin - it is from Fresno. This reduction in commute will completely change our perception of time, space and suburban sprawl. AEPVs also eliminate demand for existing and proposed mass transit. For comparison, the HighSpeed Rail system envisioned from San Francisco to Los Angeles will take 3 hours. In an AEPV, you can go from door-to-door in less time with less hassle. This will pose a significant challenge to public transit, and the benefits will likely push many riders into choosing an AEPV over other mass-transit options. The revolution of commute times, perceived distances, and the convenience to get to your destination in considerably less time will make dense cities more efficient and livable – and because of this, AEPVs will exacerbate sprawl – unless our local government and developers create inspiring projects and compelling reasons to live and work in the urban core. Urban Diversity As wages have stagnated for lower income workers, and real estate costs in the Sacramento region increase, many people have moved to the suburbs (and also elect employment outside
the grid). A decreased cost of living due to AEPVs will increase affordability for lower income workers to reside in the core (or commute from further distances), creating a more vibrant and diverse environment. In turn, this will also help urban employers in the retail and restaurant sectors recruit and retain employees. Employment According to the State’s Employment Development Department, more than 25,900 people work in the transportation sector in the Sacramento area. Most of these jobs (ride share, taxi, delivery, trucking, etc.) will transition to autonomous technology. It is imperative that our city leaders and business leaders continue to recruit new employers to the region to counter balance the gradual loss of nearly 26,000 jobs. Smart Construction In addition to the transformation of existing stalls and structures, developers should be designing their projects to survive the next 100 years. We need to lay the “smart construction” groundwork now for a future retrofit to come – and to design buildings that offer the flexibility of adaptive re-use down the road. Many developers are thinking about weight loads, column spacing and floor height (to accommodate installing mechanical, electrical and plumbing) when designing their parking structures for future re-use.
Top: The Sacramento Food Co-op’s garage at night. Future corner office? Bottom: Another view of the Dept. of Corrections parking garage. What will happen to these garages when they are no longer needed?
The next twenty years will be exciting – because we are transitioning from technology transforming our digital spaces to technology transforming our physical environment. AEPVs will give Sacramento developers the opportunity to design buildings for several lifetimes of use. Just look at the success of the former industrial buildings along R Street, now lusted after by architectural firms and retailers who love adapting challenging spaces. Get excited for a future that looks a bit like the present: a bidding war for a micro-apartment in a former parking garage.
701 1 2 t h R ENO VATE D O FFI CE BUI LDI NG I N ALKALI F LAT FOR S A LE OR LE A S E
F O U R B LO C KS FROM THE CONVENTI ON CE NTE R T W O B LO C K S FROM THE CREAM ERY TO WNHOME DE V E LOP ME NT A N D I N TH E MI DDLE OF UP-AND-COM ING A LK A LI FLAT
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O u r apol og ies f or t he deep hous e mus i c you ma y hea r i n th e bac k gro u n d w h en yo u c al l .
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ABOUT TURTON craft W e t a k e o u r c r a f t s e r i o u s l y. Q u a l i t y, k n o w l e d g e , a t t e n t i o n t o d e t a i l . I t ’s w h a t w e d o .
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We a r e a b o u t i q u e f i r m m a d e u p o f f r e s h a g e n t s a n d o u t o f t h e b ox m a r k e t e r s w i t h a p a s s i o n f o r S a c r a m e n t o. We t o r e d o w n t h o s e d i v i s i v e o f f i c e wa l l s a n d c r e a t e d a c o l l a b o ra t i v e w o r k e n v i r o n m e n t w h e r e all information is shared to benefit our clients and t h e i r r e a l e s t a t e . We r e c o g n i z e t ra d i t i o n , y e t e m b ra c e t h e f u t u r e . We a r e a f i r m c o m p r i s e d o f c o m mercial real estate pioneers that think beyond the s c o p e o f w o r k t o g e t t h e jo b d o n e .
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Sacramento Commercial Real Estate, Development & Culture. Written and Published Entirely by the Turton Team. Distributed by the Sacramento B...
Published on Sep 27, 2017
Sacramento Commercial Real Estate, Development & Culture. Written and Published Entirely by the Turton Team. Distributed by the Sacramento B...