GRID Magazine - Spring 2019

W e s t S a c r am e n t o s c u lp t u r e " S u b t il e " b y F r e d e r i c o D i a z

S ACR A MEN T O COMMERCIA L RE A L E S TAT E, DE V ELOPMEN T, A ND CULT URE

08

What urban multifamily tenants want!

ISSUE FIVE

12

Recession? Urban Sacramento will be insulated!

32

Randy Koss tells us what's going on in West Sac!

TURTON

WRIT TEN, PHOTOGR APHED, AND DESIGNED IN-HOUSE BY THE TURTON TE AM

SPRING 2019

AUTHENTICALLY URBAN RE TA IL J RES TAUR A N T J OF FICE One block from the Golden 1 Center

916.573.3309 - T URT ONCOM.COM

0

2

A f ew not es, sc ribbl es, a nd mus i ngs b efore we b egi n.

Mural: Maren Conrad (@marenconrad)

SINCE LAST ISSUE...

04

Land of O.Z.

07

Uber vs. Bikes vs. Walking

08

What Tenants Want

11

Reclaiming the Waterfront

12

Recession? Not for Sac!

16

French Fries

19

Cities are for People

25

CRE Glossary

26

Grid-adjacent Gem: East Sac

30

Workout Flowchart

32

A Chat with Randy Koss

35

SMUD: Energizing the Grid

36

State of Affairs: Place Marketing

STARK SELF-AWARENESS

VICES

ECONOMIC PROJECTIONS

New words invented: 5 Political debates had: 23 Deals closed: 114

ROOM FOR MORE HUMOR

ARTIST RENDITIONS

BIG IDEAS

QUESTIONABLE STATISTICS

COMFORT FOOD

Ou r magazin e sta c k in g p l an !

POSSIBLE PANDERING

CONTENTS

THE SENSES

ISSUE 5 | SPRING 2019

OPTIMISM

Team trips to LowBrau: 6 Collective miles of hiking done: ~96 Hours of building tours: ~2,000 Vodka handles consumed in-office: 2 Sitcom-like situations: >14 Games of Mario Kart 64 played: 45 Neighborhood cats identified: 2 JUMP Scooter crashes: 1 Games won by Brooke: 36

SMART-ASSERY

k for!

Didn't as

ARBITRARY MEASUREMENTS

Stats yo u

TURTON

SOME WORDS FROM

KEN TURTON - PRESIDENT

24 0 9 L S T R E E T, S T E 2 0 0 , S A C R A M E N T O , C A 9 5 816

PRESIDENT

KEN TURTON

Lic. 01219637

916.573.3300 | kenturton@turtoncom.com VICE PRESIDENT

VICE PRESIDENT

VICE PRESIDENT

VICE PRESIDENT

DIRECTOR

AARON MARCHAND

Lic. 01711650

916.573.3305 | aaronmarchand@turtoncom.com

JON LANG

Lic. 01934934

916.573.3302 | jonlang@turtoncom.com

SCOTT KINGSTON

Lic. 01485640

916.573.3309 | scottkingston@turtoncom.com

JOHN MUDGETT Lic. 01765754

BROKERAGE

It was April 2008 and the real estate world was on the brink of economic Armageddon. I came home one evening after a session with my therapist, walked into the kitchen, where my wife Melissa was busy preparing our lettuce rations for the evening, and proclaimed, “I think today is the beginning of what could be the best five years of our lives. We are going to travel the world and do it on the cheap!” I said. “We are going to become backpackers.”

She didn’t respond. At least not verbally. She simply gave me the ‘Look’. You know the one. Melissa, like most women, speaks fluent eye contact. “Because we’re those rare hardcore outdoorspeople who don’t own a tent, backpack, sleeping bag or hiking boots?” her sarcastic eyes chided.

Fast forward to 2019 and we have now completed 31 of the top 50 treks in the world. As you can imagine, many of these hikes are difficult for a variety of reasons: Terrain, climate, body odor, predators, tainted water, dysentery, insects, irritable disposition, ascents, descents, body hair, logistics, altitude, inaccurate maps, lack of toilet paper not to mention 14-hour flights in economy seating.

The most common question I’m asked regarding our ambition is, “Why?” After much contemplation, I've determined the reason we love hiking is the same reason we love midtown: Being part of a living ecosystem.

When you are hiking through an alpine forest in Alberta, or a rain forest in New Zealand, or the melodic sounds of cowbells gently chiming in the Oberland of the Swiss Alps you are surrounded by life. The flora, fauna, birds, fish, everything. It’s a symphony of sound, color and perfection.

When we day hike we are visitors in these environments. When you backpack for multiple days you become part of the environment. Embedded seamlessly into the life force that once surrounded you but now includes you. It’s intoxicating, addicting and unexplainable. You never feel more alive than when you are synthesized into a living ecosystem.

That’s what I love about working in Midtown too.

I know what you’re thinking. Turton’s spending a little too much time at the Midtown cannabis dispensaries. Don’t get me wrong. I’m not comparing Midtown to Machu Picchu or Torres del Paine or the Dolomites. What I am saying is Midtown has its own energy or life force that provides a similar emotional reaction.

It’s not just concrete walls, a parking lot and your car. It’s streets lined with trees whose leaves change daily, dogs strolling on grass lined sidewalks as they head to the local dog park, the local barista bantering about their latest roast, a sea of smiling faces during a summer concert in Caesar Chavez Park, the rain and wind resonating rhythmically on buildings, groups of hipsters sharing pitchers at the local watering holes watching a more adventurous group doing same on a Brew Bike. It’s alive.

When you work or live in Midtown you are no longer an entertained observer of the ecosystem. You are part of the ecosystem.

It may not be the Swiss Alps, but you feel very alive. And I love feeling alive.

916.573.330 0

916.573.3306 | johnmudgett@turtoncom.com

PATRICK STELMACH

Lic. 01964999

916.573.3314 | patrickstelmach@turtoncom.com

DIRECTOR

SEAN TOOKE

Lic. 02063940

916.573.3313 | seantooke@turtoncom.com

DIRECTOR

ZACHARY HOOKER

Lic. 02013574

916.573.3315 | zacharyhooker@turtoncom.com VP OPERATIONS & MARKETING CREATIVE DIRECTOR

MARKETING ASSOCIATE

BROOKE BUTLER 916.573.3301 | brookebutler@turtoncom.com

COREY LAU 916.573.3304 | coreylau@turtoncom.com

BRITTA SWANSON 916.573.3304 | brittaswanson@turtoncom.com

OUR SERVICES

CONTACT US

Landlord Representation

2409 L Street,

Tenant Representation

Ste 200

Buyer Representation

Sacramento, CA 95816

Seller Representation

916.573.3300

Building Valuations Market Updates Property & Project Mgmt.

TURTONCOM.COM

M A R K E T I N G / O P E R AT I O N S

KEN TURTON

T U R T O N CO M .CO M

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Opport u nit y Z ones in Sa cra mento offer new p a ths for deve l o pm en t .

A N E W TA X IN CE N T I V E M A K E S S A CR A M E N T O

THE LAND OF O.Z. JOHN MUDGETT - VICE PRESDIENT

Here’s a scenario we encounter all the time: You want to sell your property, but you don’t want to pay the taxes, nor do you want to engage in a 1031 Exchange to defer the gains.

Normally, you’d be out of luck. But what if you could sell an asset (of almost any type), defer taxes on the gain, reduce the gain by 15%, and then eliminate post-acquisition gains by holding the new investment for a minimum of 10 years? It sounds like an investor’s fantasy, but it does exist, and sophisticated property owners are making strategic, calculated moves in this new area of real estate tax strategy.

Our Federal government has long been interested in incentivizing the private sector to invest time, effort, and resources in the nation’s less privileged communities - this has historically taken the form of tax credits for low-income housing developments. However, the IRS recently finalized regulations for a game-changing alternative.

Opportunity Zones (and the derivative Opportunity Funds) are geographic districts which provide tax incentives to investors purchasing in that area. These zones are mostly underserved communities with many vacant lots. The ideal candidate for an Opportunity Zone investment is a ground-up development or significant value-add development; an investment with a significant upside.

Once an equivalent investment has been made, the original capital gain has been paid (which is also reduced by 1015%), and the asset has been held for ten years, there is no future capital gains tax to be paid.

This changes the dynamic of real estate investing. No longer is an investor beholden to the endless cycle of 1031 exchanges to avoid paying the capital gains taxes. No longer will families need to wait until an estate event to sell commercial real estate while avoiding the tax consequences.

While the focus of this legislation is to invigorate the lowest income areas throughout the county, the maps outlining Opportunity Zones were selected by the governor of each state, reviewed by economic development officials, and confirmed by the IRS, who used somewhat outdated census data for income statistics. That is great news for Sacramento investors because our community has improved dramatically since the last census being used by the IRS. Large swathes of prime developable land in Downtown Sac, West Sac, Midtown, and Power Inn are all located within these Opportunity Zones.

At our office, we’re experiencing significant interest in Opportunity Zones from the investment and development community. This is encouraging for our city’s momentum! Sacramento desperately needs to densify and provide more living spaces to our region’s burgeoning population. At a time where some are concerned about how long this wave of growth will last, bold entrepreneurs see Sacramento as the Land of Opportunity (Zones).

RETURNS

ON INVESTMENT How much does $100,000 of invested capital turn into?

How much more money can be made by investing in an Opportunity Zone? A team of esteemed economists provides an economic projection for your enjoyment!

Source: Baker Tilly (2018)

$250K

O.Z. cash flows $242,659

$225K $200K $175K $150K $125K

Non-O.Z. cash flows $188,916

$100K YEAR 5 YEAR 7

YEAR 10

Left: Numerous plots of developable land are within Opportunity Zones, like this one our firm is selling in West Sacramento.

WHO’S HELPING YOU MAKE

YO U R N E XT MOV E ?

TURTON COMMERCIAL - 916.573.3300 - TURTONCOM.COM

TURTON

TURTON

FOR LEASE

916.573.3309

LUXURY MIXED-USE PROPERTY Retail J Restaurant J Office

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S o m et imes, it ' s not about the des ti na ti on, b ut the journey ther e .

CR O S S - TO W N

TRAVEL TIMES PATRICK STELMACH - DIRECTOR

How long does it take to get from the middle of Midtown (our office) to everywhere else in the Grid? To deepen your understanding of Sacramento, we raced JUMP Bikes vs. personal cars vs. Uber rides to various locations with timers!

For this exercise, participants took three different modes of transportation from the Turton office (2409 L Street) to different parts of town. Timers were began simultaneously before the participants dispersed to find their respective vehicles.

The timer still ticked for JUMP bike users as they searched for

an available bike. The times also include the wait time for the Ubers and the parking time for the personal cars. Key takeaways: Ubers are optimal for most distances, but lose to cars in locations with abundant parking. And JUMP Bikes offer an affordable alternative that is often the fastest way around.

Sutter's Landing

8:10 8:25 11:16

Shine Cafe 9:14 6:45 9:20

MARRS 4:30 6:07 5:49

DoCo 15:23 14:37 12:45 14:38 18:48 12:10

Capitol Mall

8:30 9:46 6:29

Ice Blocks 16:46 13:20 12:58

Southside Park

7:45 5:39 8:54

Sac Food Co-op

0

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Tena nt Rela t io n s Tip # 1 : Leav e t h e m al o n e as m u c h as po s s ibl e.

Easy to live car-free

SCOTT POLASKE

"Four years ago, I sold my car and moved to the Grid. I needed to live in a highly walkable part of town. I remember studying the area on Google Maps, noting the distance of prospective apartments to the locations of grocery stores, restaurants, exciting bars, parks, river entrances, and my office. Living in the Grid without a car is so normal to me now, everything I could ever need or want is within walking distance."

Amazon Drop Box at Q19

Ample parking "As a renter in Sacramento's Grid, one of my top priorities is affordable private parking. As the city grows I think one of the most important ways to keep a diverse population of renters will be ensuring we have a way to park close to our residences. I love being a drummer in Sac, but the old 'leave your flashers on and hope nothing goes wrong while you load your things' routine can get tiring!"

WHAT TENANTS WANT

In the action vs.

On the outskirts

RESIDENTIAL

ON THE GRID

We did what many multifamily landlords don't have time to do: directly ask apartment tenants in Midtown what they want.

CASSIE MANCINI

"I moved to Midtown because I love being in the middle of everything! I like the energy and activity, of all the people walking around and going out at night.

Since I go out pretty often, I don't mind the music and revelry. I’m so happy that I found an apartment that was centrally located and close to public transit!"

ZACHARY HOOKER - DIRECTOR

QUYNN MEYERS-KELLER

PHILIP PETERSON

"I really try to limit my driving, so having walkable access to coffee shops, restaurants, and my work was important to me. As someone that's an avid cooker, I also consider the usability of the kitchen - I NEED a gas range and big kitchen KYRA KLOPP

to cook, so that's one of my priorities."

"I love how cool Midtown is as much as the next guy, but living outside of central Midtown fits my lifestyle better with less noise and action. I love getting a great night of sleep and catching a run at Sutter's Landing before the sun comes up, so the quiet outskirt

"Honestly, I just don't want my packages stolen."

ANDREW MCEWAN

neighborhoods are my preference."

Communal hangout space

Common Room at Warehouse Artist Lofts

MORGAN CONLEY

I like the location to either be close to my work or to close to the areas of town I like to frequent in my free time. I also really enjoy having communal / public space that I can host in without having to dirty up my own apartment. My friend lived in a really cool complex which had a rooftop deck with a barbecue and couches.

I like the idea of having that option!

Living room at Q19

It's gotta be nice GARRETT HANKS

"I know this sounds a little high-maintenance, but I vastly prefer brand new modern apartments and condos to older ones. I like stuff that's clean and works well. Also, I like high ceilings or else I feel cramped."

16 Powerhouse - Photo by Nicholas Wray

do people deal with leaving the BRENNA

Dataphilia:

WHAT MATTERS MOST IN A RENTAL? For your consumption, we gave our local friends 10 points to distribute amongst qualities they value most in a rental and averaged them! n=16 ON-SITE LAUNDRY WALKABLE PET LOCATION FRIENDLY NEW PARKING FINISHES

5 4 3 2 1

K E N N E A LY

house to wash their clothes? It's be-

OOH, SHE MAD

come a luxury service down there.

To top it off, half of the places WITH on-site laundry have coin-operated machines that take like

"I've got a lot to say about one

three dollars to do a load. If I do

thing: laundry. Why do so few

two loads a week, that means I'm

apartments have on-site laundry?

spending an extra $300 per year on

I have been trying to move to Mid-

laundry. Nonsense!

town for over a year and very few

I confess that my perception may

decent one-bedrooms with on-site

be skewed by my Cameron Park up-

laundry are in my price range. How

bringing, but still. Dang."

URBAN PROPERTIES

Small to Midsize Office & Retail for Lease

1401 21st* - 1630 I - 1616 I - 817 16th - 713 9th - 1014 21st - 2001 P - 1614 19th 725 30th - 2131 Capitol - 1220 H - 1930 H - 2420 K - 1600 H - 2801 J 2115 J - 5025 J - 1415 21st - 3319 J - 1015 20th - 716 10th - MARRS - 10th & R Mu

ral

916-573-3300 turtoncom.com

by:

Ra

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@a

rtb

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1

1

Ma y be some day, w e c ould ha ve a grea t wa terfront li ke every o t h e r c it y o n a riv er... W h at ? No, I ' m n o t bit t er!

Watercolor rendering by Caroline Dale

SAC R A M E N TO CAN RECLAIM ITS WATERFRONT BY INS TA LLING A N

I-5 DECK PARK

WATERFRONT IDEAS WELCOME! Sacramento is currently doing an open competition for ideas that reimagine the Old Sacramento Waterfront. The City, with input from residents and other stakeholders, will select projects to implement.

JON LANG - VICE PRESIDENT

In 1963, Sacramento lured Macy's to Downtown with the promise of building a freeway running along the river.

This had a massive effect on the usability of the waterfront. Dividing Downtown Sacramento from the riverfront has disengaged them from each other. The freeway creates a physical and psychological barrier which has stunted the utilization and evolution of both areas.

Access to waterfront areas has become vital to the desirability and, transitively, to the economic development of cities across the country. Esteemed cities such as Austin, Minneapolis, Chicago, Boston, Vancouver, and so on are defined by their proximity to a body of water. However, unlike Sacramento, these cities have transformed respective waterfronts into public amenities featuring pedestrian trails, amphitheaters, sports fields, art installations, and retail promenades. Why don’t we have any of this?

If our city wants a functional waterfront, Sacramento needs to cover I-5 with an urban deck park extending from Capitol Mall to R Street.

Deck parks cap sunken freeways with public space, allowing the natural reconnection of the adjacent districts. Imagine being able to walk straight from Downtown

to the waterfront without needing to navigate around an 80 mph river of metal. Caltrans, in a 2018 report, note that these kinds of parks “are important in repairing the fabric of communities by providing physical unity and social remediation where the community may have been divided in the past by freeway construction.” This sounds like exactly what our city needs.

Old Sacramento could become a natural extension of Downtown when not isolated by the river to the west and freeway to the east. A deck park would eliminate much of the perceived egress and ingress impediments that has stifled the area’s growth. It would no longer be considered a quarantined chunk of the old city, but a meaningful historical district located in Downtown Sacramento, much like the French Quarter in New Orleans or the Charleston Historic District in South Carolina.

The benefits of the waterfront would extend beyond Old Sacramento and reach patrons, businesses, and residents in Downtown, Midtown and West Sac. And Sacramento as a whole would profit from improved national perception.

Deck parks are generally quite large and offer a variety of public amenities. San Francisco, for example, has utilized deck parks to add communal areas featuring picnic tables, dog parks, and sports facilities. Con-

versely, cities like Columbus, Ohio, have used the additional surface area for new high-density infill development, including retail space, museums, libraries, and art galleries. A study by the Center for Park Excellence found that the average size of the deck parks across the U.S. is eight acres covering nearly 1,600 linear feet of highway.

In 2012, Dallas completed a $112 million, 5.2-acre park over the Woodall Rodgers Freeway featuring a playground, reading nook, area for food trucks, and a free concert venue. Most notably, the deck park has reestablished connectively between two detached neighborhoods. With Dallas paving the way, at least 24 deck parks have since been completed throughout the country and dozens more have been proposed in Philadelphia, Denver, Atlanta, and Los Angeles.

These types of parks have moved from being unfeasible, to novel, to completely practicable in less than a decade.

The decision to build Interstate 5 through the central city severed the city from its waterfront. A deck park would reconnect what Interstate 5 disconnected. It would allow the central city to reclaim its waterfront as a public amenity and be re-attach Old Sacramento to the urban core.

Can you imagine this? Let’s make it happen, Sacramento!

1

2

Sac rament o is mu c h more p rep a red thi s ti me a round!

WH Y W E TH I N K THE URBAN CORE IS (SO RTA )

RECESSION-PROOF SCOTT KINGSTON - VICE PRESIDENT

W Will Sacramento be hit hard in this looming recession? Will property owners need to foreclose in droves? Will your favorite pastry shop shut its doors for good? We say no! Read on to learn why we think Sacramento will be insulated from the next downturn.

AN IN-OFFICE SURVEY: Have you had a client express worry about an imminent recession?

No

Yes 33%

Top: The sun may be setting on this cycle, but this river is still flowing!

66%

n=9

Unrelated data from our office!

We have had some amazing years of urban renewal in Sacramento. New construction is still ramping up and there are several large development projects on the horizon which will continue reshaping the urban core.

With a decade now between us and the beginning of the 2008 market crash, it’s clear our city has made outstanding progress in revitalizing the urban core and overcoming the immense

difficulty that the recession imposed on our city’s growth.

All the same, many are curious what lies beyond the curve.

There are large moving pieces outside of our local market's control which throw uncertainty into the equation. However, for Sacramento property owners, worries can be quelled by knowing the local market is robust enough to withstand an economic downturn.

In Lavender Heights, the stiffest drinks are at:

The Merc

8.3% 50%

16.6%

The Depot

25%

n=12

4 reasons we think Sacramento's urban core is safe!

Faces

Badlands

1

The migratory path of the San Francisco native

Census data shows that net migration to the Bay Area peaked in 2014 and has been declining every year since. Frustrated with the Bay Area's high housing costs, 46% of residents told the Bay Area Council that they plan to move elsewhere soon. Where are they going? Here. The top-searched destination for Bay Area Redfin users was Sacramento1.

The steady flow of coastal migrants with higher buying power will not only buoy the local economy, but also increase residential demand and insulate residential investments from the effects of a recession.

1

Source: redfin.com (2019)

46,941 SF OF URBAN O F F I C E SPACE FO R L E A S E

1300 U Street, Sacramento, CA 95814

Near the R Street Corridor!

TURTON COMMERCIAL - 916.573.3309 - TURTONCOM.COM

COMING SOON R A R E U R B A N R E TA I L F O R L E A S E The Press Building @ Q&21St & Market + Makers @ The Mill At Broadway

Turton Commercial - 916.573.3300 - Turtoncom.com

1

5

Downtown Office Vacancy Rate

Source: CoStar (2019)

11.0% 10.5% 10.0% 9.5% 9.0% 8.5% 8.0% 7.5% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

2

Developers didn't overbuild

In the pre-recession boom, the urban core added over 800,000 SF of private office development which took over five years to fill. This time around, developers were far more cautious. Ice Blocks is the only significant private sector office development to be built. The 100,000 SF of office space was 100% leased before construction wrapped up. As urban tenants expanded and new companies moved Downtown, vacancy rates fell and rental rates shot up – this insulates landlords from sitting on cavernous vacancies when the market eventually cools.

Similarly, this cycle’s retail developments were designed to be lowrisk. DoCo and The Ice Blocks delivered nearly 250,000 SF of new retail space for the market to absorb – but Sacramento actually has 350,000 SF less retail space than in 2008 thanks to the demolition of the Downtown Plaza. DoCo and Ice Blocks retail are currently at 85% and 90% occupancy, respectively, indicating that our retail market is much more robust heading into this slump than the last one.

3

A TEST OF SOCIAL AWARENESS! Start at zero. Add or subtract points for each answer.

1. YOU'RE SICK. YOU: A) Notify coworkers of your illness and keep distance. (+10) B) Stay home to self-quarantine. (+25) C) Try and quietly "power through it." (-25) D) Come in even though you feel like crap because it's Karen's birthday and you want a damn slice of cake. (-35)

More diverse employment base

The State of California occupies more than 18,000,000 SF of space in the urban core. Prior to the last six years of prosperity, the city’s retail scene focused almost solely on the 9-to-5ers working for the State, meaning Downtown Sac was dark and empty by the evening. The urban core was a monoculture of public workers. When government layoffs began in 2009, office vacancies rose and retail profits dropped because the local economy was built around government employees.

But now, after seeing numerous large office relocations to the Grid, our workforce is much more diversified, as are the retail options that serve them. This reduces the risk of an economic event knocking out the city’s vibrancy in the same way genetic diversity protects crops from blight.

4

HOW GOOD IS

YOUR OFFICE ETIQUETTE?

Regional tenants didn't leverage their homes

In the mid 2000s, retail growth largely relied on small regional tenants borrowing against their home equity to finance business expenses. The problem? Banks that lent against a borrower’s home equity were lending on an artificially increased home value thanks to the demand and CMBS bubble. As a result, once the borrowers’ new businesses began struggling in the recession, they often just handed over their house keys because the balance on the home loan exceeded the

home's value.

This time, the growth of retailers in the urban core has been far more organic. We’ve observed a methodical expansion of successful existing businesses like Kru, Beast & Bounty, Bottle & Barlow, and Temple Coffee.

We've also seen an influx of urban-compatible national chains like Starbucks Reserve, Mendocino Farms, and Punch Bowl Social. These retail tenants are past proof-of-concept and are capable of weathering a recession.

2. THE DEFAULT POSITION FOR THE TOILET SEAT IS: A) (+10)

Top: The Mill at Broadway is well underway. Builders are much more focused on the urban core this economic cycle.

B) (-10)

3. YOU AND A COWORKER YOU BARELY KNOW ARE WALKING DOWN A LONG HALLWAY FROM OPPOSITE ENDS.* AS YOU APPROACH, YOU: A) Grin with a downward nod and mouth "hi" inaudibly. (-1) B) Stop and engage them in conversation of any kind. (-10) C) Physically gesticulate toward them with finger guns or a high-five. (-20) D) Avoid eye contact and say nothing. (-5) *Note: there is no winning here.

QUIZ CONTINUED ON PAGE 25

1

6

Midtown is a bastion o f hi gh-q ua li ty fri es di vers e eno ugh t o s at is f y an y t as t e - e v e n you rs, w h ic h is ap p are n t ly q u it e as t u t e !

AN AN A LY S I S O F M IDTOW N' S

FRENCH FRIES COREY LAU - CREATIVE DIRECTOR

Potatoes and mankind share a long and primal connection. In fact, the simplest diet that humans can live on indefinitely is potatoes and milk. But today, potatoes mostly serve as a beloved vessel for vegetable oil. Even though they're surely restaurants' most marked-up items, we love french fries. And Midtown cranks out some righteous ones. For your enjoyment, we have conducted a highly empirical analysis of a few local favorites!

P 1

Der Biergarten

Price: $3.95

Temp: Hot

Size: Small

For lovers of potato skins, Biergarten is french fry heaven. A light batter coats each fry with an extra layer of crunch. There is some concern about rapid heat loss due to wind, here.

2

Kupros Craft House

Price: $5.41

In background: Barwest's absolutely delectable french fries

Temp: Warm

Size: Generous

In a surprise upset, the french fries from local favorite Kupros did not intrigue our team. The surface-area-to-volume ratio is a bit low. Additionally, they were oil-drenched and flaccid.

Soggy Potato wedge Unseasoned Frostburnt

Crispy Shoestring Highly seasoned Rich potato

Rather normal

Wacky

Soggy

Crispy

Potato wedge Unseasoned Frostburnt Rather normal

Dataphilia:

WHAT MATTERS MOST IN A GOOD FRENCH FRY? Taste is subjective, but apparently not when it comes to fries! We gave our coworkers 10 points to distribute amongst qualities they value most in french fries and averaged them. Each quality maxes out at 5 points.

Texture

n=8

4.70

Shoestring Highly seasoned

Seasoning

3.50

2.00

Rich potato Wacky

2.60

Potatoiness

3

Ink Eats & Drinks

Price: $4.00

Temp: Warm

Size: Generous

As one of the only late-night fry options, these automatically deserve respect. The fries are unoffensive and predictable - notable for a solid crunch. Not for serious connoisseurs.

Soggy Potato wedge Unseasoned Frostburnt Rather normal

Geometry

0.50

Fun Factor

Crispy Shoestring

The all-important ratio:

Highly seasoned

SURFACE AREA TO VOLUME

Rich potato Wacky

A(mm) V(mm3)

4

LowBrau

Price: $5.00

Temp: Warm

Size: Decent

Strong in potato flavor and gamey oil, the Duck Fat Fries are a Midtown staple. Admittedly, they fall short in the texture category, offering a more mushy than crispy experience.

5

Burgers & Brew on J

Price: $3.95

Temp: Warm

Size: Generous

While a formidable all-arounder, this fry excells mainly at crunchiness. This alone may be enough to catapult them to #1. The best part?

They're the cheapest fries in Midtown.

Soggy Potato wedge Unseasoned Frostburnt

Crispy Shoestring Highly seasoned Rich potato

Rather normal

Wacky

Soggy

Crispy

Potato wedge Unseasoned Frostburnt Rather normal

Shoestring Highly seasoned Rich potato Wacky

Often an overlooked dynamic, the ratio of surface area to volume largely determines a french fry's character. A higher surface area to volume area ratio results in a more shoestring style fry (and the inverse for a lower ratio). A skinnier fry means you get more crispy exterior per bite. As a fry afficionado, you should see that this translates to more oil and seasonings per unit of potato than a thicker fry offers. However, a thicker fry is known for greater heat retention and more potato-forward flavor. Regardless of your taste, you can rest assured that a local spot in Midtown serves it!

Top: LowBrau's Duck Fat Fries are a Midtown staple.

ON TURT

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LANG KINGSTON MUDGETT

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WARNING - MAY CAUSE INCREASED REAL ESTATE VALUE, REDUCED VACANCY, INCREASED OCCUPANCY, CRAMPING IN FACE DUE TO SMILING, MORE EXPENDABLE INCOME, UNCONTROLLABLE HAPPINESS, LOWER TENANT IMPROVEMENT COSTS, AND MORE WORK FOR COREY.

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T h e p h y s ic al sp ac e of ou r c ity i s co o l a nd a ll, b ut w ha t ca n i t b e doin g be t t e r?

CITIES ARE FOR PEOPLE SEAN TOOKE - DIRECTOR

T The ability to engage with other people has always been the foundation of great cities. In the 1970s, acclaimed urbanist and journalist William H. Whyte studied how people actually used city space. His team focused on urban centers. They concluded that “what attracts people most, it would appear, is other people.”

Photo: Wikimedia Creative Commons

"First life, then spaces, then buildings - the other way around never works."

- Jan Gehl

Danish architect and urban design consultant

Top: The streets are most lively when the cars go away. L Street between 15th and 16th was closed down to cars for Shepard Fairey's DJ show at the end of Wide Open Walls 2018 and the completion of his 15-story Johnny Cash mural.

Whyte noted that successful urban spaces shared one quality: they are proportionately sized and scaled to what humans are instinctually comfortable in, thus creating natural social interplay. Human scale spaces are what attract people. Whyte argued that we need to reimagine our cities in a way that creates more ‘unplanned collisions’ between people instead of discouraging interaction.

This isn’t a big new idea. In much of Europe, spaces were developed with the ground-level human experience in mind.

Famous cities like Prague, Paris, Frankfurt, Copenhagen, Barcelona, and Rome are all highly-regarded for their cultural richness and ease of navigation on foot.

Streets here are not only for the movement of people, but also the interactions of daily life. In Paris, the narrow, alley-like streets are peppered with produce markets, clubs, and cafes. In Barcelona, every block has its own dedicated central public space surrounded by six to ten story apartments. As human beings, our minds naturally feel comfortable in spaces with carefully prescribed ranges of scale and distance that have developed over millennia. In these spaces, we’re more likely to engage with the environment.

A good city’s physical design makes us feel like a part of the city’s ecosystem rather than passing through it.

But American cities, which expanded rapidly during the mid-century infatuation with

combustion-engine vehicles, tossed aside urban concepts established through eons of trial and error and instead sought to prioritize cities’ drivability. This manifested in the form of vast, ostracizing spaces in our civic centers. Entire blocks of paved parking spaces; buildings set far back from the road to make their signs easier to read from a moving car; wide, multi-lane avenues with 90-second light cycles – our cities were completely redesigned to accommodate the comfort of vehicular passengers at the expense of the pedestrian. As a result, people in our cities interact less and our social sphere has suffered. In the words of foundational urban studies activist Jane Jacobs, “not TV or illegal drugs but the automobile has been the chief destroyer of American communities.”

This began after World War II, when America threw away the centuries-old playbook on how successful cities where built and began focusing on the future of the automobile. The ‘Car-is-King’ mentality took over: cities began widening roads, narrowing sidewalks, slicing quaint urban neighborhoods with highways, and hollowing out downtowns with parking garages. Buildings grew further and further apart as old structures were replaced with surface parking lots.

Unsurprisingly, it turned out people didn’t enjoy being in cities once cars were introduced.

Cars are loud, dangerous, and emit poisonous gasses – not to

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mention that the city was deconstructed to allow for car traffic and storage. They not only disturb pedestrians, they isolate their riders from other car passengers and from the street itself, meaning those valuable unplanned human collisions are not taking place any longer (but hey, we get life-threatening vehicular collisions, now!)

Favoring privately-owned cars as the main transport method also amplified social inequity and increased crime in urban areas. Now that car owners could drive great distances very easily, small businesses and amenities within walking distance of neighborhoods moved away to locations which required a vehicle to conveniently reach.

Those who could not afford a car suffered more than inconvenience – they became civically left-behind. Then, as the suburbs grew, a greater percentage of urban core workers chose to commute in on freeways and return to the outskirts at night, leaving the less socially-mobile behind in a city stripped of its former services.

Dirty, unsafe, and uninspiring, Amer-

0

0.6% of America's landmass is taken by highway lanes (not including support infrastructure).

Source: American Road & Transportation Builders Association

ican downtowns experienced a mass exodus for the privacy and perceived safety of the outlying residential plains.

This completely devastated the nation’s cultural epicenters – cities – and created the monuments of self-isolation and entitlement we call suburbs.

The good news, however, is that renewed interest in urban centers is now spurring change and starting conversations about how to readapt our cities to work for people, not just cars.

As we look to the future, and with the pivot of attention back towards Sacramento’s urban core, we must dust off the old texts and find creative ways to bring these human-centric concepts back to the urban space.

We must intertwine these ideas with the leftovers of post-war America to make Sacramento the lively city it’s always wanted to be. Here are some useful concepts which Sacramento is beginning to think about seriously.

1 Design to human scale

The three freeways bordering Downtown and Midtown contain over 10,560,000 SF of lanes alone.

Source: Google Earth

“Human scale” refers to spaces which people feel most comfortable congregating in. Building to scale means building to the physical size and psyche of human-beings, but these proportions are not hard numbers and can shift based on the relative density of the area. Historically, architects were greatly concerned with the proper proportions of urban spaces. But thanks to the dominance of the automobile, planners of the 20th century designed spaces that are uncomfortably large.

Bottom: A notoriously cozy spot, Leistal Alley by Old Soul is scaled according to what people are most comfortable in.

Danish architect and urban planner Jan Gehl writes, “We went from having architecture suited to the travel speed of 5 kilometers per hour, to entire cities of 60 kilometers per hour, which meant wider streets, bigger advertisements, higher buildings, where we weren’t able to see anything in detail as we moved so fast.”

To truly embrace human scale development in our city, developers and builders need to engage the spaces-in-between to fit with the surrounding community. This is as simple as evaluating the edges of the structure to fit contextually with the rest of the neighborhood to provide a seamless experience with the existing setting. The MARRS Building on 20th and K Streets did a fantastic job creating a human scale destination. The former State warehouse with a 15-foot setback was converted into offices with ground-level retail featuring a raised deck that reaches all the way to the sidewalk for the whole block. The patio feels cozy and allows the retail to engage with pedestrians. And it shows – the MARRS Building has become ground zero for Midtown’s cool local events.

Designing to human scale also means mixing uses of space so that pedestrians aren’t caught in a massive sea of residential or commercial alone. In Midtown, many properties accomplish this by providing office or apartments over ground-floor retail.

The result is a patchwork of different uses and functions which creates a more exciting city experience.

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We’ve been hating on cars pretty hard here, but they have their role in cities, too. When we give priority to the car over pedestrians, we lose. When we give pedestrians priority over the car, we also lose. Automobiles should operate alongside people and other forms of transportation (pedestrians, bikes, buses, trains, etc).

The car was never the nemesis of strong cities – giving it total dominance was. The world’s greatest cities are characterized by transportation interconnection and variety. Residents should be able to easily transfer from one mode of transportation to another – this is called intermodal transportation.

The streets themselves must be designed for the slower movement of traffic so pedestrians and cyclists can safely navigate legible paths throughout the city. A popular concept with urban planners is the idea of a “complete street,” where pedestrians, bikes, cars, buses, and sometimes trains all ride parallel down a boulevard which was formerly a wide road.

Sacramento has done tremendous work to provide protected bike lanes along J, P, and Q streets in Midtown, but we are only a fraction of the way there. This mentality needs to continue if we want true ease of movement.

There needs to be balance and harmonius integration between all forms of transportation.

18th & Capitol Here, a blend of housing, retailers, and restaurants all share a common sense of scale.

A crosswalk island and 4-way stop slows cars and allows pedestrians to feel more comfortable. Legible bike lanes provide a third transport option. Wide sidewalks with patios and streetscaping engage buildings with the street. The scent of Mexican food wets the appetite and triggers cravings for a mango margarita.

3rd & J This epitomizes mid century, car-centric design intended to move large numbers of commuters into the Grid. Eleven lanes of loud car traffic - with vehicles coming in at over 50 miles per hour - merge into 4 wide lanes flanked by surface level parking lots. There are no bike lanes or crosswalks at either end of this block. Space usage is limited and gathering spots are absent. The deisel exhaust stifles one's breathing and leaves people kind of squinting until they leave the area.

3 Increase walkability

29 th & P 5th & I 12th & R 7th & K 3rd & L 3rd & I 19 th & Q 22nd & J 17th & R 20 th & K 2nd & K MORE WALKABLE 3rd & J 16th & W 16th & P 5th & Capitol 8th & Capitol 27th & J 18th & L 24th & K 18th & Capitol 13th & K

2 Integrated transit options

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LESS WALKABLE

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Great cities are defined by streets that step beyond the practical role of moving people around – streets which themselves become attractions that encourage leisure and social interaction. And while new developments can attract people to neighborhoods, the area won’t thrive unless the streets support it.

What makes a great street? According to architect and planner Kevin Lynch, people will use streets which are “legible.” More specifically, pedestrians need visual cues to lure them along the sidewalk. Jane Jacobs asserts that block lengths need to be short to encourage movement and allow for the crisscrossing of uses that creates the vitality of neighborhoods. Ultimately, successful city streets will form a web that allows people to move freely and efficiently between multiple nodes within the urban environment.

Fundamentally, the most walkable streets have sidewalks that facilitate the movement of people while also enabling the outplay of culture and life. Paths should be wide enough to comfortably accommodate two pals having a conversation while pedestrians bustle past. Walkable streets can achieve their goal in multiple ways, too. For example, J Street has been made more walkable by replacing one lane with street parking, putting a barrier between pedestrians and traffic.

Meanwhile, the Ice Blocks project at 17th and R Street features abnormally low curbs, increasing safety by forcing pedestrians and drivers to be more aware of each other’s presence.

All of this needs to be taken into account on both public and private planning for developments in the city. We need to counter the negative effects of America’s multigenerational public subsidization of car-related infrastructure. The redesigning of streets to improve walkability is crucial to restoring vibrance and functionality.

There are observable patterns that make a city successful. Are we doing things correctly? Or are we still following in the footsteps of larger cities who suffered the same “urban renewal” in post-war America? Are we thinking progressively about development and culture? Or are we doing the bare minimum that pencils? These are the questions we must ask ourselves if Sacramento wants to be a world-class destination. Collectively, we all want our charming city to grow - and I think we can do it in a smart way.

T U R T O N C O M . C O M - 9 16 . 5 7 3 . 3 3 0 0

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Le a r n more u nf amil iar or confus i ng i ndus try terms i n-p ers on b y m eet in g w it h a TCRE age n t f o r c o f f e e!

T HE C O M M E R C IAL REAL ESTATE

MINI-GLOSSARY JON LANG - VICE PRESIDENT

A collection of commercial real estate terms confusing to the uninitiated, finally clarified!

1 Eminent domain The government’s right to purchase property from private entities for public use. As required by the 5th Amendment, the owner must be given fair compensation for the property.

Government Official: “Hi, the Government is exercising eminent domain to purchase your property and convert it to housing for the homeless.”

Property Owner: “Oh good - then I’ll still be able to occupy it with no debt or rental obligation.”

2 Big hat; no cattle Terminology referring to a person acting as if they can execute a large transaction when they actually have very little equity or capital resources.

Investor: “I’d like to purchase this $10,000,000 property with a full non-recourse construction loan.”

Lender: “Hmmm… Big Hat No Cattle.”

3 Hard money loan Riskier loans used for quick acquisitions, turnaround refinancing, and foreclosures. Usually secured for a short time period and at a higher interest rate than traditional financing options.

Higher fees are generally expected.

Buyer's Google search: “what to do if property sale is closing soon and i can't get a loan” Hard Money Lender reviewing Google Analytics: *grinning* “Jackpot!”

Buyer: “Oh look, an ad for hard money loans!"

4 Zoning How a municipality assigns what can be done with land parcels. Zoning places limits on usage type, structure height, overall density, parking requirements, and more.

Beaming Property Owner: “We're gonna put a shiny eight-story building here! There will be creative offices over a luxury hotel with a bunch of cool restaurants in the lobby! And an underground parking garage! I'm so excited!”

TCRE Agent: “Uhh, the zoning is only R-1.”

5 Come-to-Jesus meeting If a party is irrational, and irrationality persists after multiple rational solutions are proposed, a final “Come-to-Jesus” meeting is called in hopes the irrational party receives an epiphany of religious proportion resulting in a more progressive response.

Nostalgic Property Owner on speakerphone: “What do you mean its overpriced? My grandfather built this Property with his own hands in the 1940’s - it's got the original roof, electrical panels and cast-iron plumbing.”

TCRE Agent: *whispering to coworker* “Time for a Come-to Jesus meeting.”

9 Coworking space A workspace occupied by many tenants in communal fashion, often on a short-term basis.

Aimed at creating a social business atmosphere and sense of community for entrepreneurial tenants.

Hipster 1: “I love this coworking space! For only $199 a month, I can operate my web-based platform selling personalized gift cards while sipping craft beer in a room full of art!”

Hipster 2: “Wait, I thought this was just a rad coffee shop full of abnormally-driven people?”

6 Percentage rent A lease provision where the tenant pays rent above and beyond their Base Rent based upon the sales volume made at the specific location in consideration for the traffic the building theoretically brings to the retailer.

Business Owner: “So the reason my business is doing so well and I’m paying percentage rent is because the Landlord made me successful?”

TCRE Agent: “Yep. Kind of like Federal Taxes.”

7 Blowing smoke up one's ass Over-inflating someone’s ego into thinking they are capable of completing a purchase or project they are incapable of or over inflating the potential opportunity of a project to a given individual.

Agent: “Wow... can you believe Jones thinks he can pay $500 per square foot for that building, fix it up, and still make a profit?!”

TCRE Agent: “No kidding. Someone is definitely blowing smoke up his ass.”

CONTINUED FROM PAGE 15

4. IT'S A CRISP 68° AND YOU'RE FEELING CHILLY. YOU: A) Initiate an open discussion about the temperature. (+15) B) Put a jacket on and deal with it. (+35) C) Rapidly increase your body temperature by attempting to repair the printer. (+40) D) Sneakily adjust the thermostat to your liking. (-50) 5. A COWORKER GETS UP TO GO TO LUNCH AND YOU WANT TO JOIN. YOU: A) Ask to join them, knowing they can't smoothly say no. (-25) B) Wish them a good meal and allow them to invite you. (+25) CONTINUED ON PAGE 35

8 Buying a listing When a real estate agent competing for a listing assignment quotes a prospective seller a property value considerably higher than the true market value of the property to secure the listing.

Buyer: “Are you kidding me??? That property is $1,000,000 over priced! Someone blew smoke up their ass!”

TCRE Agent “We agree. It would appear the agent bought the listing.”

More unrelated data from our office!

Which art gallery is coolest?

Art House

n=10 20% Don't want to reveal to normies

50%

10%

Elliot Fouts

20% B Sakata Garo

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G rid-adj ac ent ; v al u e-a dd p a ti ent!

SO , TH E M I D TO W N M ARKET IS TOO HOT, HM?

Mural: Tyson Anthony Roberts (@tysanthrobe)

TRY OUT EAST SAC! PATRICK STELMACH - DIRECTOR

M

EAST SAC

Midtown is rad, but it’s slim pickings for commercial space or property right now. Enter: East Sacramento, one of the bougiest residential markets in the Sacramento region! Though elusive, some commercial value-add opportunities are still available if you know where to look - and if your project speaks to the tastes of the community.

$2.33 / SF Current class A retail rental rate $1.48 / SF Current class B retail rental rate

East Sac offers a little slice of value-add and a healthy dollop of urban demand with lower risk than other up and coming commercial corridors. This once-sleepy neighborhood has evolved into an eclectic mix of swanky historical residences and gritty industrial warehouses.

With stately mansions, walkable retail corridors, and narrow treelined streets, East Sac has maintained a small town atmosphere while also attracting a new wave of high-end commercial tenants.

While national chains like Peet’s Coffee and Starbucks are closing up shop, local stalwarts like Pachamama Coffeebar, Chocolate Fish, and Bacon & Butter are thriving in this unique submarket which craves authenticity. High-caliber restauranteurs - namely Kru, OBO, Canon, Allora, and OneSpeed - draw patrons from all over the region with their specially-curated dining experiences. These restaurants are reuse projects in of themselves. Kru replaced the Andiamo Restaurant that shuttered half a decade earlier. And Allora took the place of a former charming,

Top: One of the more Instagrammable murals in East Sac located at Canon.

Bottom: Obo' Itialian Table & Bar brings a hip new vibe and is routinely packed for lunch on weekdays.

old-school florist shop.

Creative office users have taken notice and are inserting themselves into centralized locations like The Cannery on Alhambra to take advantage of the concentration of amenities. Quynh Yamamoto, Associate at Urban Hive, remarks that “being at The Cannery gives me access to awesome new restaurants and the chance to work in a high-end, professional workspace at an approachable price point.”

Additionally, the construction of thousands of multifamily apartments and student housing is transforming the former industrial corner near 65th Street into a “University Triangle.”

Within the next four years, 4,000

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T UR T O N C O M . C O M | 9 16 . 5 7 3 . 3 3 0 9

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“We were adamant about staying in Midtown until Patrick convinced us to view a property on the corner of 42nd and H Street. Driving down the tree lined streets with quaint shops and restaurants, we were sold before we even arrived at the property. We have made East Sac our new home and are absolutely in love with the area!�

- Carver Wright, Managing Director at Bryan Allen Events

Student housing units will be built within walking distance of campus near Folsom Boulevard south of campus. Developers are drawn to this area because high density housing can be very profitable near a growing university lacking in on-campus housing. The seven planned projects will turn a faded industrial nook into a teeming youthful village, offering students an area near campus to engage with the city. Getting students into nearby housing will help the university shed its commuter-school reputation while pumping energy into East Sac. Smart business owners see the value in using their office as a

branding tool and are seeking spaces which exude a modern, authentic vibe. Demand is high for raw architectural elements like thick timber cross-beams, polished cement flooring, and rustic brick construction. The issue is that this type of space is very scarce, with the now-100%leased Ice Blocks being one of the only Class A creative properties on the Grid. A keen investor will find, however, that East Sac is abundant in rustic, industrial buildings at a much cheaper price point than in Midtown or Downtown.

Off market, there are a surprising number of under-valued under-utilized quirky buildings, va-

Top: Sacramento State's new housing project which is currently under construction. (image courtesy of Greystar Student Housing) Bottom: Brayn Allen Events' office occupies what used to be an old East Sac craftsman-style home.

cant properties, and parking lots primed for development – particularly on Folsom Boulevard.

The combination of long-time business owners retiring and aging property owners getting fed up with property maintenance results in loads of hidden opportunities. These properties can be cost-effectively repositioned to capitalize on the growing demand from retailers and office users, and of course residential tenants, for space on the Grid.

East Sac is now getting the attention it deserves. Keen tenants and investors are finally realizing how green the grass is (and how great the beer is) on this side of the freeway.

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Somet imes, it ' s easier to ha ve deci s i ons ma de for you.

T HE S E M I - U N O FFICIAL SACRAM ENTO

WORKOUT

FLOW CHART

COREY LAU - CREATIVE DIRECTOR

A highly presumptuous and potentially-offensive decision tree for the athletically-indecisive!

Being fit in Sacramento can be hard. Sometimes you want to lift weights at Cal Fit but the weather here is too nice to be inside. Sometimes you want to go bouldering at Pipeworks but your arm is still sore from the bocce ball tournament at The Federalist last weekend. And sometimes you want to just go for a bike ride through town but you end up getting lured into a small taproom where you consume two pints of cider and an order of garlic fries. It can be tough to get a good workout in. We're here to help you stay focused!

Yoga: Yoga Shala, Zuda Yoga, Solefire, Yoga Seed Collective Cycling: Dai, Team Ride, Orange Theory, The American River Bike Trail Climbing: Pipeworks, Midtown Strength & Conditioning Boxing: Title Boxing, Midtown Fitness & Boxing Weightlifting: California Family Fitness, 24-Hour Fitness, Pinnacle Fitness, Capital Athletics Cross-Fit: Pipeworks, Midtown Strength & Conditioning, Crossfit Galvanize Free outdoor activities: Jog through Midtown, frisbee at McKinley Park, bocce ball at Sutter's Landing, adult jungle gym at Roosevelt Park, Old Sac Waterfront Yoga (Fall only)

START HERE!

Are you currently bedridden?

No

Are you willing to sweat?

Yes

Are you willing to comingle your sweat with someone else's?

Then what?

Eh

Do you have super good health insurance?

No

No

Jog by the American River or play frisbee in the park!

Be a yogi at Zuda!

Like what?

Hit on

Check out people in the mirrors at Cal Fit!

Yes

Do you feel the need to shave your entire body to fit in with your workout partners?

No

Get the most out of your policy with Cross-Fit!

Punch people at Midtown Fitness & Boxing!

Do you have money?

Yes

Go bouldering and belaying at Pipeworks!

Hit

Do you like trendy workouts you can tell everyone about?

Stroll under Midtown's shady tree canopy

Yes

Oh. Uhh, practice your kegels?

Would you rather hit people or hit on people?

No

No

Yes

Yes

Yes

Try cycling at All City Riders!

Yes

Are you comfortable in skin-tight clothing?

No

Confront your insecurities! Find something simple you can do you to remind you how sexy you truly are.

We don't just market your building - we market the lifestyle it facilitates.

CAPTURE

TURTON

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VIBE

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A B R I E F C H AT W ITH F ULCRUM ' S

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CHIE F INV E S TME NT OF F ICE R

RANDY KOSS I N T E RV I E W E D B Y: S C O T T K I N G S T O N - V I C E P R E S I D E N T

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E XP E R IE NC E

Randy Koss is a 30 year veteran of the commercial real estate industry. Prior to joining Fulcrum Property last year, he was Senior Vice President, Real Estate Development for the Sacramento Kings, and oversaw the development of Golden 1 Center and DoCo. Randy is now Executive Vice President and Chief Investment Officer for Fulcrum Property. He has his undergraduate degree in Economics / Business from UCLA and his MBA from the Walter A. Haas School of Business at UC Berkeley.

Senior VP of Real Estate Development Sacramento Kings Executive Director Morgan Stanley Real Estate Funds Asset / property / development Manager The Macerich Company

Top: Randy Koss in the Fulcrum office across from Memorial Auditorium.

Bottom far right: Koss poses on the street in front of the Elliot Building - one of Fulcrum's first projects in Sacramento.

&

JON LANG - VICE PRESIDENT

TCRE: How did working for the Sacramento Kings shape your outlook on development in Sacramento?

RK: Working for the Sacramento Kings was a great introduction to the Sacramento market, people, and community. It allowed me to be involved in a meaningful way to help shape how the urban core would look for generations to come. The public-private partnership with the City of Sacramento was well conceived and was the driving force that kept the team from moving to Seattle. Proof of success is not only in the development of Golden 1 Center, but its profound effect on the surrounding area such as Kaiser’s new medical office building, increased residential developments, and it’s looking like a probable MLS stadium announcement in the near future.

Overall, my role with the Kings was just the start of my opportunities to work on large-scale projects that impact the region. It’s a thrilling time when it comes to growth in the urban core - and I’m excited to continue being a part of it. Both sides of the Sacramento river are refocusing on riverfront revitalization which is something to be excited about for the next several years.

Development is noticeably active right now in Sacramento’s urban core, but what do you see as the current challenges of developing?

Developing in the urban core is challenging in the current envi-

ronment in which construction costs are relative to rents in the greater region. The booming bay area economy has increased construction pricing locally while rents and real estate prices have not risen at the same pace as in San Francisco and surrounding areas, meaning developers can’t afford to build. While Sacramento has come into its own as a cool place to live and owning its agricultural surroundings, large numbers of new jobs are key to sustaining growth. The development of Centene is a good example of strong job growth in the region; we need to do everything we can to continue that type of momentum.

On job growth, what do you think is needed to attract jobs?

Quality of life. I grew up and as a third generation San Franciscan.

Actually, Governor Brown was my grandmother’s paperboy in the 50s and stopped by her house on her 100th birthday a few years ago to wish her well. But in my past five years in Sac, I’ve gotten married, started a new family, and made great friends. My wife, Amy, and I are happy to call Sacramento home. When I think of the large tech companies in the bay area, I believe there’s at least a small percentage of workers who would opt for a better quality of life if given the choice - especially with the ease of commuting to the Bay as needed. I have friends with families in the Bay who say they would absolutely consider the opportunity.

Sacramento should continue attracting the big whales but also focus on companies opening satellite offices for the benefit of their employees. Sacramento has a great quality of life at an attractive price, especially when compared to the Bay Area.

The quality of life here is Sac is great and improving every day.

Where do you see opportunity for continued development and redevelopment of the urban core?

The pace of development in the urban core is somewhat constrained given where construction pricing is relative to rents. I think Fulcrum has the opportunity to continue to develop The Bridge District into the most unique residential community on the river in the region and immediately adjacent to Downtown Sacramento. What struck me when I moved to Sacramento is the limited amount of housing that is actually on the river.

The Bridge District, which is situated along the Sacramento River adjacent to Raley Field, is unique in that it is raised above the river levee system thanks to rice farmers elevating it back in the early 1900s. I envision it developing into Sacramento’s version of Mission Bay in San Francisco: a vibrant active mix of office, residential, retail, and hospitality.

broken ground on our next for sale product in The Bridge District which is called The R and will consist of 19 row-style for sale townhomes. And we are in the early stages of planning an exciting mixed-use project that will single-handedly transform people’s view of the riverfront.

We are fully sold out of our current ‘for-sale’ product and are in the final stages of leasing our newest apartment project, 980 Central. Last, but certainly not least, we are thrilled about What are your primary responeverything happening with sibilities at Fulcrum?

Top right: The Drake’s: The Barn. The oncoming Besides the day-to-day responBARN in West warm weather will be bringing sibilities of leasing, marketing, Sacramento's people out to experience everyand communications, my primaBridge District is thing Drake’s: The Barn has to ry objective is to generate new demonstrating offer including a great line up development opportunities. high demand of events and outdoor fun along We have several retail, office, for experiences along the river. the riverfront. and mixed-use projects includBottom left: What’s the single work-related ing The Cannery on Alhambra Fulcrum's item that you’re proudest of? (which is an adaptive reuse renovation of There are many to mention! project of a former tomato canThe Cannery on But one accomplishment I am nery), the MARRS building, and Alhambra proextremely proud of is having Ice Blocks (in which Fulcrum is vides an urban spent over 10 years on being partnered with lead developer environment which is atinvolved in the development Heller Pacific). The largest optracting creative of the Woodlands, a 28,000-acre portunity for Fulcrum in the tenants. master-planned community in urban core is The Bridge District.

Houston, Texas.

Our efforts are focused on con“What struck me when I moved to Sac- The ability to successfully cretinuing to build ramento is the limited amount of hous- ate community out the area, creating community ing that is actually on the river ... Every- on such a large allowed me and leaning into thing happening in The Bridge District scale to cut my teeth our riverfront in in the land deways we have is truly exciting. ” velopment businot done before ness by learning from some of What can you share that the pubthe best in the field. We were lic may not already know about able to transform an already what Fulcrum has planned for successful community by creWest Sacramento? ating a vibrant and flourishing Everything happening in The town center for people to work, Bridge District is truly excitlive and play. The holistic exing. We are in the middle of perience in city planning and construction of The Foundry, development gained from that which is our next phase of ‘forproject was invaluable to my lease’ residential units and will growth and career as well as in be a remarkable project that my projects with Fulcrum here includes community spaces in Sacramento. done in a unique way. We have

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LAND OPPORTUNITIES 1025 19th St - 425 G St - 714 14th St - 2816-2820 D St 16th & E St - 21St & T St - 6409 Folsom Blvd 2737 Eastern Ave - 4330 Watt Ave 18691 N Hwy 99 - 12673 McKenzie Rd

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Ne w dev el opment is key to the s ucces s of Sa cra mento, a nd SM U D re c o gn ize s it .

SM U D I S WO R KING W ITH DEVELOPERS TO

ENERGIZE THE GRID KEN TURTON - PRESIDENT

Is it rare to love your local public utility company as much as we love SMUD? Probably.

Especially at times like now where less-informed folks claim that all utility companies “just cause sewer clogs and forest fires!” At risk of sounding like a TV commercial: SMUD is different. And, while there are countless ways they invest in the community, we most appreciate their recent efforts to make commercial development in Sacramento easier.

At a time when our city is aching for new construction, imagine a developer running into this: The 100-unit housing project they planned to build on their 25,000 SF land parcel doesn’t have enough electrical power and installing the necessary infrastructure adds an unexpected cost of $500,000 to $2,000,000. As you can probably see, this jeopardizes the entire development and stagnates our housing supply growth.

Four years ago, the Sacramento Municipal Utility District (SMUD) decided they wanted to play an active role in facilitating development in the urban core. They recognized the importance of energy costs in new construction projects. If Sacramento was to achieve the urban renaissance envisioned by local residents and City Management, SMUD needed to be at the forefront of the process - not a deal-killing afterthought.

Seeking to energize the Grid both literally and figuratively, SMUD created their internal Commercial Development Team to engage with commercial property developers, owners, and brokers in the area in 2015. Led

by Chief Energy Delivery Officer Frankie McDermott, the team aims to troubleshoot electrical challenges for potential ground-up developments and large-scale renovations.

This team formulated a proactive plan: 1) Identify all significant land parcels within the Sacramento city limit.

2) Contact those respective land owners to determine their development plans.

3) Calculate a path of development through the urban core, thereby establishing a priority area for SMUD to provide adequate power access.

4) Provide a financial mechanism to help developers mitigate exorbitant electrical infrastructure costs that might otherwise prevent development.

They began by hiring the notoriously-amicable Rob Lechner, Director, Commercial De-

velopment, as their communication liaison to the development and ownership community. Lechner has become the interface between private commercial developers and SMUD. This position acts as a single point of contact and overcomes the communication confusion that formerly occurred.

Next, the team created the Central City 21kV Line Extension Program. This program identifies areas of future development where more electricity will be needed. In anticipation of this increased power demand, SMUD will then install a 21kV extension.

To further entice construction, they also implemented the Rule 16 Development Fee Offset Program. It provides to projects, 300kW or greater, a $125/kW offset applied to the interconnection costs from SMUD. For example, a project requiring a 500kW installation would receive nearly a $62,500 discount on the cost of equipment and installation – that’s significant!

SMUD is doing exactly what a publicly-funded organization should: work for the long-term benefit of the community. They don’t just provide electricity – they sponsor hundreds of local events, plant thousands of shade trees annually, and have commissioned over $100 million in contracts with small Sacramento businesses. And now, rather than reacting to emergencies that ultimately result in commercial development termination, they’re partnering with the City and developers to energize the ur-

OWNERS

Developers

BROKERS

Bottom: Frankie McDermott at the SMUD office.

CONTINUED FROM PAGE 25

6. YOU NEED INFO FROM A COWORKER BUT THEY'RE OUT OF THE OFFICE AT THE MOMENT. YOU: A) Text or call them (+5) B) Spin around in your chair until they return, then barrage them with questions before they reach their seat. (-45) C) Wallow in defeat and make a cup of tea, then surf Instagram. (-10) D) Email them the question and move on to other tasks, then follow up with them after they've settled in at their desk. (+40) 7. SOMEONE IN THE OFFICE YOU DISLIKE SAYS HI TO YOU. YOU: A) Amicably greet them back, maybe even ham it up. (+25) B) Do literally anything other than the above. (-25) CONTINUED ON PAGE 39

ban core. By easing the development process, SMUD is doing their part to extend our city’s exciting growth spurt and mitigate Sacramento’s housing crisis.

COMMERCIAL DEVELOPMENT TEAM SMUD ADMIN.

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E v er w onder w ho de ci ded to p ut a ll thos e b a nners up on lam p po s t s aro u n d t o w n ?

T HE B U S I N E S S OF BRANDING

MICRO-MARKETS BROOKE BUTLER (MSc Marketing) - VP OF OPERATIONS & MARKETING

W When you think of coming to the Grid to have fun, where do you think about going (other than Faces, of course)? Usually, you think of a general part of town before determining a specific destination, and this is by design.

A S U RV E Y O F R A N D O M M I D T O W N E R S : When you want lunch, which local district do you think of first?

The Handle District Old Sacramento Waterfront

The Sutter District

30%

15%

3% 5%

@stangerprojects

12% 35%

Midtown Central

The Kay The R Street Corridor

n=40

Top left: Artist Jeremy Stanger poses with the large mural he was commissioned for on the Alhambra Corridor, a new are of focus for the Midtown Association.

Stanger has done work for multiple improvement districts, all of which contribute to a location's sense of "place."

Warm nights always remind me of walking past the bustling Zocalo patio with my friends, a few cocktails deep. At this intersection, I feel like I’m “somewhere.” The streets are immaculate. Dining terraces are regularly packed full. The charming alleys are paved with bricks. The vibe is inviting. As I look around, I notice quirky bike racks, warm string lights, and vintage lamp posts that display banners reading “Handle District.” This area feels different – almost curated – but in a good way. What is it about this block?

Zocalo and its popular neighbors are located in Midtown’s Handle District – one of Sacra-

mento’s branded micro-markets.

The Handle District, the Sutter District, the R Street Corridor, the Kay all have one thing in common – they’re all purposefully branded by the local PBID (Property Business Improvement District) or BID (Business Improvement District) that they belong to. These improvement districts act as financing mechanisms for improvements and events in that area. Historically these types of organizations focused on street cleaning, improving safety, and engaging locals. But, looking forward, their role is shifting toward placemaking and location branding.

Since a location is consumed very much like a product or service, it’s important to use strategic marketing practices that cut through the noise of crowded markets to convey the promise of an enjoyable experience different from other locations.

Successful location marketing involves establishing the area’s values, personality, and value proposition before positioning it in relation to other markets. The location then uses this brand or message to target its desired audience using print media, websites, display advertising, social media posts, actual events, email campaigns, public relations, and so on. This establishes the location in the minds of locals. Next time they are in the mood to eat, shop, or party, the branded location will be top of mind. As a result, traffic and sales in this micro-market are boosted.

Where is Sacramento now in terms of location branding?

1

The Handle District

18th-19th Street and L-Capitol Ave

SOME WORDS FROM A F R I E N D O N T H E M AT T E R

Status: Established Brand Personality: Upscale, European, mature, eclectic Events: Bastille Day, Dress Up-Wine Down, Beer Street Online Presence: Website, social media, #handledistrict Physical Presence: Lamp post banners, door decals, parklets, bike racks

2

The Sutter District

27th-28th Street and J-P Street

Status: Established Brand personality: Trendy, entertaining, established, festive Events: Sutter's Fort Movie Night, Pooch Parade, Sacratomato Online presence: On Midtown Association's site, social media, #sutterdistrict Physical presence: Lamp post banners, bike racks

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The R Street Corridor

7th-18th Street and Quill Alley-S Street

Status: Established* Brand personality: Authentic, gritty, rustic, edgy, artsy Events: Our Street Night Market, R Street Block Party & Makers Mart Online presence: Website, social media, #rstreet Physical presence: Lamp post banners, branded arches, bike racks, murals *Room for improvement: Overcoming the walkability perception, update website more often

4

Midtown Central

20th-25th Street and Jazz Alley-Kayak Alley

Status: Established* Brand personality: Fresh, vibrant, youthful, energetic, party-time Events: 2nd Saturday, THIS Concert Series, Farmers’ Market, 3rd Thursday Online presence: On Midtown Associations site, social media, earned media, #exploremidtown Physical presence: Bike racks, lighting, stylized crosswalks, murals *Room for improvement: Mental disconnect from 20th Street and 25th Street. Midtown Central also could use a name/brand that is distinctly different than Midtown as a whole.

5

The Kay

7th-13th Street and L-J Street

Status: Semi-established* Brand personality: Urban, historic, charming, party Events: Ice rink Online presence: On Downtown Sacramento Partnership site, social media, #thekay Physical presence: Lamp post banner, bike racks that spell "KAY" *Room for improvement: Increase social media presence. Consider brand relaunch that reflects new developments and their vibrant mix of tenants.

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Old Sacramento Waterfront

2nd-Front Street and I Street-Capitol Mall

Status: Undergoing rebranding* Brand personality: Historic, cliche, rustic, tacky, tourists Events: Tower Bridge Dinner, St. Patrick’s Day Parade, Christmas Show, Waterfront Yoga, Dance on the Edge Online presence: Website, social media, #oldsacramentowaterfront Physical presence: Mural painted on train car *Room for improvement: Update website. Continue developing the new brand while reducing the western theme. Try more events that target locals.

Top right: The R Street Corridor boasts large amounts of physical branding, including these railroad-style R Street signs which line the street.

Top: Stanger hangs off of a boxcar he painted for the Old Sacramento Waterfront.

"Creating an authentic brand identity for a district or location contributes to increased awareness, which directly benefits stakeholders. It can help inspire a sense of community pride, attract business investment, and improve economic performance. Done correctly, branding combines strategy, creativity, and longterm investment, and is a reflection of the personality of a community. "

Emily Baime Michaels Midtown Association

Sacramento is full of established micro-markets with brand identities that speak to its citizens. Within the Grid, the biggest room for improvement lies with the Old Sacramento Waterfront and The Kay. Old Sacramento has rebranded as the Old Sacramento Waterfront with the tagline “come find it.” The new branding has the goal of communicating the area’s unique location as the front door to the Sacramento river while modernizing it to local visitors and investors. This micro-market is on the right track and needs to continue developing this new identity.

The Kay, established in 2012, could use a fresh rebranding as new developments like Golden 1 Center, The Hardin, and The Belvue continue to elevate the area. While we can appreciate that its name is rooted in history, let’s consider something that speaks to its vibrant new future. We can do so using tools like social media and events.

Sacramento is a diverse city in more ways than one. These recognizable micro-markets have a distinct flavor and contribute to the overall perception of our great city. By celebrating the uniqueness of each part of town, we can enjoy a more exciting city.

TURTON COMMERCIAL - 916.573.3315 - TURTONCOM.COM

F O R SA L E

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MultiFamily Gem 2615 H STREET | IDEAL LOCATION | $2,980,000

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So m et imes, w e g o a l it tle over the length req ui rements. . .

BITS & PIECES

W E D I D N ’ T H AV E S PA C E F O R E L S E W H E R E

A N D N OW, S O M E Q U IC K Q U E ST I O N S

QUIZ: HOW GOOD IS YOUR OFFICE ETIQUETTE?

For Sean Kohmescher, CEO of Temple Coffee CONTINUED FROM PAGE 35

8. DURING A TEAM MEETING IN THE CONFERENCE ROOM, A VERY SENSETIVE COWORKER FARTS. YOU: A) Laugh uproarously. (-15) B) Laugh uproarously, but only after another coworker begins laughing. (-25) C) Help them play it off by pointing out that their chair is creaky. (+20) D) Fart even louder to absorb the blame; a true martyr. (+40) TCRE: What was your inspiration for the name “TEMPLE” and how does it relate to your business?

Sean: Traveling in South East Asia, Temple was a daily community gathering space for rituals. The name seemed fitting to what I consider the greatest thing about coffeehouses.

TCRE: How would you describe your brand?

Sean: Our brand and company values are the same: Authentic, real relationships with our partners in coffee as well as our local community. Economic sustainability as well - we pay well for the coffees we purchase and offer our team members competitive wages, health insurance, and a 401K. And environmental impact is always important to us. We minimize it in all ways possible while also ensuring the practices are sustainable.

TCRE: How does the real estate you choose for your coffee shops contribute to your brand?

Sean: It is always a factor but has to be based on where the market is. Some regions need great building with character while other areas are just fine with something blander.

TCRE: What advice can you give to a retailer looking for space in the urban core?

Sean: It's tough, but make sure you are looking in new spots and not just the current hot spot that everyone else is also looking at.

TCRE: Are there any other business collaborations in the works?

Sean: Hmmmm. I can't share secrets.

9. YOU ____ KNOW HOW TO CHEW QUIETLY: A) Do. (+15) B) Do not. (-20) 10. YOU HAVE SOME LEFTOVER SALMON FROM LAST NIGHT. YOU: A) Microwave the salmon in the breakroom for lunch. (-100) B) ...along with brussels sprouts, too. (-125) C) Keep the leftovers at home and figure out something else for lunch. (+30) D) Microwave your coworker's lunch. (-150)

200+

You are a true stalwart of pro-social office behavior! We may even host a campy awards ceremony in the conference room just so we can recognize your competence!

125-200 RANT

People who park in others' reserved spaces

We get it, the majority of us are dependent on our cars, even in the Grid. But anyone literate should know NOT to park in a lot where the signs and pavement markings specify that you can't park there.

With the typical monthly costs of these stalls rising to over $100/

month for tenants, there is no reason that you, with your entitled or confused disposition, should plant your auto in these spaces. You will be towed. And the tenants who called it in will watch with glee from the windows as your car is toted off.

You're socially-aware, but not an over-achiever. We call this a "normal" coworker.

<125

In this range, don't count on your coworkers remembering that you've always wanted an ice cream cake for your birthday.

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G et sh*t done w hil e h a vi ng fun.

Tu r t o n C o m m e r c i a l R e a l E s t a t e

ABOUT TURTON

*

* Index finger Š 2019 This information has been secured from sources believed to be reliable. Any projections, opinions, assumptions or estimates used are for example only and do not constitute any warranty or representation as to the accuracy of the information. All information should be verified through an independent investigation by the recipient, prior to execution of legal documents or purchase, to determine the suitability of the property for their needs. Logos and/or pictures are displayed for visual purposes only and are the property of their respective owners.

Sean - Climbing the Via Ferrata at Rocklin Quarry Park

TURTON

T U R T O N CO M .CO M 916.573.330 0

24 0 9 L S T R E E T, S T E 2 0 0 , S A C R A M E N T O , C A 9 5 816

PRESIDENT

KEN TURTON

Lic. 01219637

916.573.3300 | kenturton@turtoncom.com

We are a boutique firm made up of fresh agents and creative marketers with a passion for Sacramento. We tore down those divisive office walls and created a collaborative work environment where all information is shared to benefit our clients and their real estate. We recognize tradition, yet embrace the future. Whether tenant or landlord, buyer, or seller, we combine industry knowledge, know-how, and resources with creativity, hard work, and a relentless passion to beat client expectations. Contact us anytime to discuss the perfect property for your firm or how to maximize the value of your own property. Interested in learning about the market or working for Turton Commercial? Letâ&#x20AC;&#x2122;s grab a coffee at Temple or a beer at LowBrau. Our treat.

VICE PRESIDENT

VICE PRESIDENT

VICE PRESIDENT

DIRECTOR

Lic. 01711650

916.573.3305 | aaronmarchand@turtoncom.com

JON LANG

Lic. 01934934

916.573.3302 | jonlang@turtoncom.com

SCOTT KINGSTON

Lic. 01485640

916.573.3309 | scottkingston@turtoncom.com

JOHN MUDGETT Lic. 01765754 916.573.3306 | johnmudgett@turtoncom.com

PATRICK STELMACH

Lic. 01964999

916.573.3314 | patrickstelmach@turtoncom.com

DIRECTOR

SEAN TOOKE

Lic. 02063940

916.573.3313 | seantooke@turtoncom.com

DIRECTOR

ZACHARY HOOKER

Lic. 02013574

916.573.3315 | zacharyhooker@turtoncom.com VP OPERATIONS & MARKETING CREATIVE DIRECTOR

MARKETING ASSOCIATE

BROOKE BUTLER 916.573.3301 | brookebutler@turtoncom.com

COREY LAU 916.573.3304 | coreylau@turtoncom.com

BRITTA SWANSON 916.573.3304 | brittaswanson@turtoncom.com

Jon and Scott - Riding JUMP Bikes through Old Sac

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