Redevelop Capitol Mall Offices Into Housing

Last year in August the State of California requested architects and general contractors to look at three state office buildings along Capitol Mall downtown and see if they can be converted into housing. Fast forward to today, the State of California has now declined any further request for money to move forward with the project... possibly because the crazy cost to continue and the States budget not as healthy as it once was. The three buildings that were under consideration were 800 and 801 Capitol Mall and 751 N Street. The three building could have add 700 units of housing. and it was clear the state didn’t have the funds for the adaptive reuse study. It will be interesting to see what other opportunities The California Department of General Services has for these buildings in the near future.

Update: Capitol Mall Redevelopment Proposal

 In April of 2021 I posted a grand vision the City of Sacramento has for the scenic Capitol Mall promenade west of the Capital up to the Tower Bridge. The city presently wants to spend $500,000 from Sacramento Area Council of Governments (SACOG) to move forward with the design. As reported by KOVR 13, the estimated cost to develop this plan could be $16 million, but if you have been paying attention to government spending (like many have) the real cost could be closer to $20 million or more.

The proposed design would be to reconfigure the street  to host large festivals and small farmers markets without shutting down the street. This would include removing 4 lanes of traffic and only have one in each direction, the center median of grass gone, wider sidewalks and another row of trees. I personally prefer  grand approach to Sacramento's Capitol Mall from the west this is a scenic promenade with a two lanes of traffic and a wide center strip devoted to vegetation. Today as we drive across the Tower Bridge, local residents as well as visitors have a clear view of the Capitol. Like I said in the previous post, what planners are doing is social engineering people to change driving habits. After Capitol Mall has the number of lanes reduced, traffic will be worse, hoping this congestion get you out of your car and take public transit instead. Manipulating people, changing behavior. This is happening on many downtown streets, often referred to as a road diet.  Your tax dollars at work as cities shut traffic lanes. On many streets and roads, road diets don't leave adequate capacity for cars and trucks. That pushes traffic onto other streets.

Renaissance Tower Sold

       Renaissance Tower at 801 K Street, Sacramento, CA

Last week the Renaissance Tower sold in an auction for $21 million to Ethan Conrad Properties as reported by KCRA 3. The 28-story office building has a current occupancy rate of 27%, but the new owner plans to renovate the office space and add restaurants into the building as well. The last time the tower was sold was in 2016 for $80 million, so this is a good price.

Colliers Sacramento Office Snapshot: Q3 2024

Vacancy have moved higher according to Colliers Sacramento 3^rd quarter report. Colliers states that because the State of California is vacating 278,000 square feet across four buildings, occupancy losses have pushed higher but there is hope of a recovery in mid-2025.

Two Downtown buildings sold at substantial discounts, reflecting the office sector’s pricing reset. Ethan Conrad Properties acquired 770 L Street for $22.5 million ($132/SF), a 52% drop from when New York Life bought it in 2018. Ethan Conrad also purchased 630 K Street for $10.3 million ($119/SF), a 63% drop in value since early 2020. An affiliate of Buzz Oates is reportedly under contract to acquire 400 Capitol Mall from Manulife for $117 million, which would be a 41% decline from the 2019 purchase price. 801 K Street, which is only 27% leased, is going up for auction on October 21 at an $8.5 million starting bid. It sold for $79.2 million in 2016.

Wells Fargo Tower Sold

The decline of downtown Sacramento and the office market is now more clear than ever. As reported by KCRA 3, Sacramento's tallest tower has sold for a steep decline, a 67% drop in value from what it was most recently sold for. The tower was originally constructed for $120 million in 1992 and sold in 2000 for $130 million. The building was later resold again to to Hines’ Core Fund in 2007 for $237,250,000 million. The 501,308-square-foot was most recently sold to an all-cash buyer for $117 million. 

Renaissance Tower Will Be Auctioned

 
The 28-story Renaissance Tower at 801 K Street will be up for bid on October 21^st. As stated in the Sacramento Business Journal, the building is currently 27% leased, well below most other "trophy" office properties in Sacramento's urban core. Renaissance Tower also has a seven-story attached parking garage. the starting bid for the building would be $8.5 million. That's nearly a tenth of the building's last sale price, $80 million in 2016. 

On-Hold: 201 N St. Residential High-Rise

It’s been reported in the Sacramento Business Journal that the proposed 28 story residential high-rise at 201 N Street has officially been paused. With no activity with the city of Sacramento to secure building permits since 2022, it’s a safe bet Southern Land Company is feeling the pinch from the slowing economy. The proposed project exterior looked to be made with high quality materials and lots of details. Does Sacramento have enough deep pockets to rent out or own enough of these high-rise units to make them profitable? I would say no, that is why downtown sees lots of residential projects being built up to eight stories, after that the construction costs to go taller are to high and there are not enough people in Sacramento willing to pay that high amount to live there. I could make an extensive list of all the failed high-rise residential projects in Sacramento in the last 40 years, this might be another.