The document provides a review of commercial real estate in Sacramento's urban core in 2015. It discusses several key trends, including rising demand and rents for downtown office space driven by the new Golden 1 Center arena. Large tenants now have limited options for space over 50,000 square feet downtown. Investors have acquired several properties near the arena site in anticipation of the area's revitalization. The state of California continues expanding its downtown workforce. Rents in the prime "Skyline" downtown submarket rose significantly in 2015 and vacancy rates fell.
Leasing volume has been stuck in neutral for several quarters. Nevertheless, activity in the Midtown, Central Perimeter, North Fulton and Northwest remains steady with corporate relocations boosting demand as well.
JLL Cincinnati: Full Circle Report 2017Ross Bratcher
Downtown Cincinnati has undergone a tremendous transformation over the last five years that has positioned its urban core to be a live-work-play destination for companies, professionals, and visitors. Cincinnati is home to a mature corporate community consisting of 10 Fortune 500 companies. In addition, Downtown Cincinnati has become a hotbed for startup activity as companies flock to the Central Business District and Over-The-Rhine to attract and retain top talent.
Leasing volume has been stuck in neutral for several quarters. Nevertheless, activity in the Midtown, Central Perimeter, North Fulton and Northwest remains steady with corporate relocations boosting demand as well.
JLL Cincinnati: Full Circle Report 2017Ross Bratcher
Downtown Cincinnati has undergone a tremendous transformation over the last five years that has positioned its urban core to be a live-work-play destination for companies, professionals, and visitors. Cincinnati is home to a mature corporate community consisting of 10 Fortune 500 companies. In addition, Downtown Cincinnati has become a hotbed for startup activity as companies flock to the Central Business District and Over-The-Rhine to attract and retain top talent.
JLL’s Mid-Year Skyline Update: A Closer Look at OH, MI & PAJLL
JLL's annual Skyline review is back and more advanced than ever before. Register for free to access the floor-by-floor data in roughly 1,200 of our nation’s most prominent towers, including Class A buildings in Cincinnati, Cleveland, Columbus, Detroit and Pittsburgh.
Real Estate Competition - Campus Finalist Oscar Haman
Based on the 4th annual Cornell International Real Estate Competition.
A potential recommendation for a buy or pass of mezzanine debts
Completing this case involved:
- Using the lien on a mezzanine debt in order to take equity interest of the owner's properties
- Computing an amortisation schedule in order to determine the financial capabilities of the owner
- Analysing the post GFC conditions of the U.S economy and real estate market
- Conducting a DCF to determine exit selling price of the properties
- Providing relevant renovations to the properties in order to main standard of Class A classification
Jll commercial real estate market report toronto 2014Chris Fyvie
office space toronto, toronto office space, office search toronto, office space in toronto, office rentals toronto, commercial office space, commercial real estate toronto, office rent toronto, toronto offices for lease
Update on the factors driving Industrial Commercial Real Estate in the Inland Empire of Southern California. Excerpt from Western Real Estate written by Nathan Bragg, Commercial Real Estate Broker, Director RE/MAX Time Commercial Real Estate Division
2019 LA Tech & Venture Scene | Amplify.LA Eric Pakravan
The LA technology scene has come along way in the last few years. This deck offers a comprehensive overview of the Los Angeles technology and venture landscape in 2019. It covers the players, investors, history and future of LA tech, as well as leading sectors such as e-commerce, online media, e-sports, VR & AR, aerospace, logistics, marketplaces, gaming and more.
JLL’s Mid-Year Skyline Update: A Closer Look at OH, MI & PAJLL
JLL's annual Skyline review is back and more advanced than ever before. Register for free to access the floor-by-floor data in roughly 1,200 of our nation’s most prominent towers, including Class A buildings in Cincinnati, Cleveland, Columbus, Detroit and Pittsburgh.
Real Estate Competition - Campus Finalist Oscar Haman
Based on the 4th annual Cornell International Real Estate Competition.
A potential recommendation for a buy or pass of mezzanine debts
Completing this case involved:
- Using the lien on a mezzanine debt in order to take equity interest of the owner's properties
- Computing an amortisation schedule in order to determine the financial capabilities of the owner
- Analysing the post GFC conditions of the U.S economy and real estate market
- Conducting a DCF to determine exit selling price of the properties
- Providing relevant renovations to the properties in order to main standard of Class A classification
Jll commercial real estate market report toronto 2014Chris Fyvie
office space toronto, toronto office space, office search toronto, office space in toronto, office rentals toronto, commercial office space, commercial real estate toronto, office rent toronto, toronto offices for lease
Update on the factors driving Industrial Commercial Real Estate in the Inland Empire of Southern California. Excerpt from Western Real Estate written by Nathan Bragg, Commercial Real Estate Broker, Director RE/MAX Time Commercial Real Estate Division
2019 LA Tech & Venture Scene | Amplify.LA Eric Pakravan
The LA technology scene has come along way in the last few years. This deck offers a comprehensive overview of the Los Angeles technology and venture landscape in 2019. It covers the players, investors, history and future of LA tech, as well as leading sectors such as e-commerce, online media, e-sports, VR & AR, aerospace, logistics, marketplaces, gaming and more.
3. 3
THEGRID
WINTER 2016
Page 4
Page 5
Interview with Greg Levi
Review of 2015 and Beyond
The Arena Effect
Investor’s Perspective
Page 6
Page 8
Page 10
How’s the Downtown Market Performing?
Updates from our JLL Sacramento office
Grid Projects
A glance at the Sacramento Urban Pipeline
Downtown Area Perimeters
Exciting projects that add value to the core
contents
4. 4THEGRID
natural brick. This has not
yet been a major trend in Class
A downtown Sacramento office
buildings, although it has been
in the Bay Area. Driving this
trend is the desire by tenants to
be in a more unique and edgy
environment for employees.
The idea is to create an
environment that will attract
and retain younger talent from
the millennial generation.
I anticipate national and
professional firms located in
Class A office buildings will
continue to gravitate toward
more traditional finished look
with a bit of an edgy feel.
As competition for downtown
office space escalates, how
high do you expect Class A
rents to rise in 2016 above
their current $2.72 PSF mark?
We can expect Downtown
Class A building to continue
to tighten with a decrease
in vacancy to under 8% and
overall asking rates to reach
an historical high of $3.00 on
average. ■
Landlords are positioning
themselves to push lease rates
higher, while balancing and
maintaining critical occupancy.
Large tenants will need to plan
well in advance of their lease
expiration dates because
they will have little or no
choices for relocation.
This means they will need to
evaluate the market prior to
their notification date for their
renewal options.
If lease rates and demand
continue to increase, we will
potentially start to see new
construction, and this entire
dynamic could change. For now,
large tenants are actually at a
disadvantage.
What about trends inside
the buildings themselves? Is
downtown Sacramento, like
many other downtown markets
on the West Coast — Portland,
San Francisco, Seattle, L.A. —
seeing greater desire for so-
called ‘creative’ space?
Creative spaces are starting
to creep into the Class A
downtown office buildings in
Sacramento. In the past, creative
spaces, which consist of non
traditional improvements such
as exposed duct and rafter
ceilings, polished concrete
floors and exposed exterior
walls, have been primarily
developed along the R Street
Corridor and in Midtown. This
concept has done very well in
aged buildings that have some
of these older elements, like
How would you sum up the
last 12 months in Sacramento’s
downtown real estate sector?
The last twelve months
has been a steady climb in
occupancy downtown with a
lot of underlying excitement.
The Arena is the big story
downtown. Sacramento’s
downtown has always been just
a place to work. Workers drive
downtown at 8am and leave at
5pm. The tenancy has always
been dominated by the state
government on one side and
law firms and advocacy related
tenants on the other. In the past,
it has been safe to say that no
tenant would choose to locate
in downtown Sacramento unless
they had to. It was simply more
expensive and less convenient
than suburban locations.
In 2015, this balance changed.
Arena construction is in full
swing and scheduled for
completion in Fall 2016. Tenants
are now choosing to relocate
to downtown due to the
perception that it will now be
the true heart of the city.
How are downtown landlords
approaching the current
market? Is there a lot of
competition to bring in big
tenants and how are landlords
differentiating their product?
GREG LEVI REVIEWS 2015 AND
LOOKS BEYOND
F R O M O U R M A N A G I N G D I R E C T O R
Landlords are positioning
themselves to push lease rates
higher while balancing and
maintaining critical occupancy.
5. 5
THEGRID
The Golden 1 Center and Downtown Commons will be the new
face and heart of Downtown Sacramento encompassing six
blocks and up to 1.5 million square feet of new development.
By Rob Cole and Alan Stevenson, Capital Markets Group
Downtown Sacramento is enjoying
a surge of investment and tenant
activity due in large part to the
development of the new Golden
1 Center, a 17,500-seat sports and
entertainment venue that
will predominantly
feature the Sacramento
Kings professional
basketball team.
While the new arena
is under construction
and set to open
in October 2016,
properties that are
proximate to the site
and around downtown
are enjoying strong interest
from developers, investors and
users seeking to be part of the
revitalization of the area.
Key recent acquisitions in and
around the new arena site include
THE ARENA EFFECT DRAWS
INVESTORS TO DOWNTOWN
Recent JLL Transactions
501 J Street, a 195,500 square foot
office building that Kaiser Permanente
is currently converting to medical
office; 630 K Street, an 85,000 square
foot office-retail mixed use building
located at the east entrance to the
arena that San Francisco-based
Swift is repositioning; and
the Capital National Bank
building at 700 J Street,
a 60,000 square foot
historic office building
recently acquired by
a partnership led by
Sacramento-based CS-360
to also be repositioned.
Outside of these acquisitions,
the only significant office sale
downtown in 2015 was that of
The Senator at 1121 L Street; this
151,000 square foot historic office
building sold in July, also to Swift
who outbid a number of other
well-known regional and national
investment groups. The Senator is
widely considered as having one of
the very best locations downtown,
just north of the State of California
Capitol building and, with appropriate
capital investment, is poised to be
repositioned into one of downtown
Sacramento’s premier office buildings.
JLL handled three of the four key
downtown transactions.
The Senator Lobby
The Senator
• 151,000 SF, value-add
multi-tenant office
• Prime location in Downtown
Sacramento’s Capitol District
• Closed July 2015
Capital National Bank
• 60,000 SF, value-add
mixed-use office
• Located in Downtown
Sacramento’s new Arena District
• Closed October 2015
501 J Street
• 195,501 SF
• Just north of Arena site
• Closed December 2014
• Medical Office Conversion
INVESTOR’S PERSPECTIVE
6. 6THEGRID
The downtown office landscape has become increasingly competitive
due to renewed interest in Sacramento’s urban core, and expansions
from the area’s major demand drivers: the State of California and
regional healthcare systems. Rising demand for downtown office
space is borne out by the average asking rate, which has risen for 9
consecutive quarters and increased by 4.0 percent during 2015.
The recent in-migration has left large users seeking downtown
space in a lurch with a single option over 50,000 square feet of
contiguous space. The urban renaissance has also attracted an influx
of professional services, particularly architecture and design firms
seeking closer proximity to the action.
DOWNTOWN
BY THE NUMBERS
STATE OF THE STATE
As the State of California
employment continues to
expand—adding over 3,300
jobs to the region over the
past 12 months—State-owned
buildings are reaching capacity,
forcing growing agencies to
look beyond their traditional
downtown sphere. The revised
2015-2016 budget indicates
future expansion for additional
agencies and JLL is tracking 17
State agency requirements totaling
over 843,000 square feet, an
increase of 75 percent over State
requirements 12 months ago.
Of these agencies, all but four
are targeting either the central
business district (CBD) or Highway
50 Corridor submarkets.
The Skyline market for Sacramento is
defined as the Trophy market, which
is further defined as a top-tier Class A
product, larger than 100,000 square
feet in a centralized core Sacramento
CBD location. These Trophy assets tower
above Sacramento’s metropolitan market
and are considered the premier business
address in our region. The key indicator
for inclusion or exclusion is based on
product type, location and rent levels.
The State remains in expansion mode
S E C T I O N O N E // D o w n t o w n O f f i c e U p d a t e
SACRAMENTO SKYLINE
Downtown office market tightening
1325JStreet RenaissanceTower
801KStreet
12thKTower
1201KStreet
EsquirePlaza
1215KStreet
770LStreet CapitolPlace
915LStreet
RBA 348,407 338,876 223,893 248,016 169,078 163,425
Total
vacant (s.f.)
35,102 63,569 0 20,486 0 3,813
Total
vacant %
9.9% 18.8% 0% 8.0% 0% 2.3%
Direct asking
rate ($FS)
$2.65 $2.65 N/A $2.95 N/A $2.85
Year built/
renovated
1989 1989 1989 1999 1984 1988
Visit www.jll.com/skyline
7. 7
THEGRID
Occupied floor Direct vacant floor
Similarly, market conditions among the premier
Skyline micro-market considerably tightened in
2015, with over 112,000 square feet of positive
net absorption— the largest yearly figure since
2009. Rental rates responded, shooting up by
8.4 percent over the past 12 months— more than
doubling the CBD’s average annual growth rate.
With no deliveries on the immediate horizon,
rental rates will continue along their upward
trajectory in 2016.
$2.84
$2.57
$2.30
$2.55
$2.80
Q3 2010 Q2 2011 Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015 Q4 2015
Skyline CBD CBD (10-year average)
$ p.s.f.
FSG
Skyline vs. CBD Average Asking Rent
Skyline rents surge
925LStreet ParkTower
9809thStreet
OneCapitolMall
1CapitolMall
TheSenator
1121LStreet
MeridianPlaza
1415LStreet
EmeraldTower
300CapitolMall
WellsFargoCenter
400CapitolMall
BankoftheWestTower
500CapitolMall
NewLegacy555LLC
555CapitolMall
U.S.BankTower
621CapitolMall
165,919 450,153 201,707 159,917 227,644 383,238 589,408 433,500 376,432 366,821
7,016 123,176 44,015 38,708 6,280 37,745 76,939 83,718 62,993 43,752
4.2% 27.3% 21.8% 24.0% 2.7% 9.8% 13.1% 19.0% 16.7% 11.9%
$2.95 - $3.15 $2.95 $2.25 $2.75 - $3.25 $3.00 - $3.30 $2.85 $3.00 $2.85 - $3.10 $2.50 $3.00
1973 1991 1992 1924/1982 2003 1984/1996 1992 2009 1970 2008
DOWNTOWN SACRAMENTO OFFICE UPDATE / Q4
8. 8THEGRID
JASON GOFF | GREG LEVI
±372,000 SF
916.447.6300
NOW PRE-LEASING
STORY HIGH RISE
OFFICE BUILDING26
GOLDEN 1 CENTER
WHOLE FOODS
VANIR TOWER
EVIVA MIDTOWN SACRAMENTO COMMONSICE BLOCKS
700K BLOCK
2015 2020
SACRAMENTO KEY URBAN PROJECT PIPELINE
GOLDEN 1 CENTER
STATE OF THE ART ENTERTAINMENT
AND SPORTS COMPLEX
A TIMELINE OF ESTABLISHED AND ANTICIPATED CONSTRUCTION START DATES
700 K ST. BLOCK
137 RESIDENTIAL UNITS,
15 RETAIL SPACES
630 K ST.
GROUND FLOOR RETAIL
CONVERSION AT GATEWAY OF
GOLDEN 1 CENTER
VANIR TOWER
26 STORY OFFICE TOWER
WHOLE FOODS
141 RESIDENTIAL UNITS AND
41,000 S.F. COMMERCIAL
RAILYARDS
1.0 M S.F. RETAIL, 2.3 M S.F. OFFICE
VARIOUS RESIDENTIAL TYPES AND
MEDICAL CAMPUS
EVIVA MIDTOWN
118 RESIDENTIAL UNITS,
5,000 S.F. OF RETAIL
SUPERIOR COURTS
6 STORY COURT TOWER
IN RAILYARDS
DOWNTOWN COMMONS
250 ROOM KIMPTON HOTEL,
50 CONDOS, 630,000 S.F. RETAIL
AND 250,000 S.F. OFFICE
ICE BLOCKS*
145 RESIDENTIAL UNITS,
55,000 S.F. RETAIL AND
46,000 S.F. OFFICE
2016
ProposedPermittedUnder ConstructionEst. Start Date* Currently being re-evaluated due to fire
S E C T I O N T W O // G r i d P r o j e c t s
630 K ST
KIMPTON HOTEL
RAILYARDS
SUPERIOR COURT
SACRAMENTO COMMONS
TWO TOWERS ENTITLED FOR 1,400
RESIDENTIAL UNITS AND 74,000 S.F.
OF COMMERCIAL
9. 9
THEGRID
KEY PROJECTS
DOWNTOWN COMMONS
Downtown Commons (DOCO), the
Kings’ and JMA Ventures’ development
adjacent to the Golden 1 Center, is slated
for completion in 2017. The 16-story
mixed-use tower will house a Kimpton
Hotel in addition to 50 residential units,
630,000 square feet of retail space and
250,000 square feet of office space. The
project will further advance downtown
Sacramento’s emergence as an “18-hour”
urban core.
Pappas Investments received unanimous approval from the
Sacramento City Council to develop a Whole Foods anchored,
mixed-use project. Construction is expected to begin in early
2016, in the heart of midtown at 21st and L Streets. The project
is entitled for approximately 41,000 square feet of retail space,
141 residential units and three levels of parking, which will
both contribute to and support the urban core’s growing
residential base.
Two high-rise residential buildings, two mid-rise residential
buildings and a mixed-use building will constitute the
Sacramento Commons redevelopment project, located
between N and P Streets, and 5th
and 7th
Streets.
The development also received approval for up to 50,000
square feet of retail and a hotel, which would include up
to 300 rooms. Sacramento Commons will become an
integral piece in the City’s housing initiative, by adding up to
1,400 new residential units to the urban core.
WholeFoods
UPCOMING MIXED-USE DEVELOPMENTS
THE GRID
SacramentoCommons
10. 10THEGRID
S E C T I O N T H R E E // Downtown Perimeters
Over the past 30 years we have generally defined the downtown area as the CBD
bound by the Sacramento River to the west, 16th street to the East, the Railyard
to the North and W/X Freeway to the south. This changed as the Zigaurat
Building and the CalSTRS building were constructed in West Sacramento
and further evolved as the Bridge District has emerged into an exciting
and popular project.
Sacramento’s urban core, as traditionally conceived, continues to
expand as major infill projects on the periphery, such as The Mill
on Broadway, take shape. Across the river, The Bridge District
is on track to bring 9,700 residents, 16,000 jobs and 5 million
square feet of commercial space to West Sacramento’s
riverfront. The Railyards, a 240 acre infill site just north
of the CBD, will consist of a major mixed-use hub
for transportation, entertainment, retail, housing,
office, parks and museums. At the confluence of
the American and Sacramento Rivers, the River
District is undergoing a transformation from
a distribution and wholesale hub into an
eclectic residential and entertainment
district.
These perimeter area projects
will expand the geography of
downtown’s office market
boundaries and will also include
extensive housing and retail
components, playing key
roles in downtown’s
continued revitalization.
BRIDGE DISTRICT
RIVER D
RAILYARDS
PUSHING THE BOUNDARIES
OF DOWNTOWN
11. 11
THEGRID
DOWNTOWN AREA PERIMETERS
THE MILL
DISTRICT
EMERGING 18-HOUR URBAN CORE
Sacramento is in the midst of a transitional period, evolving from a Monday
to Friday government town into an “18-hour city”. Sacramentans have
increasingly shown a preference for urban living and the development
community is responding. When Mayor Kevin Johnson launched a “Think
Downtown” marketing campaign, calling for 10,000 new housing units to
be developed over the next decade, many downtown stakeholders were
skeptical. That initiative is now becoming a reality. Expect and look forward to
the announcement of more diverse housing developments in 2016.
12. 400 Capitol Mall, Suite 1560
Sacramento, California
+1 916 447 6300
T H E G R I D
A JLL SACRAMENTO PUBLICATION
Greg Levi
Managing Director
+1 916 491 4310
greg.levi@am.jll.com
CA LIC # 00973235
Rob Cole
Senior Vice President
+1 916 491 4314
rob.cole@am.jll.com
CA LIC # 01323882
Jason Goff
Managing Director
+1 916 447 6092
jason.goff@am.jll.com
CA LIC # 01205230
Alan Stevenson
Vice President
+1 916 491 4339
alan.stevenson@am.jll.com
CA LIC # 01890995