The company that bought Sacramento's struggling Downtown Plaza this week got the shopping mall for a bargain price of $22 million, far below the going rate for successful retail centers in Sacramento.
That number, calculated from transfer tax figures at the Sacramento County Recorder's Office, offers an insight into both the buyer and seller in one of the biggest property transactions in years downtown.
Westfield, the international shopping center company that recently opened a major mall next to Olympic Stadium in London, clearly wanted out of Sacramento after years of sliding sales.
And JMA Ventures of San Francisco, the lifestyle and entertainment company that owns ski resorts, restaurants and upscale time shares, wanted a piece of Sacramento enough that it was willing to buy an under-performing center that experts say will require substantial amounts of money, time and creativity to turn around.
For JMA, it came down to location, said David Brandenburger, a senior associate with Cornish & Carey Commercial Newmark Knight Frank, one of the brokers on the deal.
Brandenburger cited the mall's proximity to the Capitol, Old Sacramento and the Sacramento River, with tens of thousands of downtown workers in the area daily.
"It is a high-profile property in a fantastic location, which was JMA's motivation to acquire the property," he said. "It is a property that takes an active hands-on ownership group to make it successful."
The sales price per square foot, in the low-$30 range, compares to a going rate of $175 to $250 and up for a well-performing retail center in the region, commercial real estate brokers said.
JMA President Todd Chapman would not confirm how much his firm paid for Downtown Plaza. He also declined to say what he thinks needs to be done and how much it would cost to revive the center. But he said his company and its equity partners have set money aside and "are prepared to make additional investment."
Their goal, he said, is to transform Downtown Plaza into a unique urban retail and entertainment venue that does not duplicate offerings at suburban malls.
That's no small task. The mall has seen revenue tumble by more than half in recent years. Fifty percent of the center's retail and office space is vacant. That doesn't include Macy's, which is independently owned and operated.
Mayor Kevin Johnson, who called JMA's purchase "a good day for Sacramento," said he would like to see the site remodeled so that stores also face onto J and L streets, better connecting the now fortress-like center with the rest of downtown.
Chapman said his company has not made any decisions on design changes but will spend the next few months talking to key players downtown.
"We want to make sure we are good listeners," he said. "We are going to work with the powers that be in Sacramento to come up with a long-term vision that is responsive to what Sacramento needs."
The deal consummated Tuesday took a year and a half to pull off, and fell out of escrow twice before finally coming together this week, brokers said.
"It's a complicated property in a difficult market," Brandenburger said. Other brokers on the deal included Tom Heacox and John Austin.
Randy Getz, a vice president with CBRE commercial real estate, called the purchase a risk, but also a solid long-term business opportunity.
"What you have here is a marvelous canvas to work with," he said. "If you have perspective, this is a marvelous opportunity to show the community what you are capable of doing."
JMA took the first steps Wednesday toward making its mark on the plaza, as it began taking down the Westfield signs. Company officials said the Westfield name should be gone by Friday.
Merchants and customers at Downtown Plaza generally said they were pleased by the news of the sale.
"At this point, any change is good," said Carole Heath, manager at River City Brewing Co. "We're just excited to see the (Westfield) sign come down."
She and other merchants met with JMA officials this week, and Heath said the exchange was encouraging.
"It was like a conversation. They were interested in the tenants' opinions," she said.
"We're very excited," said Scott Gilbert, co-owner of Getta Clue, a streetwear and skateboard shop that has operated at the plaza for 15 years. "It seems they are going to be very hands-on. They realize this project will need a unique approach."
Shoppers at the mall Wednesday offered a handful of suggested changes: Give the place a face-lift. Connect it better to J and L streets. Bring in more upscale stores. Fill in the vacant spaces. Increase security, especially in the parking garage. Offer goods and entertainment that you can't get at suburban malls.
"It's run-down," said downtown worker Sharon Hicks. "I'd like to see more stores that are higher end, unique and interesting, instead of junky stores."
An outstanding question is how much the city of Sacramento is willing and able to help JMA turn the six-block downtown site around.
At a morning news conference, Mayor Johnson said the city intends to put a project team together to work with JMA on its plans for the mall. The city no longer can tap into redevelopment funds to help, but Johnson said the city could consider using downtown parking revenue or other tax revenue.
"We don't know quite yet," he said.