Sacramento's Howe 'Bout Arden shopping center is about to be sold to a Bay Area company that may convert the center and several adjacent properties into a massive "lifestyle" complex.
Commercial real estate sources said Friday that Syufy Enterprises of San Rafael is set to close on the Howe 'Bout Arden purchase as early as next week, at a sales price around $40 million.
That's roughly the same amount Sacramento's Saca Development Co. paid for the 170,000-square-foot center when it acquired it in 2006.
Saca Development executive John Saca declined comment on the pending deal Friday. A spokesman for Syufy's SyWest Development subsidiary was unavailable for comment.
But others said the transaction has been in the works for months and that Syufy could well be planning a huge project that ties in Howe 'Bout Arden with other properties the Bay Area company owns on the same block, including the Motel 6 just west of the center and the Century Stadium 14 theater complex at Arden Way and Ethan Way.
"I wouldn't be surprised if they turned that whole area into an upscale lifestyle center, like the Fountains" in Roseville, said Garrick Brown, research director at Cassidy Turley BT Commercial. "They would have no problems leasing it."
Brown said many of the investors he's dealing with these days are "picking up solid, core properties in dense areas and Howe 'Bout Arden certainly fits as one of Sacramento's prime (retail) areas."
A real estate source familiar with the deal said Saca came up with the idea to connect the various properties fronting Arden and create a single destination.
The combined properties would allow the creation of an attraction that would rival Folsom's Palladio or Roseville's Fountains as a top regional lifestyle center offering entertainment and upscale retail shops.
Saca proposed the idea to Syufy, but joint venture talks fell through, said the source, who was not authorized to speak about the deal.
Ultimately Syufy opted to buy Howe 'Bout Arden and proceed with any future remake of the various properties on its own, the source said.
Syufy, which owned the Century Theatres chain until selling it to Cinemark USA in 2006, has long been considering a similar sort of retail complex at a drive-in theater site near Bradshaw Road and Highway 50 in the Rancho Cordova area.
But that project, called The Landing, encountered environmental challenges and then was delayed by the economic downturn.
In 2009, Syufy officials said the $116.5 million project was being put off temporarily but was still "moving ahead" in the long term.
But a project at Howe and Arden may make more sense than the Rancho Cordova area plans because it targets underperforming properties at one of the area's most coveted retail locations, according to Brown and others.
The theater complex, on land still owned by Syufy, is outdated and inefficient, according to local brokers.
The hotel also is in poor condition, as is another Syufy property just south of Howe 'Bout Arden that now has a Mongolian barbecue restaurant and other small shops.
As for Howe 'Bout Arden, it was built in 1988 and remodeled in 1994 but now needs another upgrade, including improvements in access to the parking lot, real estate people said.
"It's nice, but it's a 'B plus,' " said Brown, adding it could easily become an "A" quality property with some enhancements.
It already has a Nordstrom Rack location that's among the top sellers for the Seattle-based company's discount division.
Other key tenants include a Sleep Train Mattress Center, the Punch Line Comedy Club and Chili's Grill & Bar.
Fixing up Howe 'Bout Arden along with the other properties and connecting them into a single, unified center would reshape the area and create a new attraction for the region, said Bobby Rich, a Retail West broker who was aware of the negotiations between Saca and Syufy.
"I think Syufy sees a bustling intersection but with an underutilized (shopping) center, an underutilized theater, an underutilized hotel and underutilized restaurants," Rich said.
All would benefit, he said, "by taking those different components and combining them into one venue."