A handful of downtown Sacramento’s most blighted, troublesome properties are suddenly getting attention.
Thanks to a revived economy, the gravitational pull of the new downtown arena, and a City Hall emphasis on creating more downtown housing, developers appear poised to tear down and replace some of Sacramento’s most embarrassing empty buildings, including large sections of key downtown blocks.
A local developer is expected to pull permits to demolish a vacant hotel on J Street near 10th that was gutted by fire in March and is among a row of boarded up buildings – a move that will make room for his dream of building a residential tower overlooking Cesar Chavez Plaza.
The owner of the former Greyhound bus station, for years an empty shell, is in talks with local and national retailers, and rumors are that one might be Raley’s, which announced Thursday it is interested in building a specialty market downtown.
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The city itself last week announced it is ready to accept bids from potential buyers for development of blighted properties it owns, including a vacant, fenced-in “hole” on K Street and several boarded-up, derelict buildings nearby on L Street, all along Eighth Street.
Real estate brokers also are aggressively marketing long-shuttered properties on the south side of the 1000 block of J street, saying they expect to interview prospective buyers in the next few weeks.
Mayor Kevin Johnson, the arena project’s lead booster and an advocate for new housing downtown, said it’s all a sign of a downtown on the move.
“We continue to see the transformational project (the arena) spur development downtown,” the mayor said in a written statement. “These amenities will attract more people to work, live and play downtown, which means more jobs and a stronger economy.”
Given the past difficulties at these sites, another city official said he’s hopeful the momentum leads to major redevelopment, but isn’t counting on it. “There are a lot of dreams out there,” said Ryan DeVore, head of the city’s Community Development Department. “And it’s encouraging to hear the buzz. But until I have an application (for construction), it’s not real.”
But downtown developer David Taylor, who previously dropped plans for the Eighth and K site, said he’s seen enough of an increase in downtown rent rates to make that site and others developable.
More than almost any other downtown property, the old Greyhound station at Seventh and L streets has served as the object of frustration to city officials for years. The bus terminal opened on the corner in the 1930s during a period of expansion for the bus line. For years before it moved north of downtown to Richards Boulevard in 2011, downtown property owners complained it was a magnet for crime and loitering that scared off potential tenants in the surrounding blocks.
Now, the building’s owner, the Benvenuti family, appears close to transforming it into the kind of amenity developers and city leaders are seeking as they try to attract thousands of new residents to the central city.
Danny Benvenuti said he’s in discussions “with interested parties,” but declined to say whom he is talking with. Marketing materials for the building include renderings of the property as, among other uses, a food outlet.
A spokeswoman for West Sacramento-based Raley’s said Thursday the company is exploring several sites downtown for a smaller-format, farmers market-style store that would appeal to residents who live in a denser and more pedestrian-oriented environment. One rumored site is the Greyhound terminal.
Raley’s spokeswoman Chelsea Minor declined comment on specific locations the chain is exploring, but said the company has been monitoring development downtown and feels it is time to jump in. “Raley’s is looking at new ways to expand and grow in the Sacramento market,” Minor said. “We feel like there is a lot of excitement around new development downtown. We are exploring various options downtown.”
Minor said Raley’s likely will design a new type of store that appeals to health- and local-product-conscious consumers. “We are sensitive to the fact that the demands of customers are changing,” she said.
Ariel Fox, a partner at Retail West, the real estate broker for the former Greyhound site, said the redeveloped property will have a retail portion and a multi-level garage, taking advantage of its location just steps from the arena.
The distinctive building, one of the few in Sacramento in the “art moderne” style, has been on the market for some time, Fox said, but “interest has ramped up since the news of the arena has been official.” Benvenuti’s plans call for putting the retail tenant in the existing terminal building, preserving its historic facade. The garage would be built in the adjacent structure, where buses would pull in to pick up and drop off passengers.
A few blocks away, there was more unexpected news this week for a blighted stretch of J Street within sight of City Hall.
DeVore said he expects developer John Saca to file an application soon to demolish two properties he owns near the corner of 10th and J streets. One of those buildings is the former Biltmore Hotel on J Street, a vacant three-story structure damaged by a fire in March.
Saca – the developer who tried unsuccessfully to build twin 53-story condo and hotel towers on Capitol Mall during the last housing boom – has plans to construct a 39-story condo and hotel tower at 10th and J called The Metropolitan. Last year, Saca purchased a city-owned building on 10th Street for $600,000 to complete the land acquisition for the project.
It’s unclear whether Saca’s vision for a high-rise tower remains intact. He did not return phone calls and emails seeking comment. Some at City Hall have privately expressed skepticism that Saca can follow through on the project and say they wonder whether a five- to seven-story residential project on the block is more realistic.
Across J Street from Saca’s shuttered properties, another row of empty buildings is owned by a local group that includes St. Anton Partners and the Cordano family. They are marketing the parcels aggressively and expect to interview potential buyers in the next few weeks.
The hope, their broker says, is to sell the buildings to buyers who can take advantage of the expected arena opening in 15 months by knocking them down and replacing them with a high-rise. The group holds city entitlements for 233 condominium units in what could be a 25-story tower.
“We have players that are financially strong, coming from out of town,” said Greg Levi, managing director of the JLL commercial real estate brokerage firm in Sacramento. “I think we are hitting the market just right.”
Levi said a local partnership group has not set a firm price, but he said that $7 million is a likely number, given the amount of interest downtown Sacramento is getting from outside investors.
City officials also announced last week they have set up a deadline for potential buyers to submit bids for the city-owned hole in the ground at the corner of Eighth and K streets, and the nearby corner of Eighth and L streets. The locations are just slightly more than a block from the Kings arena, but have long sat idle due to the expected high cost of development.
The land at Eighth and K streets is vacant and surrounded by a fence. The Eighth and L streets site includes the historic, three-story Bel-Vue Apartments at the corner and the former site of Sam’s Downtown Hof Brau at 815 L St.
The buildings’ interiors are dilapidated. Ken Turton, the head of a commercial real estate company marketing the property, said buyers might knock the buildings down, while saving the historic facades.
Prospective buyers this summer will be given three months to make a bid, and provide the city with details on what type of development buyers envision, Turton said. “The goal is to get a good development project at those locations, and price alone does not rule the day.”