Bob Shallit

Bay Area firm eyes 2nd office buy near Sacramento’s downtown arena

Sacramento’s Capital National Bank building is envisioned as an office building, with ground-floor retail shops and restaurants.
Sacramento’s Capital National Bank building is envisioned as an office building, with ground-floor retail shops and restaurants.

A Bay Area investment firm that recently acquired one prominent downtown Sacramento building is poised to scoop up another, convinced the area around the new Kings arena could one day mimic San Francisco’s booming AT&T ballpark district.

Swift Real Estate Partners last month completed a $26 million purchase of a five-story building at 630 K St., just to the east of the Kings arena construction site. Now it’s closing in on a second deal to buy one of the city’s underappreciated gems – the Capital National Bank building at Seventh and J streets, according to Swift founder Christopher Peatross.

Both deals are based on a belief that Sacramento’s downtown will flourish in coming years, thanks to city efforts to upgrade key downtown corridors, improve public transit and, most significantly, contribute to a new sports and entertainment facility.

“(The arena) is one of the best things that ever could have happened for Sacramento,” Peatross said. “It’s just the sort of catalyst needed to turn things around.”

Peatross, who raised $330 million to establish his real estate investment fund, said he’s not planning any immediate changes at 630 K. But he said the building – a onetime JC Penney location – eventually will be the site of a major entertainment and restaurant complex like those that have sprouted in the area near the San Francisco Giants’ ballpark.

“There’s a restaurant there called Momo’s, where it’s always standing room only,” Peatross said, citing one example.

“This,” he said, referring to the 630 K site, “is Momo’s.”

As for the century-old, seven-floor Capital National Bank building at 700 J St., Peatross said his firm has “locked it up” and is completing its due diligence before closing on a deal.

The historic granite building, finished around 1915 with distinctive rounded forms and terra cotta nudes perched on the sixth floor, is owned by local investors and was recently placed on the market by the Sacramento office of Jones Lang LaSalle. JLL executives declined to comment on any pending sale.

Peatross said the bank building – which bears exterior signage for its most recent anchor tenant, First Northern – needs more rehab than 630 K and has low occupancy.

“We have work to do there,” he said. But he said the 82,000-square-foot building has enormous potential and a great location. “It’s close enough that it’s still a part of what’s going on at the arena,” he said.

A marketing brochure for the J Street property calls it a “jewel box,” whose ground-floor banking lobby with high ceilings and arched windows is ideally suited for restaurant and retail space.

Swift, which was founded in 2010, has been buying up property mostly in the Bay Area. It has made offers on Sacramento buildings over the past two years, Peatross said, but “we were always bridesmaids.”

Now it’s looking at more deals here to take advantage of a market in transition.

“Sacramento’s day is coming,” he said. “It’s only getting better.”

History lesson

Two big target dates are looming for Michael Ault, the executive director of the Downtown Sacramento Partnership.

The first is Tuesday, when the partnership wraps up a campaign to win a 10-year extension from downtown property owners.

The second date, in July, is the start of a sentimental six-week European trip for Ault and his father. Michael’s dad, Ted Ault, taught history for 40 years in Bay Area high schools and is passionate about World War II.

Ted turns 80 in July, and to celebrate the event, Michael, his brother Greg, and Michael’s son, Nicolas, will travel with Ted to Normandy and other WWII landmarks.

“I really wanted to do this with my dad. It could be my only chance,” Michael said.

They’ll start in Edinburgh, Scotland, and “have a few shots of Scotch so my dad can see Nessie” emerging from Loch Ness, Ault said. Then they’ll head to London and France, where Ted can impart some of his knowledge about the actual sites where history was made.

“My dad can’t tell you what he had for breakfast, but he can tell you what Hitler was wearing on the third day of the war,” Michael said. Michael and Nicolas will then spend a week in Spain before flying to Germany to meet wife Christine and daughter Kiera.

The extended vacation was endorsed by Ault’s board. “This will be re-energizing and the trip of a lifetime,” said Janie Desmond Ison, the partnership’s past chair.

There were some, though, who worried that the six-week trip might mean Ault was thinking of stepping down from his post after nearly 18 years heading the partnership.

Not a chance. “I love this job and I can’t imagine being part of a more exciting (time) in Sacramento history,” Ault said.

“Why the heck would I leave now?”

Slam dunk

As for the downtown partnership’s renewal campaign, property owners are “overwhelmingly in favor” based on informal polling so far, said Ison, whose family runs several local businesses, including Steamers restaurant in Old Sacramento.

When the actual votes are counted at Tuesday night’s Sacramento City Council meeting, don’t be surprised if the group doesn’t match or exceed the 93 percent support rate it got 10 years ago at its last renewal.

Ison said the preliminary polling shows most property owners value the group’s “clean and safe” program, business support services, tenant recruitment and advocacy on issues ranging from keeping the Kings to promoting streetcars.

The partnership was a pioneer when it started as the state’s first property-based business improvement district, known as a PBID, in 1995. Now there are more than 200 in California alone. Property owners pay an annual assessment to support district activities.

“We’re looked at as a model by downtowns all over the United States,” Ison said. “That speaks volumes.”

Call The Bee’s Bob Shallit, (916) 321-1017.