Real Estate News

Developer unveils vision for ‘hole in the ground’ in downtown Sacramento

The owners of downtown Sacramento’s infamous “hole in the ground” said Wednesday they plan to build a 30-story tower on the long-vacant site with a mix of offices, retail and 100 apartments.

Nearly a decade after construction was halted on a pair of 53-story condo towers, Los Angeles developer CIM Group unveiled conceptual drawings of a single 420-foot building that could revive the drab western end of Capitol Mall. The building would be the second tallest in the city, just a few feet shorter than the nearby Wells Fargo tower, although CIM executives said their project is still being designed and could grow depending on tenant demand.

Construction probably wouldn’t begin for another two years.

“This is a very preliminary vision,” said Avi Shemesh, co-founder and principal of CIM.

CIM and its partner, CalPERS, said the project still doesn’t have a price tag. The size and scope could change substantially, depending on how many office tenants sign on.

The development, to be built in partnership with CalPERS, is considerably smaller than the aborted project that was supposed to occupy the block at Third and Capitol a decade ago: a pair of condominium and hotel towers billed as the tallest residential project on the West Coast. If the developers break ground on schedule in early 2018, the parcel will have sat idle for 11 years since CalPERS pulled the plug on developer John Saca amid cost overruns and a faltering economy.

“We’ve waited since 2007,” said CalPERS chief investment officer Ted Eliopoulos, who gave the order to halt the earlier project. “We’ve been patient. The economic conditions in Sacramento are improving. ... There’s a window opening.”

Shemesh said CIM and CalPERS would have liked to move faster but that market conditions dictated caution. It would be a mistake “just to add inventory to downtown and not have the building occupied,” he said. If that happened, “it may not be a hole in the ground, it may be a building that is half empty, which in my mind would be just as bad.”

Shemesh said “there are a lot of stars that are aligned here,” including the construction of the $507 million Golden 1 Center a block away. The new home of the Sacramento Kings is scheduled to open in October.

The project needs building permits and has to clear other hurdles in the city’s entitlement process before it can go forward. Also, Shemesh said the developers aren’t likely to break ground until they’ve lined up an anchor office tenant capable of occupying 400,000 or more square feet of space. Office space is expected to consume roughly two-thirds of the 1.1 million square feet of space in the structure.

One possible candidate for the space, a new headquarters for the state Board of Equalization, appears to be a no-go. The Department of General Services released a report last week saying the BOE should move into a campus-like facility with low and midrise buildings instead of a tower.

Shemesh said he is nonetheless confident a major office tenant can be found, from either the public or private sector.

The lower floors would be devoted to retail and “creative office” space, which Shemesh defined as large, high-ceilinged open spaces of the type favored by tech firms and other unconventional tenants. A landscaped terrace, open to the public, would ring the seventh floor and provide views of the Capitol and the Sacramento River. Two more outdoor terraces are planned further up the tower for office occupants and apartment residents. There will be parking for 1,260 cars on the lower floors.

The preliminary design for the building, by the global architectural firm Gensler, includes some artistic touches, including balconies carved out of the skin of the residential complex on the uppermost floors. A giant staircase running through the office portion of the building will be visible from the exterior as a dark slash through the tower’s midsection.

Shemesh said the seventh-floor terrace is part of an effort to make the building accessible to pedestrians. “It’s got human scale,” he said. “You’re not just looking at a tower. We want this to be where you’re walking down the street, you’ll see a reason to go there.”

City officials said they like the preliminary plans. “While it’s not as pie-in-the-sky as the previous project, this is a beautiful project,” said City Councilman Steve Hansen, who represents downtown. “This is a realistic project we can get built.”

John Dangberg, assistant city manager, said “it’s an inspired design” that will bring an iconic style to the downtown skyline.

The elevated public terrace “could be a destination unto itself,” Dangberg said. “People would go downtown to experience that.”

Hansen said he’s pleased the developers plan to include 100 apartments. Lacking housing, and lined with office towers, Capitol Mall is often empty and lifeless on the weekends.

The empty parcel, an entire block once occupied by the old Sacramento Union newspaper, has been an irritant to city officials who have eagerly awaited movement from CalPERS and CIM ever since construction on the Saca towers was halted.

CalPERS was the main investor in Saca’s project, which would have towered above the existing buildings in downtown Sacramento. Although 400 customers made down payments on condo units, the project ran into cost overruns, the result of troubles with the concrete pilings. CalPERS cut off funding for the project in January 2007. The site has been fenced off ever since.

CalPERS spent $60 million on the failed project, including dollars spent to satisfy contractors’ liens after construction was halted. Its only consolation was that the pilings have remained usable. The pension giant brought in CIM, which has partnered with CalPERS on several projects, including the Plaza Lofts on J Street, to manage the property and find new uses.

“Over the years, we looked at a number of alternatives,” Shemesh said, noting that a new county courthouse was proposed for the site six years ago. “Today we feel like it’s a good time to move ahead.”

Dale Kasler: 916-321-1066, @dakasler