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‘Lifestyle and entertainment’ district taking shape. Is this the answer to downtown’s woes?

A few weeks ago, with the Sacramento Kings’ second season in their downtown arena approaching, brightly colored letters spelling out D-O-C-O suddenly showed up at three street-corner entrances to the arena area.

The 11-foot-tall purple, orange and red logos, short for Downtown Commons, look like playground toys for kids to climb on. But they also serve as symbols of a billion-dollar bet the Kings are making on the site of the failed Downtown Plaza shopping mall.

With online shopping on the rise and traditional retail malls struggling, the Kings hope to lure suburbanites, families, tourists and urban millennials downtown by building what they call a lifestyle district, where entertainment is the main selling point.

That effort, now in its second year, will take a major step forward next month with the opening of a 250-room upscale Kimpton hotel, the first major hotel in downtown in more than a decade, yards from the year-old Golden 1 Center. The hotel boasts a third-story pool deck with outdoor bar and lounge overlooking the plaza.

Within months, the Kings expect a steakhouse on the plaza, a bakery, an ice cream store and a supermarket-size game center called Punch Bowl Social with bowling, shuffleboard, karaoke, skee-ball, cornhole, Trivial Pursuit, wall Scrabble, chess and billiards. A multi-screen cineplex under construction will follow.

Forty-five condominium units, perched in a distinctive glass box atop the hotel tower, will be ready for move-in by year’s end, including one with the astronomical asking price of $4 million. Kings officials have declined to say how many have sold since the units were put on the market this spring, but have indicated they are pleased with sales so far.

Retail stores will still play a significant role. Urban Outfitters recently announced it is moving its Arden Fair Mall store to DoCo. Macy’s opened a new entrance facing the arena. And the Kings are trying to lure more retailers, particularly clothing stores.

City officials, who had hoped the Kings partnership would build more than just an arena, say they are pleased with the team’s effort.

“It’s exciting to see the energy,” said Desmond Parrington, the city of Sacramento’s arena project manager, who was on site Friday looking it over. “It really is more than basketball. Each new piece increases the level of interest and activity.”

While the hotel opening gives DoCo momentum, history suggests the Kings’ place-making task will not be easy. Past efforts to remake and redefine the K Street Mall have had limited success, drawing people for awhile, then losing traction as economic and social trends shifted.

Downtown Plaza, itself a $150 million-plus project, was similarly hailed in 1993 as the answer to the downtown core’s economic woes. That project, which mimicked suburban retail malls yet also had entertainment elements, was successful for a decade. But it rapidly lost stores, shoppers and vitality in the 2000s, becoming a shell of its original self by the time it was torn down in 2014.

City officials say one of the lessons learned from Downtown Plaza’s failure is that DoCo’s developers will have to land unique stores, maintain destination restaurants and invest significant money to keep the site fresh and attractive over time, something the plaza’s owners didn’t do.

Even that, however, may not be enough to lure some suburbanites, who shy away from downtown, citing off-putting elements ranging from homelessness to parking meters with extended night hours.

Councilman Steve Hansen said the long-term key is to get more people living in the downtown core. That is starting to happen.

About 130 apartments are under construction a block away from the arena at 700 K street. Another apartment complex is planned a block farther at 8th and K. Housing also has begun to pop up near light rail in the R Street corridor, including 150 apartments opening at Ice Blocks at 17th and R streets.

Several retail experts and economists contacted by The Bee say the DoCo entertainment and lifestyle center concept is not easy to pull off, but makes sense as a replacement for Downtown Plaza.

Traditional retail-based shopping malls have been on the decline in recent years, victims of e-commerce. That trend is likely to continue. Credit Suisse, an international financial services company, published a much-quoted, stark forecast several months ago that up to 25 percent of existing retail malls in the country will be out of business in five years.

Some observers say a sea change among consumers plays a role. Younger adult consumers, who live in smaller apartments and are less likely to buy homes, are less interested in purchasing products and more interested in spending money on enjoyable experiences.

“Retail is going through a paradigm shift,” said Ken Noack, Jr., a retail specialist with Newmark Cornish & Carey. DoCo appears to be a response to that. “Retailers have had to come up with a new mousetrap and that mousetrap is called entertainment. The arena is a superbly natural venue to do this. So, why not surround your arena with continual attractions?”

Economist Chris Thornberg, founder of Beacon Economics in Los Angeles, who called a prior downtown arena deal a bad idea, says he is a fan of what the Kings are trying to create. He likens it to L.A. Live in Los Angeles, a growing entertainment and housing “ecosystem” that opened 10 years ago around the Staples Center downtown.

“Downtown Sacramento needed that investment,” Thornberg said. “I am impressed with what they are doing.”

 

The DoCo plan

The six-square-block project is rising at the former site of the Downtown Plaza shopping mall. It includes a 16-story hotel and condo tower, and more than 40 retail or restaurant spaces.
Sources: Cushman and Wakefield, City of Sacramento

Thornberg said he believes brick-and-mortar retail stores are not going away, but they need to offer services and experiences consumers can’t get online.

Currently in DoCo, many of the retail sites remain unleased. Kings representatives say they are not looking to fill those spots with stores that already exist in the region. Instead, they are pushing to land a handful of distinctive stores, focused on fashion, that will make DoCo more of a destination.

David Scanlon of Cushman and Wakefield, head of the DoCo retail leasing team effort, said the recent decision by Urban Outfitters is “a testament to the project. Each deal creates more momentum. Retailers are cautious, but DoCo is the kind of cool, unique experience they are looking for.”

Ultimately, he said, the hope is that the district, “becomes a destination that is not relying on arena events. The arena becomes just a bonus.”

Tony Bizjak: 916-321-1059, @TonyBizjak

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