[SacTownAndy]

Market for 301 Capitol Mall is unclear

By Ben van der Meer – Senior Reporter, Sacramento Business Journal
Jul 28, 2022

...Listed by Turton Commercial Real Estate, the 2.39-acre property at 301 Capitol Mall is hitting the block at something of a transitional time for urban downtowns, and Sacramento is no exception.

At least for now, the shiny high-rise office building isn't in vogue, when white-collar employees who would normally fill it are posting up at home offices and dining room tables instead. The two most recent proposals for 301 Capitol Mall were both mostly office space, but couldn't land a big tenant to move forward. It's safe to say that big tenant is no easier to find now.

So if an office tower is likely off the table, the next most likely scenario is the one Turton CEO Ken Turton said potential buyers have floated: multifamily, or a combination of hotel and multifamily. Some ground-floor retail would likely be involved, too.

If the site were to go the direction of condos or apartments, Turton said, future residents could reasonably pay a premium of 10% above a standard new-unit cost just for the location. The only other project that could make a similar claim would be the planned residential tower at 201 N St., a stone's throw from 301 Capitol Mall.

That so-far unnamed project by Southern Land Co. would be 32 stories with 243 apartments. The proposed square footage for that building — the proposal includes two others for non-residential use — is 372,605 square feet.

Turton said making the finances work at 301 Capitol Mall would likely mean a building of 500,000 to 600,000 square feet. That would be significantly bigger — and probably taller — than the 201 N St. residential proposal.

But Southern Land Co.'s project has yet to break ground, though the developers have said they're targeting 2023 to do so. Otherwise, Sacramento continues to be an unproven market for high-rise residential, going back about 15 years to several grandiose but ultimately unworkable proposals floated for Downtown Sacramento.

A buyer looking to break that trend would also have to account for hundreds of apartment units coming online nearby before the site is ever built. In addition to 201 N St., more than 400 units at Sacramento Commons, a block south of Capitol Mall, will start opening in upcoming months.

Combining hotel rooms and apartments/condos in one project is another potential route. Like a strictly residential one, though, a new chunk of hotel rooms have opened in the last year and more are on the way Downtown, so demand for more may be in question...

Full article at: https://www.bizjournals.com/sacramen...Pos=1#cxrecs_s