Greatest Real Estate Deal of all Time

With the 4th of July just a day away I dusted off the old history book and started reading about our Founding Fathers.  One of them, Thomas Jefferson who was President at the time (1803),  sent Robert Livingston over to France to negotiate the Louisiana Purchase.  Later, Jefferson sent James Munroe to assist, but shortly before he arrived in France, Napoleon asked if the United States would like to buy the whole territory; sometimes it is all about timing.  You see, at the time, France was having financial difficulties and they were about to go to war with Great Britain.  Jefferson adroitly saw this and let Napoleon know that if they didn’t sell the territory, the U.S. would align itself with Great Britain.

The Louisiana Purchase consisted of approximately 830,000 square miles.  The Purchase Price:  $15,000,000.  That amounts to 3 cents per acre.  Adjusted for inflation it would be $236,000,000 today.

If you want to learn more about the greatest real estate deal ever check out this article:  The Greatest Real Estate Deal Ever

If you want to learn more about the Sacramento commercial real estate market click here: Sacramento Commercial Real Estate

Commercial Property Owners Targeted in Effort to Change Proposition 13

Over 30 years ago, voters passed Proposition 13 in response to unpredictable tax increases imposed on property in this state.  Prop. 13 set a base rate of taxation and limited annual increases in assessed value.  This protection continues today for all residential, commercial and industrial properties.

Year after year, legislation is introduced to increase taxes on commercial and industrial property by amending Prop. 13 and requiring these properties be assessed based on current fair market value instead of acquired value.  This is referred to as “Split Roll” because it would raise taxes on commercial and industrial, but continue Prop. 13’s protection of residential property.

Year after year, these legislative efforts fail because they require a 2/3s vote in each house — a feat impossible to accomplish given Republican opposition.

However, proponents of “Split Roll” property taxation (mainly labor unions) are putting together a statewide initiative.  They believe the Presidential election in November 2016 will be their best chance to see its passage.  Younger (and more liberal) voters will be targeted in hopes of convincing them that Proposition 13 has been bad for California — taking funds from schools, roads and child care.

In response, opposition (mainly business) argues that imposing higher taxes on commercial and industrial property owners is discriminatory and unfair.  The change will lead to increased costs of doing business in this state.  Those costs will be passed on to the general public — including commercial property tenants, employees and consumers.

So when you are negotiating a lease, make sure you know the assessed valuation of the property and then negotiate accordingly.

Restaurants To Open In Iconic Folsom Boulevard Building

The site of the former Rosemount Grille — which operated in East Sacramento from 1945 to 1989, and — should be dishing out some amazing food by the end of this year.

The 11,000 square foot building on Folsom Boulevard will house what is sure to be an incredible addition to the neighborhood.  One side is going to be occupied by OBO’ Italian, the newest Selland Family Restaurant; on the other side you will find Kru, an extremely popular midtown sushi restaurant.  Spearheading the redevelopment of the property is John Mikacich.  John has extensive experience in development, having worked with Swinerton Builders where he helped build office, hotel and retail.  Most recently (the last 20 years) John oversaw the development of the Cache Creek development that includes a Hotel, Casino, retail and the award winning Yocha Dehe Golf course.

With OBO’ Italian, Randall Selland continues his tradition of focusing on the food.  The intent is for the 4,700 square foot dining room to be a casual Rome-style café, with take-out and catering available.  A full-bar and patio dining are also planned.

For quite a while, Kru chef and owner, Billy Ngo, has wanted to move to a larger space that is able to accommodate all of the people wanting to experience his modern Japanese offerings — without waiting in a long line.  The new location will provide just that and have an innovative bar program featuring specialty cocktails, to boot.

The Rosemount Grille served “fine food to fine people” at this location for 44 years.  Andiamo Restaurant and Bar was there for 16.  The most recent tenant, Good Eats Restaurant and Market, operated until 2011.  The building has been vacant since.  After various tenant improvements — the first being a separation (demising) wall — the new restaurants should be set to open.  With the 100,000 square foot UC Davis Medical Center opening up across the street December 2015, Kru and OBO’ Italian will get a significant boost from a few hundred medical professionals and visitors.

Sacramento is America’s farm-to-fork Capitol … later this year there will be two more reasons to savor our City!

The Senator will Rise Again

It looks like the iconic Senator Office Building is about to change hands.  The building consists of about 160,000 square feet on 10 floors, and has historically been a popular location for lobbyists and associations since it is directly across the street from the Capitol.

In 2010 CALHFA vacated the building to move into a shiny new space at 500 Capitol Mall.  When CALHFA moved out they left behind a significant vacancy, say about 50,000 square feet.  Up until CALHFA’s move, the building never had a vacancy over 5%; in fact, 5% would be considered high.

Currently there is about 50,000 square feet available about (30% vacancy) with spaces ranging from 500 to 15,000 square feet.  With new ownership this vacancy should lease up fast.

If you are a tenant looking for about 5,000 square feet near the Capitol, your choices are slim.  Class A space in the Capitol Close Micro market (excluding the Senator and 1130 K Street) is hovering under 7%.  So, once the leasing program gets going at the Senator, we should see the Senator’s vacancy back to where it should be.