Betting on K Street…

Walking down K Street in downtown Sacramento these days could be compared to a dentist peering into the mouth of a tot who’s had too much Halloween candy. There are buildings that look brushed and cared for. But there also are buildings resembling cavities, where years of neglect have made them visually unappealing. And at least one building, on the south side of 800, has been removed. There, an unsightly hole is surrounded by a painted fence.

Slowly, though, the jawline of K Street is being improved. Spurred at least partially by the dramatic change at the western end of K Street with the Golden 1 Center, other blocks are undergoing their own reinvestment and redevelopment, bringing in new retail and housing tenants.

Valerie Mamone, manager of business development with the Downtown Sacramento Partnership, said the city and her organization have long recognized K Street as a main artery for the city core.

What’s changed in the last half decade, she said, is how the market is treating that corridor.

“In 2010 and ’11, we worked on selling properties on K Street, and we could barely give them away,” she said. In addition to a woeful economy at the time, K Street was handicapped by a central feature, the Downtown Plaza mall, that most would charitably describe as underperforming.

Mamone said since 2014, when Downtown Plaza began coming down to make way for Golden 1, private investors have taken notice. In the last two years, according to Downtown Sacramento Partnership, one fifth of the K Street properties downtown have changed hands. That includes small buildings, such as 923 K St., which sold earlier this year for $1.05 million, and big buildings, such as Renaissance Tower at 801 K St., which sold for $80 million in February.

Both new and existing owners are investing to fix up storefronts, create new spaces and actively market them to tenants.

This activity, however, should be considered in the context of past history. Downtown Plaza, and the K Street Mall before it, held similar promise to revitalize an underperforming boulevard in the heart of the city. Both ultimately failed to be that catalyst.

But Mamone believes this time will be different. She cites early plans to revamp the city’s convention center at the other end of K downtown, and to set up a streetcar service for the urban grid, as future boosts to investment.

“There’s so much opportunity now that I don’t see it going backwards,” she said, adding partnership officials are hoping for soft goods retailers to complement the plethora of restaurants and bars opening or in the works.

At 10th and K, the night of the inaugural concert at Golden 1 by Paul McCartney, pedestrian traffic was twice what it is typically, Mamone said. “There will be a nice mix of different events happening,” she said. “And we’re working actively with property owners.”

Nonetheless, “K Street definitely still needs more logs on the fire,” Mamone said. Block by block going east from the arena, here’s what’s happening:

700 block

As the strip closest to the arena, no portion of K Street is seeing as much investment as the 700 block. On the north side, restaurant entrepreneur Trevor Shults teamed with former Sacramento King Kenny Thomas to open El Rey and Malt & Mash. Those two bars and restaurants and a third unnamed concept will take up 14,000 square feet of ground-floor space. Opposite them, developers Bay Miry and Ali Youssefi envision a mid-2017 opening for 700 K, a revamp of existing retail buildings and the addition of 137 apartments behind them.

“The sudden exponential increase in the level of foot traffic has unquestionably raised the investment interest and overall potential of K St. The corridor presents that rare opportunity to revitalize an area at the very core of a downtown city,” Miry said in an email. “With the presence of the Golden 1, convention center and community center, a K Street property owner now has the unique ability to offer a variety of housing and retail options to a wide demographic of potential tenants and customers.”

800 block

Home to the infamous K Street hole in the ground, the 800 block still isn’t seeing as much new investment as other blocks. But that may not be the case for long: The Sacramento Kings are buying the “hole” property at 800-816 K St., along with properties on Eighth and L streets. Though the team has not filed plans with the city yet, city officials expect a mid-rise, mixed-use building of apartments and retail on the K Street side.

Just east of that property sits an empty retail space. A broker said he’s soliciting tenants and working with the owner on a development strategy that he may pursue. The unnamed owner is likely to make a decision by year’s end, the broker said.

Across K Street, the Renaissance Tower has seen strides in office leasing since the down market of the late 2000s, a factor that helped its sales price. A brochure from leasing brokerage JLL Sacramento shows about 20,000 available square feet among three different office spaces. That’s less than 10 percent of its overall square footage. First-floor retail spaces totaling about 12,500 square feet are still available, however.

Next door, at 831 K St., data tech firm SkySlope is taking occupancy this month of 24,000 square feet. The growing company has an option to double that lease down the road.

900 block

At the corner of Ninth and K streets, Rubicon Partners has submitted plans to renovate first-floor retail spaces at 1107 Ninth St., known as the Forum Building. Bru Co. plans to open a tap room and bottle shop in one of those spaces, while the other is being marketed for lease. The renovations would add an outdoor patio, and Rubicon principal Kipp Blewett said the idea is to draw a tenant that fits with downtown’s new vibe.

“It’s manifesting itself in both the types and number of tenants,” said Blewett. Since Golden 1 Center’s first ticketed event, Rubicon has gotten a half-dozen inquiries about available retail space in the Forum Building, he said, adding that within the last six months, the office space in the building became 100 percent occupied.

Next door, changes also could be coming to three office and retail buildings: 920, 924 and 930 K St. Real estate investor and developer Mo Mohanna is working with Turton Commercial Real Estate to lease those buildings, which total about 33,000 square feet. But he’s also exploring the possibility of adding apartments to the upper floors of the buildings, aimed at downtown workers who need a “smart size” apartment as small as 400 square feet.

No formal plans for those additions have been submitted to the city yet, however, while Mohanna and his daughter Nikky work on a mixed-use project in midtown Sacramento with a similar concept.

Mohanna, who also owns 901 K St., which is on the northeast corner, is looking for a new ground-floor tenant after Estelle’s Patisserie announced plans to move into the Downtown Commons shopping area around Golden 1 Center.

And Ismail Abukhdair, the owner of 923 K St., said he’s hoping to eventually redevelop the building into a first-floor retail space with apartments above. Formerly home to a tailor’s shop, the building has been inert since that business closed earlier this year, after Abukhdair bought it.

1000 block

Ripples from Golden 1 Center might not reach quite this far, but then again, they might not need to. Both the north and south sides of the street are filled with popular retail and entertainment options, including Dive Bar, Crest Theater and Ambrosia Cafe.

At the southeast corner of 10th and K, however, restaurateur Randy Paragary is planning to sell his building housing KBar and Cafe Bernardo to a franchisee for the bar and grill Bennigan’s, to open early next year.

The opposite end of the block is in the midst of its own changes. After renovations, Sutter Capital Group is leasing 21 upper-floor apartments at 1029 K St. The building has been rebranded MAY for the butcher shop and grocery it originally housed, and the first floor, formerly a Pyramid brewery and restaurant, is being marketed for new retail.mapkstreet102816xx

Article and images provided by the Sacramento Business Journal


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