Centene at the former home of Kings?

Sac Biz Journal

The pending deal to bring health insurance giant Centene Corp. to Sacramento, and up to 5,000 jobs with it, is likely to have ripple effects on regional real estate and development. Here are some areas that might feel the waves first.

Sleep Train Arena: While the area Centene (NYSE: CNC) is looking at for its regional headquarters campus in North Natomas includes the former home of the Sacramento Kings, it doesn’t appear to be a likely destination. But at nearly 200 acres, the arena and its surroundings are still a prime opportunity site, surrounded by housing and retail, and now likely near a dynamic office development as well.

The site also was on the Greater Sacramento Economic Council’s list of potential landing spots for Amazon.com Inc.’s second headquarters, and could host events while the Sacramento Convention Center undergoes renovations and expansions in the next few years. If it hasn’t happened already, expect the Kings and the city to make a major push to put the closed arena in front of anyone sniffing around the region.

Bannon Investors’ South Natomas site: For more than a year, most of the talk around new office development in Natomas centered on projects Bannon is considering on either side of Interstate 5 near West El Camino Avenue. Near the firm’s existing Gateway 2020 project on the east side, entitlements are under review for a 90,000-square-foot building.

On the west side, a development could either consist of one Gateway 2020-like tower or a three-building mid-rise campus. If Centene’s plan is realized, office brokers believe it’s bound to result in expansion over time and interest from office tenants with connections to Centene. As the class A development closest to Centene’s potential site is nearly ready to go, Bannon’s project could see the quickest, most direct positive impact.

Downtown Sacramento’s office market: So far, we haven’t heard why Centene decided Natomas was the place to go, though it seems likely City Councilwoman Angelique Ashby made a full-court press for the company to be in her district. That raises a question though: Why not downtown? Two proposed high-rises, by Vanir and CIM Group, could’ve absorbed a significant amount of the 1.2 million to 1.5 million square feet Centene may need.

And if the company was tilting toward a multibuilding campus, the Railyards would’ve seemed to be an option. It’s possible Centene wanted to have its own buildings and space, and it’s also possible the Railyards is likely to be more of a mixed-use development with several smaller employers rather than one big one. But either way, downtown’s office market, while very healthy, is still waiting for a transformational new tenant or two to turbocharge rents and spur a new round of construction.

Source: Sac Biz Journal