Premier Lobbyist Address Gets Snapped Up
The Senator was a mainstay of California political and social activity for more than 50 years before it was converted to an office building in 1982, and now Seagate Properties has purchased it for nearly $50 million.
SACRAMENTO—Built in 1924 as an Italian Renaissance-style hotel, The Senator was a mainstay of California political and social activity for more than 50 years before it was converted to an office building in 1982. Seagate Properties Inc. recently completed the purchase of the 180,123-square-foot landmark building located directly across from the state capitol at 1121 L St. for $46.9 million. The property was 88% leased at the time of sale.
“We’re excited to continue to improve on this beautiful historic property,” said Brian Johnson, principal at Seagate. “Swift has done a great job reviving and improving the building, and we look forward to continuing to bring it back to its original splendor, while also adding new elements that today’s office tenants are seeking.”
Swift Real Estate Partners acquired the building in 2015 and began a renovation program to update the building’s vacant tenant spaces to appeal to creative office space users, which Seagate Properties plans to continue in the vacant tenant spaces. Other planned upgrades include new bike storage, a restaurant tenant for the ground floor, lobby updates, new outdoor seating, common area upgrades and possibly a new fitness center with showers.
“We acquired The Senator back in 2015, excited to increase our portfolio in the Sacramento market. The building’s history, character and location presented an exciting opportunity to revive one of Sacramento’s most iconic buildings,” said Tom Harris, investment manager at Swift Real Estate Partners. “By updating dated office suites to creative office, we were able to increase occupancy and complete our business plan. We are thrilled to sell to Seagate, a great owner who will do a wonderful job with the building.”
Alex Witt, John Manning and Tom Gilliland of JLL Capital Markets worked with Seagate Properties to arrange acquisition financing for the project. Rob Hielscher, Michel Seifer and Erik Hanson of JLL represented seller, Swift. The JLL leasing team of Alexis Garrett and Greg Levi will remain in place.
“The Senator Building is an irreplaceable landmark asset in the Sacramento market that continues to evolve to fit the needs of a diverse tenant base that seeks an office location adjacent to the state capitol. Swift has done an excellent job executing the business plan of converting a number of office suites to creative space, and Seagate has several opportunities to continue to add value to this historic building,” said Hielscher.
The 10-story office building is considered to be the premier office address for lobbyists in downtown. In addition, The Senator is located within a Qualified Opportunity Zone, and is surrounded by retail and entertainment amenities. For example, it is just four blocks from the burgeoning Arena District anchored by the Sacramento Kings’ Golden 1 Center.
“We saw strong interest in The Senator building from a diverse group of regional, West Coast and national investors,” Hanson tells GlobeSt.com. “We see a number of factors prompting investors to embrace more deals in the Sacramento market. Among these factors are intense competition for commercial assets in the Bay Area and other core markets along the West Coast. However, investors are also mindful of Sacramento’s growing Millennial workforce and relative housing affordability along with the game-changing development of Golden 1 Center and the surrounding Downtown Commons entertainment district. We see this continuing to evolve as an exciting urban mixed-use hub for the city for years to come.”
This is Seagate Properties’ second recent acquisition in the Sacramento region. In August, the real estate investment company purchased Creekside Oaks, a 178,695-square-foot office complex in South Natomas. With vacancy rates down, a rising cost of parking in downtown and a real lack of available large blocks of space, the South Natomas office space is positioned to be highly sought after, according to a JLL office report.
While industries such as technology, finance and hospitality are good barometers of office demand, the public sector, healthcare and professional business services continue to be the key market drivers in Sacramento. Overall, class-A leasing activity is expected to be at the forefront of declining vacancy rates and upward pressure on rental rates will keep rents on a rising trend, which would support the recent speculative developments and potentially attract more of it. However, limited availability in supply-constrained areas will create tight market conditions with tenants in these areas electing to renew leases rather than test the market. Overall, Sacramento appears to be trending positively with strong leasing activity and tenant demand indicating that the region will continue to be healthy, says JLL.