The 87,140-square-foot mixed-use office and retail building at 630 K St. will undergo cap improvements.
SACRAMENTO—New York Life Real Estate Investors on behalf of an institutional client recently acquired the five-story 87,140-square-foot mixed-use office and retail building at 630 K St. from Swift Real Estate Partners. As part of its repositioning plan, the owner will be making significant capital improvements to the asset situated adjacent to Golden 1 Center that will bring it to class-A market-ready condition.
"We continue to be compelled by the growth trajectory recently experienced by downtown Sacramento and believe in its prospects going forward. The dynamism being created within the Downtown Commons region is impressive and we look forward to contributing to its continuation through our ownership of 630 K St.," said Ross Berry, senior director at New York Life Real Estate Investors.
630 K St. is the second acquisition New York Life Real Estate Investors has arranged on behalf of its client in downtown Sacramento in the past two years. In early 2018, 770 L St., a 170,267-square-foot class-A office tower located around the corner, was also acquired.
Cushman & Wakefield represented the seller. Its Northern California capital markets group comprising Adam Lasoff, Seth Siegel, Steve Hermann, Ryan Venezia and Eric Fox in the Bay Area together with Ron Thomas and Kevin Partington of the firm's Sacramento office brokered the sale. New York Life Real Estate Investors retained Cushman & Wakefield to perform project leasing services, an effort being led by Thomas, Partington, Spencer Nielsen and Ben Corfee as well as property management services on its new asset.
"High-quality office assets such as 630 K St. located within major sports and entertainment districts in California are known to command significant rent premiums over similar class-A properties found within a one-half mile radius," Thomas tells GlobeSt.com.
630 K St. is positioned at the 7th Street terminus of K Street, the main pedestrian entrance to Downtown Commons/DOCO, which since its completion in 2016, has become the social epicenter of Sacramento and is a top live/work/play destination. The location also provides direct access to multiple public transportation options servicing the region, with stops immediately in front of the building.
"This was a rare value-add investment opportunity in the CBD, and by remodeling the asset and leasing up the available office space, the owner has an excellent opportunity to unlock the true value of this coveted amenitized building, which also provides great regional accessibility and city views," says Thomas. "Downtown has a severely limited number of sizable class-A leasing options to support the existing tenant demand and office growth in our urban core. Upon completion of the asset's transformation, 630 K St. will provide well appointed, modernized full floor and/or contiguous floor options for larger users. It is one of few buildings that can deliver a full floor in a class-A building, let alone up to 62,000 square feet or more in downtown."
In addition to its four stories of glass-lined office space, 630 K St. consists of basement and ground-floor retail space that is fully leased to a strong tenant roster of food/coffee/beverage, financial and other services directly accessible to occupants. The location is also walkable to the substantial amount of dining, shopping and entertainment options within DOCO and the surrounding downtown area. Tenant signage and visibility are further potential perks for future larger tenants in the building.
"The property is also uniquely equipped with two wall billboard signs, one on each side of the building, and that also provide an additional source of income for the owner," Thomas notes.
Sacramento's office market remains considerably stable. Data companies, innovative office tenants and the ability to retain top government firms makes for a unique recipe, according to a fourth quarter report by Kidder Mathews.
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
