Sacramento’s multifamily market continued to be the popular choice of prudent local investors in 2003, according to Grubb & Ellis’ 2004 Real Estate Forecast. The integrated real estate service company lists the dramatic increase in home prices in the area and the recent rise in interest rates — keeping would-be homebuyers in the rental market — as the key reasons why the city’s apartment sector will continue to fare well this year. “In addition, employment analysts’ predictions of moderate growth in 2004 coupled with the specter of further rising interest rates confirms multi-housing’s star status in the coming 12 months,” the report asserts. During 2003, sales reached a high of $90,000 per apartment unit and complexes with 40 or more units posted an average cap rate of 7.45 percent.

Grubb & Ellis lists two multifamily sales among the top six investment transactions in Sacramento in 2003. Demmon Properties purchased Haverhill at Highland Reserve from Fairfield Highland Reserve for $44.6 million. Stanford Meridian Apartments LLC sold the Meridian at Stanford Ranch to Demmon Family Trust for $50.8 million.

There is a large number of new multifamily units coming on line in the Sacramento area. As for the city’s future multifamily development direction, Bruce Hester, senior vice president in Colliers International’s Multifamily Group in Sacramento, looks to the city’s core. “The Sacramento downtown rail yard is slated for a lot of development in the next 5 years,” he says. “Current plans include 4,000 multifamily units.”

Due to land availability and the growth rate, the Sacramento suburbs of Natomas, Folsom, Elk Grove and South Placer County are experiencing the majority of multifamily development, says Hester.

According to Colliers International, Sacramento’s apartment market has a vacancy of 5 percent. The rental rates in California’s capital city range from $495 to $1,500.

CAPITALIZING IN THE CAPITAL CITY Retail developer Donahue Schriber feels right at home in Sacramento. Sacramento continues to show a strong retail development market, a trend fueled by steady residential growth, careful community planning and the eagerness of retailers to set up shop in the area. Donahue Schriber’s business approach has found a home in a market exhibiting such conditions. One need only look at the company’s new shopping centers in the capital city submarkets of Roseville, Rocklin, Natomas, Elk Grove, Rancho Cordova and El Dorado Hills. In 2001, Donahue Schriber delivered the Sacramento area's first P.F. Chang's China Bistro to Creekside Town Center in Roseville, California. “Donahue Schriber is well positioned in the Sacramento marketplace to complement retailers’ existing holdings and provide a broad retail offering to consumers by continuing our strategy of aligning with the community, the respective cities and counties, landowners, and tenants to effect progressive design solutions that are tailored to the area in which they are located,” says Mark Whitfield, executive vice president of development and acquisition for the Costa Mesa, California-based company. In the greater Sacramento area, Donahue Schriber owns nine shopping centers, totaling more than 2 million square feet. This accounts for approximately one-third of the developer’s $1 billion asset base. Three area projects, totaling 709,000 square feet and more than $105 million in value, are currently under construction and scheduled to open this year. These retail properties are each anchored by Kohl’s — marking the retailer’s entry into the Sacramento market — and include a wide array of retail offerings such as Trader Joe’s, Borders Books & Music, Marshalls, PetsMart, Cost Plus World Market, HomeGoods, Sports Chalet, Krispy Kreme Doughnuts and In-N-Out Burger as well as Bed Bath & Beyond. Just outside the greater Sacramento area, Donahue Schriber has retail construction projects underway in Placerville and Brentwood. These two projects total 590,000 square feet and represent a $51 million investment. “Donahue Schriber believes in ‘following the rooftops’ to bring necessity-based retailing to communities within these growing areas,” says Whitfield. The 35-year-old shopping center developer, which is also a recognized leader in the management and leasing of retail real estate, leverages its extensive relationships with the more than 2,000 tenants in its client base to create distinctive retail destinations in and around Sacramento. “From grocery- and drugstore-anchored neighborhood shopping centers to large open-air community and power centers, a wide offering of merchandise is presented to the communities of Sacramento,” says Whitfield. With the goals of creativity, diversity and balance in its shopping centers, Donahue Schriber complements the offerings of strong national retailers with the distinction of local merchants. Whitfield says that the company’s innovation and dedication can be seen through the many industry firsts that it has achieved. Besides attracting three of the first Kohl’s stores to the Sacramento market this month, Donahue Schriber will feature the latest prototypes of Safeway, Raley’s and BelAir in its area retail centers. Adds Whitfield, “Donahue Schriber brought the area’s first P.F. Chang’s to Roseville and introduced In-N-Out Burger to the Natomas community.” — Brian A. Lee

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