cathedral square - om_final_lr
TRANSCRIPT
CALIFORNIA STATE CAPITOL
CITIZEN HOTEL
CALIFORNIA EPA HQ
CATHEDRAL OF THE BLESSED
SACRAMENT
J STREET
K STREET
11TH STREET
MIXED-USE LAND FOR SALE
1018-1030 J STREETPrime Downtown Development Site
SACRAMENTO, CALIFORNIA
CATHEDRALSQUARE
Conceptual Rendering
OFFERING HIGHLIGHTS
Although information has been obtained from sources deemed reliable, Owner, Jones Lang LaSalle, and/or their representatives, brokers or agents make no guarantees as to the accuracy of the information contained herein, and offer the Property without express or implied warranties of any kind. The Property may be withdrawn without notice. If the recipient of this information has signed a confidentiality agreement regarding this matter, this information is subject to the terms of that agreement. ©2015. Jones Lang LaSalle. All rights reserved.
Rob Cole Senior Vice President+1 916 491 4314 [email protected] CA Lic 01323882
Alan Stevenson Vice President+1 916 491 4339 [email protected] Lic 01890995
Greg Levi Managing Director+1 916 491 [email protected] CA Lic 00973235
1018-1030 J STREETSacramento, CA 95814
CATHEDRALSQUARE
CATHEDRALSQUARE
Prime Downtown Development Site
Table of Contents
Executive Summary ...........................................
Property Description .........................................
Offering Highlights ............................................ Prime Location.................................................... Pedestrian Friendly ............................................. Easy to Access, High-Traffic Location ................. The Capitol District ............................................. Demographics .................................................... Tightening Multifamily and Office Markets ........... Downtown Hotel Occupancy ............................... Unmatched View Corridor ................................... The New Arena District ....................................... Other Projects of Note in the Arena District .........
Downtown Area & Market Overview ..................
Downtown Market Overview: Multifamily ............................................................... Competitive Set ........................................................... Downtown Market Overview: Office ........................... CBD Office Submarket ...............................................
Downtown Office: Competitive Set..........................
Sacramento Area Overview ...................................... Population Growth ....................................................... Diversified & Resurging Economy .............................. Major private sector employers ................................... Highly Educated Workforce......................................... Recovering Housing Market ........................................
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+1 916 447 6300 www.jll.com/sacramento
400 Capitol Mall Suite 1560 Sacramento, CA 95814
For more information contact:
SUBJECT PROPERTY
Conceptual rendering of future develop of subject property
OFFERING HIGHLIGHTS
JLL is pleased to offer the Cathedral Square development site (the “Property”), a rare assemblage of prime real estate located in downtown Sacramento. This highly coveted location is less than two blocks from the north steps of the State Capitol office building and is surrounded by Sacramento’s most prestigious hotels and office buildings.
The Property is located on the north side of the vibrant Capitol District. Driven in large part by its proximity to the State Capitol, office buildings in the Capitol District are the most highly occupied and garner the highest rents in the CBD. The Property is located adjacent to the Kay Entertainment District, which features some of the region’s best restaurants, hotels and entertainment venues, and is book-ended by the Convention Center to the east and the new Sacramento Kings Arena site to the west. The Property would be excellent for a number of future uses, including mixed-use residential, office and/or hotel.
49erGreen Cesar E.
Chavez PlazaPu
blic M
arke
t
CaliforniaState Capitol
Building
I Street Bridge
Roosevelt Park
Tower Bridge
Wate
rfron
t Par
k
Crocker Park
Hotels / Meeting Areas Office Buildings Government Buildings Restaurants / Retail / Entertainment Housing Parking OtherCapitol District
L Streett
Neesham Cr
Merchant Street
5th S
treet
6th S
treet
7th S
treet
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treet
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treet
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et
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et
15th
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et
16th
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17th
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et
Fron
t Stre
et
2nd S
treet
Capitol Mall
Fron
t Stre
et
Capitol Mall
I Street
J Street
L Streett
K Street Mall
H Street
O StreetO Street
N Street
G Street
F Street
I Street
J Street
H Street
O Street
N Street
G Street
F Street
I Street
J Street
H Street
N Street
Capitol Mall
K Street Mall
Fron
t Stre
et
3rd S
treet
3rd S
treet
5th S
treet
6th S
treet
7th S
treet
8th S
treet
9th S
treet
10th
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et
12th
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13th
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15th
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16th
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17th
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4th S
treet
3rd S
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7th S
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8th S
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9th S
treet
10th
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11th
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13th
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14th
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et
15th
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16th
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17th
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et
I Street
J Street
K Street
L Street
P Street P Street P Street
Capitol Avenue
L Street
11th
Stre
et11
th S
treet
4th S
treet
HotelMarshall
Residence Inn
Hyatt Regency
City Parking
City Parking
SacramentoConvention
Center
Community Center Theatre
Memorial Auditorium
Parking
Parking
1600 K St
1325J St
1303J St
1616I St
1650I St
1608I St
1619I St
1631I St
City Pkng
1112 I St
Mix Use
1201 J St
1201 K St
1515K St
1510J St
Cal EPABuilding
City HallAnnex
City Hall
Department of Justice
1401K St
1414K St
Meridian Plaza
The Park
Pkng
Crest Theatre
Clarion Hotel
Federal Building State of CA -
East End Project
State of CA - East End Project
State of CA - East End Project
State of CA - East End Project
Holiday Inn
300 Capitol
Mall
400 Capitol
Mall
500Capitol
Mall
520Capitol
Mall
555Capitol
Mall
Embassy Suites
Library
455Capitol
Mall
Department of
Education
1400 10th Street
Legislature StaffLewis Apts
Dept. of
Transp.Dept.
of Food & Agricult.
State Employees
Building
501 J St(Future Medical Office)
621Capitol
Mall
Federal Building
Education Building
12258th St
Employment Develpment Department
Employment Development Department
Library / Courts
Building
UnionBank
Federal Courthouse
County Jail
County Building
Post OfficeCounty
Administrative Building
Sports Basement
801 J St
980 9th St
801 K St
City Parking
Crocker Art
Museum
Governor's Square
Apartments
Board Of Equalization
CalPERS
Employment Develpment Department
Employment Develpment Department
Deptartment of
Transportation
Dept. of Food
& Agriculture
Church
State of CA - East End Project
State of CA - East End Project
State of CA - East End Project
State of CA - East End Project
Capitol Towers500 N Street
Pioneer TowersCapitol Towers
Governor's Square
Apartments
StateParking
StateParking
Amtrack Station
Offic
e &
Dinin
g Masonic
Temple AT&T
Governor’s Mansion
Cathedral of the Blessed
Sacramento
City Parking
One Capitol
Mall Sutter Club
800 J St
Forum
St. Rose of Lima Park
China Town Village
VagaBon
Working Center
CityParking
Retail
700 Block of K St
Parking CA Fruit Bldg
City ParkingOl
dSa
crame
nto
Old
Sacra
mento
Greyhound Site
PlannedResident.
RiteAid
800H St
8009th St
818 K St
630K St
660J St
24HR Fitness
830 K St
831 L St
770 L St
925 K St
907 K St
900 J St
Citizen Hotel
Cathedral Square
Sheraton Grand
Esquire Plaza
Planned Resid.
1029 J St
1100 K St
1130 K St
1127 L St
Senator Building
925L St
915L St
BestWestern
801 12th St
1234 H St
1231 I St
777 12th St
1301 I St
1314 H St
Sterling Hotel
MusicCircus
1521 I St
1517 L St
Hotel Berry
Pkng
Pkng
Pkng
City Parking
700 J St
Entertainment & Sports Complex
(Under Construction)
City Parking
County Recorder
OfficeSacramento
County Sherrif’s Dept.
Sacramento County
Compliance
Sacramento County DA
Agricultural Council of CA
Dive Bar, District 30, Pizza Rock
Ella’
s
Pkng
Pkng
Retail, Restaurants, Parking
Sbux
Capitol District
629J St
Sacramento Valley Station (Amtrak/RT Light Rail)
Macy’s
Century Theatres
Hotel/Residential Tower (U/C)
City Parking
OFFERING SUMMARY
Property: 1018-1030 J Street, Sacramento, CA
APN: 006-0103-007, 008, 009 and 0015
Zoning: C-3 SPD
Entitlements: Current entitlements would allow a 25 story, mixed-use residential high-rise.
Size: Four parcels totaling ±33,289 SF
CALIFORNIA STATE CAPITOL
CITIZEN HOTEL
CATHEDRAL OF THE BLESSED
SACRAMENT
K STREET
11TH STREET
SITE
EXECUTIVE SUMMARY
VIEW OF 11TH STREET FROM PROPERTY
CATHEDRALSQUARE
4
OFFERING HIGHLIGHTS
PROPERTY LOCATION AND ZONINGStreet Address: 1018-1030 J Street,
Sacramento, CAOrientation: Four parcels located at the SW
corner of J Street and 11th StreetCounty: County of Sacramento
Land Area: ±30,289 SF (.69 AC)
Assessor’s Parcel: 006-0103-007, -008, -009, -015
Zoning: C-3-SPD
UTILITY SERVICESElectricity: Sacramento Municipal Utilities DistrictGas: Pacific Gas And ElectricWater/Sewer: City Of Sacramento
NEIGHBORING PROPERTY USESNorth: Low-rise officeSouth: Crest Theater / RetailEast : 1100 J St Office BuildingWest: Retail / Citizen Hotel
SEISMIC ZONEThe property is not located within the Special Studies Earthquake Zone as defined by the Alquist-Priolo Special Studies Act.
EXISTING IMPROVEMENTSThe current improvements are comprised of four vacant commercial storefronts located along the south side of J Street between 10th Street and 11th Street
CURRENT ENTITLEMENTSZoning:
The purpose of the C-3 zone – also known and referred to as the central business district (CBD) – is to provide for the most intense residential, retail, commercial, and office developments in the city. The maximum density is 450 dwelling units per net acre. There is no lot coverage requirement.
Development Plan:
The current development plan provides for a 25-story, mixed-use, residential high-rise tower. The project includes 233 residential units on 23 floors with a 4 level (two above grade, two below grade) garage podium containing 328 parking stalls and 12,000 square feet of retail space. Levels three and four of the tower include both residential units as well as parking, and level six is an amenity level including pool, spa, and landscaped terrace.
Environmental Impact Report
An Environmental Impact Report has been completed in accordance with the California Environmental Quality Act (CEQA) and Sacramento Local Environmental Procedures.
Timing:
The proposed use is consistent with the objectives of the City of Sacramento General Plan and is identified as a “Catalyst Site” by the Downtown Sacramento Partnership. The current entitlements were approved in July, 2007 and expire in July, 2017. A condominium Tentative Map expires July 12, 2017.
PROPERTY DESCRIPTION
J St J St
K St
Jazz Alley
CITIZEN HOTEL
ESQUIRETOWER
ESQUIRE PLAZA
CATHEDRAL OF THE BLESSED SACRAMENT
11th
St
10th
St
12th
St
PARCEL MAP
76
OFFERING HIGHLIGHTS
SITE
925 L ST CITY
PARKING
STATE CAPITOL
HYATT REGENCY
CITIZEN HOTEL
CITY HALL
ELKS TOWER
CAL EPA
THE KAY ENTERTAINMENT DISTRICT
980 9TH ST
801 K ST
915 L ST
LEGISLATIVE COUNSEL
1215 K ST1201
K ST
1130 K ST
SENATOROFFICE
BUILDING
SHERATON GRAND HOTEL
CONVENTION CENTER
OFFERING HIGHLIGHTS
PRIME LOCATIONThe Property will be one of the most distinctive locations on J Street and offers an assemblage of parcels large enough to build a significant structure. The Property is located in the Capitol District, also known as the Government Affairs District, immediately north of the State Capitol. J Street is a high traffic major downtown artery with excellent access off freeways.
PEDESTRIAN FRIENDLYPedestrian access is very important in this area of downtown, and Cathedral Square features an outstanding Walkability Score of 96 driven by its easy walking access to surrounding restaurants, retailers, hotels and office buildings. The site is also located within walking distance to the north steps of the State Capitol Office Building which is paramount as government affairs users need to be able to walk from the legislative body of the Capitol to fundraisers in nearby venues, private sector and State offices, hotels and restaurants on a daily and sometimes hourly basis.
EASY TO ACCESS, HIGH-TRAFFIC LOCATIONSet on the southeast corner of J and 11th Streets, the Property is easily accessed from J Street and from 11th Street as well as the alley that runs east-west directly to the south of the site. J Street is a primary commercial thoroughfare for traffic traveling east from Interstate-5, with more than 27,000 vehicles driving it daily. The intersection of 11th and J Streets is signalized with one way traffic on J Street and two way traffic on 11th Street.
VIEW LOOKING SW AT THE CORNER OF 11TH AND J STREET98
OFFERING HIGHLIGHTS
SITE
OFFERING HIGHLIGHTS
THE CAPITOL DISTRICTThe State of California is the huge economic engine that has always pushed the growth of downtown Sacramento. The State Capitol was permanently located in Sacramento in 1854, and the construction of the Capitol Office Building was completed in 1874, securely establishing the future of Downtown Sacramento. California represents the ninth-largest economy in the world and its 38.5 million residents give it the largest population in the United States. State government and private sector firms that work with the government have consistently grown over the years in order to govern the swelling population and manage the annual State budget that is currently up to $165 billion.
The area near the State Capitol Building, referred to as the Capitol District, is generally bound by J Street to the north, L Street to the South, 15th Street to the east and 9th Street to the west. The Site is in an ideal location in the middle of the district with excellent pedestrian proximity to the State Capitol. This proven central location is a distinguished, established, mature downtown area that will be enhanced by the surrounding developments, including the new Arena as well as the future residential and retail projects under construction or planned downtown.
STATE CAPITOL
THE KAY ENTERTAINMENT DISTRICT
L Street
13th Street
K Street
J Street
CAPITOL DISTRICT
ARENA SITE
1110
OFFERING HIGHLIGHTS
DEMOGRAPHICS:Downtown Sacramento continues to be the largest employment center in the region with a workforce population of nearly 72,000. Downtown’s psychographic profiles, for both the residential and workforce populations, have a strong affinity for urban amenities including the arts, cultural attractions and entertainment. Dominant psychographic profiles in the residential population consist of Aspiring Contemporaries (18%) and Upscale America (13%). Dominant segments in the workforce population also include Upscale America (12%) as well as Affluent Suburbia (15%).
Aspiring Contemporaries: Young, mostly single, ethnically diverse, online active households living in new homes or apartments with discretionary income to spend on themselves.
Upscale America: College-educated couples and families living in the metropolitan sprawl earning upscale incomes providing them with large homes and very comfortable and active lifestyles.
Affluent Suburbia: The wealthiest households in the U.S. living in exclusive outlying neighborhoods enjoying the best of everything life has to offer. Source: Buxton Customer Analytics, 12 Minute Drive Time, 7th & K streets.
Demographic snapshot of radial area from the Cathedral Square site
TIGHTENING MULTIFAMILY AND OFFICE MARKETSSacramento remains one of the nation’s top performing multifamily markets, and overall market occupancy currently stands at 97.2%. The downtown Sacramento submarket has an occupancy rate of 95% and has experienced rent growth in excess of 8% over the past year. Demand for high quality rental housing in the downtown area is expected to grow dramatically for the next several years as Sacramento’s downtown experiences a resurgence driven in part by the new Entertainment and Sports Center.
The immediate office micromarket is among the strongest in the region with the vacancy rate below 8% compared to 15% for the overall downtown submarket, and the area features some of the highest office rents in Sacramento. In addition, there are only three new Class A office buildings that have been completed in the last fifteen years in the immediate area. Total vacancy in these buildings is less than two percent and the high rent range is now approaching $3.20 per rentable square foot per month. Demand in this sector has continued to grow and is pushing rents to new heights.
DOWNTOWN HOTEL OCCUPANCY IS ABOVE THE NATIONAL AVERAGEHotel occupancy is above the national average and may suggest that a hotel may be another option for the subject property. Downtown Sacramento enjoyed a healthy 78% average occupancy in 2014. This is well above the national average of 64.4%. Demand is expected to increase significantly with the completion of the new Entertainment and Sports Center.
Year Total Avg Occ.2014 78%2013 71%2012 66%2011 64%2010 58%2009 67%2008 73%
Source: Downtown Sacramento Partnership
1-Mile 3-Mile 5-Mile
Residential Population 17,736 130,691 312,912
Workforce Population 71,335 149,450 271,154
Annual Household Income $42,616 $65,067 $93,079
Total Housing Units 11,062 62,889 136,619
Average Age 35 35 34Source: Buxton Customer Analytics and Downtown Sacramento Partnership
OFFERING HIGHLIGHTS
SUBJECT PROPERTY
12 13
OFFERING HIGHLIGHTSOFFERING HIGHLIGHTS
ORIGINAL RANSOHOFF DEPT. STORE
ELKS TOWERSTATE CAPITOL
CATHEDRAL OF THE BLESSED SACRAMENT
UNMATCHED VIEW CORRIDOR INCLUDES THE CITY’S BEST KNOWN LANDMARKS
Due to the historical nature and stature of many of the surrounding properties, the site will enjoy unchallenged views of several of Sacramento’s most desirable landmarks and cityscape:
THE CATHEDRAL OF THE BLESSED SACRAMENT is located southeast of the site. Not only is this a significant and historical property that will never be a future development site, the view of the Cathedral itself is very desirable.
THE ORIGINAL RANSOHOFF DEPARTMENT STORE located directly to the south of the site was recently sold to a development company. This is an historical building was built in 1911 and was most recently tenanted by the Pyramid Ale House. This property consists of 2 structures that are only 3 and 4 stories in height, totaling 46,000 sf. This is the most important of the view corridors with the State Capitol located directly south.
CREST THEATRE is also directly south of the site. This historical structure was completed in 1912 as the Empress Theatre and later converted to the Hippodrome theatre. The buildings have had several renovations over the years. The most current modernization is the conversion of the basement level screening area to a full service restaurant. The facility is also a popular venue for hosting community events, concerts, fundraisers as well as the showing of independent and foreign films.
1001 K STREET is a five story historical office structure built in 1940. This property is located to the southwest of the Site.
THE LANDMARK BUILDING is located mid-block on 10th Street to the west of the site. This two-story building was built in 1935. Pre Fight Lounge recently opened in part of this building off of the Alley shared with the Site.
ELKS TOWER is located diagonally across the intersection of 11th and J Street to the northeast and was built in 1926. This multitenant office building and event center is also home to the Rail Bridge Cellars tasting room on the top floor.
1100 J STREET, is directly to the east of the site across 11th Street. This five-story office building is home to the Legislative Counsel and Data Center. Legislative Counsel is a nonpartisan public agency that drafts legislative proposals, prepares legal opinions, and provides other confidential legal services to the Legislature and others.
14 15
OFFERING HIGHLIGHTS
THE NEW ARENA DISTRICTLocated at the east side of K Street – three blocks east of the Property – and bound by J and L Streets to the north and south, the 14-acre Entertainment and Sports Center (“Arena”) is currently under construction at the former Downtown Plaza site and is scheduled for completion in October 2016. While this will be the new home arena for the Sacramento Kings professional basketball team, it is anticipated that the Kings’ ownership will host more than 150 events annually at the new Arena and draw nearly 2 million visitors. The new Arena has quickly become a catalyst of excitement and change downtown. Below is an overview of the some of the new key projects underway or being planned within the adjacent Arena District.
ENTERTAINMENT AND SPORTS CENTER (ESC):The new Arena will have an indoor seating capacity of approximately 17,500. One of the new complex’s design features is a series of five-story glass doors which can be opened to an outdoor plaza during events to allow visitors an experience that is entirely unique to this arena and is possible due to Sacramento’s warm, dry climate.
16-STORY HOTEL AND RESIDENTIAL TOWER: The Sacramento Kings recently announced plans to develop a 16-story hotel and residential tower adjacent to the arena on the 500 block of J Street. The project is scheduled for completion in October 2016.
STREET CAR LINE:A proposed street car line would connect the Arena District with other parts of downtown, midtown and West Sacramento’s Bridge District. The proposed line runs immediately to the north of the Senator on K Street.
OTHER PROJECTS OF NOTE IN THE ARENA DISTRICT Below is an overview of the some of the new key projects underway or being planned within the Arena District.
700 BLOCK OF K STREET:Funding has been secured by this project’s developer to redevelop this half-city block into a new $48 million mixed-use improvement that will include 137 residential units and retail and restaurant space. The project is scheduled for completion by the end of 2016
501 J STREET:A major health care provider is planning a new, major 150,000 square foot health care facility at this currently vacant office building located directly across from the Arena site and one block to the northwest of the Property. The project is scheduled for completion by 2016.
MARSHALL HOTEL: An up to 17-story, 175-room hotel has been preliminarily proposed by the property’s ownership at this property adjacent to the Arena site on the southwest corner of 7th
and L Streets.
VANIR TOWER: Vanir Development Co. is planning its new 26-story headquarters building on the north side of the 600 block of J Street. Anticipated co-tenants include the regional headquarters for a major commercial bank and a restaurant.
Downtown Plaza Tower
700 Block of K Street
501 J Street
Marshall Hotel
Vanir Tower
Street Car Line
OFFERING HIGHLIGHTSOFFERING HIGHLIGHTS
Conceptual rendering of the ESC Plaza16 17
OFFERING HIGHLIGHTS
R STREET CORRIDOR: A number of exciting mixed-use and retail projects have recently been completed or are underway along the 27-block R Street Corridor where former warehouse and manufacturing facilities are being converted. Two of the newer projects include the Ice Blocks – a massive, three-block long retail and residential development planned by Heller Pacific – and CFY Development’s Warehouse Artist Lofts, a mixed-use redevelopment of 116 apartment units designed for local artists. R Street Corridor: A number of exciting mixed-use and retail projects have recently been completed or are
underway along the 27-block R Street Corridor where former warehouse and manufacturing facilities are being converted. Two of the newer projects include the Ice Blocks – a massive, three-block long retail and residential development planned by Heller Pacific – and CFY Development’s Warehouse Artist Lofts, a mixed-use redevelopment of 116 apartment units designed for local artists.
IN ADDITION TO THE ARENA DISTRICT, A NUMBER OF EXCITING PROJECTS ARE UNDERWAY OR PLANNED THROUGHOUT DOWNTOWN SACRAMENTO AND ALONG ITS PERIPHERY, UNDERSCORING THE CLEAR RENAISSANCE THAT IS OCCURRING THERE. HERE IS A SAMPLING:
COURTHOUSE SITE
ARENA SITECAPITAL CITY FREEWAY
50US
5
730 I STREET: Sporting goods retailer, Sports Basement, recently completed the purchase of this 76,000 SF building from the City of Sacramento and is finalizing plans to renovate the former civic structure into a major sports retail outlet.
NEW SUPERIOR COURT:Located to the northwest of the Property and to the immediate north of the US District Federal Courthouse, the Office of the Courts acquired a full city block at H and 6th Streets to construct a new county courthouse. The new five-story facility will feature 44 courtrooms at an anticipated
cost of $300 million. This is likely to further drive demand for attorney office space at the Property.
PERFORMING ARTS CENTER:The City of Sacramento is planning a major performing arts center at the corner of H and 14th Streets. This would house training facilities for the Sacramento Opera, Ballet, Philharmonic Orchestra and the California Musical Theater.
THE RIVER DISTRICT: This area north of downtown and the Railyards was recently connected to downtown by the 7th Street extension. Key projects here include the new residential development Township Nine and the Powerhouse Science
Center, a planned museum and education facility located on the Sacramento River and north of Old Sacramento.
EVIVAEVIVA is currently under construction at the northwest corner of 16th and N Streets and is due for completion in 2015. The project includes 118 market-rate rental apartment units, 5,195 square feet of ground floor retail along 16th Street and 123 parking spaces on
the first floor and in the basement. The project is a joint venture between the Capitol Area Development Authority (CADA) and The Integral Group of Atlanta.
16 POWERHOUSE: This new “green” development is under construction at 16th and P Streets by D&S Development, which is also planning the 700 K Block with CFY Development. This will be a 50-unit mixed-use property
featuring four local retailers on the ground floor. Once completed, the property will be certified LEED Platinum.
WHOLE FOODS MARKET:This site at L and 21st Streets is proposed by Pappas Development and will include a 40,000 SF Whole Foods Market, residential units and multi-level parking.
THE RAILYARDS: This 240-acre site is the largest infill redevelopment site in the country. Located to the north of the Property and being spearheaded by LDK Ventures of Sacramento, discussed developments there include a new campus for University of California Davis, a new Major League Soccer stadium, a medical campus and a public market.
THE BRIDGE DISTRICT188 acre mixed-use development by Fulcrum Properties in West Sacramento just across the Tower Bridge and adjacent to Raley Field.
THE RAILYARDS
18 19
OFFERING HIGHLIGHTS
5
MARRIOTTRESIDENCE INN
HYATT REGENCY
CITIZENHOTEL
50US
CITY PARKING
CITY HALL
FEDERAL COURTHOUSE
CalSTRS
980 9TH STREET
CAL EPA
STATE OF CALIFORNIA
SHERATON GRAND
ICE BLOCKS(U/C)
DEPARTMENT OF CORRECTIONS
DEPT. OF EDUCATION
DEPARTMENT OF HEALTH AND HUMAN SERVICES
CONVENTION CENTER ARMY
CORPS OF ENGINEERS
COMMUNITY THEATER
STATE CAPITOL
ATTORNEY GENERAL’S
OFFICE
AT&T
POWERHOUSE 16(U/C)
LEGADODE RAVEL 800 J
DOWNTOWN AREA & MARKET OVERVIEW
LEGEND: POTENTIAL COMPETITION
OfficeMultifamilyHotel
I Street
J Street
L Street
Capitol Mall
K Street
AERIAL VIEW LOOKING SOUTHWEST FROM 15TH & I STREETS
R Street Corridor
The Kay Entertainment District
FREMONT MEWS
CAPITOL TOWERS
MERIDIANPLAZA
ESQUIRE PLAZA
1201 K
THE SENATOR
770 L
925 L
915 L
1414 K STREET
CATHEDRALSQUARE
ARENA SITE
THE BRIDGE DISTRICT
KIMPTON HOTEL (U/C)
EMBASSY SUITES
2120
OFFERING HIGHLIGHTSDOWNTOWN MARKET OVERVIEW: MULTIFAMILY
SACRAMENTO MULTIFAMILY MARKET OVERVIEWSacramento remains one of the nation’s top performing multifamily markets and continues to show very strong performance with the most recent quarter yielding improvements in both occupancy and rental rates. The market occupancy rate has remained above the 95% full economic occupancy equilibrium for the past eight quarters and currently stands at 97.2%.
Effective rents have increased 7.2% over the past year, and concessions have decreased dramatically and remain at minimal levels. New construction remains in check with 360 units delivered over that past year, which represents a less than 0.5% increase to supply.
0
50
100
150
200
250
$1,350
$1,400
$1,450
$1,500
$1,550
$1,600
$1,650
$1,700
2009 2010 2011 2012 2013 2014
Net Absorption Units Effective Rent Per Unit
HOTEL DEMAND IS ABOVE THE NATIONAL AVERAGEHotel occupancy is above the national average and may suggest that a hotel is another option for the subject property. Downtown Sacramento enjoyed a healthy 78% average occupancy in 2014. This is well above the national average of 64.4%. Demand is expected to increase significantly with the completion of the new Entertainment and Sports Center.
Year Total Avg Occ.2014 78%2013 71%2012 66%2011 64%2010 58%2009 67%2008 73%
Source: Downtown Sacramento Partnership
THE FUTURE OF DOWNTOWN HOUSINGMayor Kevin Johnson recently highlighted his vision for “ Sacramento 3.0” that includes a city focused on innovation and technology. This vision includes his repeated call to add 10,000 new housing units downtown. Downtown Sacramento has a residential population of nearly 18,000 within a 1-mile radius of 11th & J Streets. Increasing the residential housing downtown remains a high priority for the City of Sacramento. Downtown has 11,062 housing units with an 87 percent occupancy rate.* In a recent Office Market study commissioned by the DSP, 95 percent of respondents stated that living close to work was a major factor in the job selection process. In addition to workplace proximity, people are looking for amenities that are within walking distance of their residence.
COMPETITIVE SET MARKET ANALYSISThe Downtown Sacramento multifamily submarket consists of approximately 2,600 units, or 2.6% of the county’s total inventory. The Downtown submarket has an overall occupancy rate of 95% with continued strong performance being driven by its strategic location, strong demographics, and the current downtown economic resurgence.
The primary multifamily competitive set for Cathedral Square consists of eight properties located in downtown and midtown Sacramento, totaling 1,472 units. The overall occupancy rate is 95.9%, and effective rents have grown by 8.5% over the past year. New construction has been moderate with the 84-unit Legado de Ravel, delivered in 2013, being the only new development since 2009.
0%
1%
2%
3%
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5%
6%
7%
$500
$550
$600
$650
$700
$750
$800
$850
$900
$950
$1,000
Vacancy Percent Effective Rent Per Unit
SACRAMENTO COUNTY HISTORICAL VACANCY AND RENT
COMPETITIVE SET MARKET ANALYSIS
22 23
OFFERING HIGHLIGHTS
800 J Lofts800 J Street Year Built % Leased Unit Type Unit Mix # of Units Market Rent Average SF Rent/ SF
2006 97.8% Studio1 Bed2 Bed
33%25%42%
745794
$1,305$1,750$2,299
590842
1,074
$2.21$2.08$2.14
Totals 100% 225 $1,833 856 $2.15
Legado de Ravel16th & O Street
2013 97.6% 1 Bed2 Bed
71%29%
6024
$1,648$2,175
7431067
$2.22$2.04
Totals 100% 84 $1799 836 $2.17
1801 L1801 L Street
2006 98.8% Studio 1 Bed 2 Bed 3 Bed
23%52%24%1%
3885402
$1,325$1,738$2,275$4,000
49769111051920
$2.67$2.52$2.06$2.08
Totals 100% 165 $1,800 762 $2.43
Fremont Mews1400 P Street
2005 99.0% Studio 1 Bed 2 Bed
15%60%25%
187130
$1,350$1,655$2,133
4957391012
$2.73$2.24$2.11
Totals 100% 119 $1,729 771 $2.28
LINQ Midtown3111 S Street Year Built % Leased Unit Type Unit Mix # of Units Market Rent Average SF Rent/ SF
2009 92.0% Studio1 Bed2 Bed
8%44%48%
23120132
$1,435$1,741$2,141
6327961111
$2.27$2.19$1.93
Totals 100% 275 $1,907 933 $2.07
Capitol Towers1500 7th Street
1965 92.4% Studio1 Bed2 Bed3 Bed
32%49%15%4%
1311986216
$1,235$1,453$1,864$3,687
539697835
1,163
$2.29$2.08$2.23$3.17
Totals 100% 407 $1,533 685 $2.22
St. Anton Building2110 L Street
2006 100.0% Studio1 Bed2 Bed
20%52%28%
133418
$1,138$1,475$1,925
570814
1215
$2.00$1.81$1.58
Totals 100% 65 $1,532 876 $1.79
Lofts on L Street1818 L Street
2008 94.3% Studio1 Bed
Penthouse
25%63%13%
10255
$1,950$2,729$3,875
70910781279
$2.75$2.59$3.03
Totals 100% 40 $2,715 1011 $2.68
DOWNTOWN MULTIFAMILY: COMPETITIVE SET
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OFFERING HIGHLIGHTSDOWNTOWN MARKET OVERVIEW: OFFICE
0%
5%
10%
15%
20%
25%
30%
(1,000,000)
(500,000)
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000Total Net Absorption Total Vacancy
SACRAMENTO MARKET HISTORICAL NET ABSORPTION AND VACANCY
SACRAMENTO OFFICE MARKET OVERVIEWSacramento’s office market consists of more than 44 million square feet of non-owner occupied class A and B product spread between the Central Business District (CBD) and 10 primary suburban submarkets. The CBD attracts the region’s top legal, financial and government-related industries, many of which require proximity to the state capitol. The Highway 50 Corridor and South Placer submarkets make up the largest share of private sector office inventory, accommodating growth as the region’s housing development has expanded to the suburbs. These two submarkets have benefited most during the early stages of economic recovery as the resurgence of professional services and the growth of healthcare has led to renewed demand for office space.
Sacramento’s office fundamentals continue to improve on the heels of a banner year in 2013 when the market experienced 1.6 million square feet of positive absorption. Overall market vacancy now sits at 17.8 percent, down 700 basis points from the peak in 2011. While government and healthcare accounted for nearly 50 percent of all leasing activity in 2013, leasing volume in 2014 and 2015 has been characterized by a more diverse tenant mix. Energy, insurance and financial office users have comprised 28 percent of leasing volume YTD, compared to government and healthcare combining for 36 percent.
26
OFFERING HIGHLIGHTSDOWNTOWN MARKET OVERVIEW: OFFICE
DOWNTOWN AND CAPITOL DISTRICT OFFICE MARKETDowntown Sacramento currently totals 7.8 million square feet of competitive Class A and B office buildings. This can be broken down into 20 Class A buildings totaling 5.6 million square feet and 25 Class B building totaling 2.2 million square feet. These totals exclude all of the state-owned and occupied properties which total approximately 8 million square feet. The centerpiece of the downtown Sacramento area is the California State Capitol and the 40-acre Capitol Park. The State Capitol houses the governor’s office as well as the State Senate and Assembly offices and chambers.
The Capitol District is the private sector micro-market that services the State Capitol and is located directly north of the Capitol. This micro-market is composed primarily of Capitol-related tenants including lobbyists, associations, PAC organizations, labor unions and State election campaign offices.
This location and the proximity to the State Capitol – within walking distance – is of critical importance to these users. This micro-market offers all the necessary amenities these users require for themselves and their clients including: travel, hospitality, entertainment, fundraising events and board meetings. There are eight competitive Class A buildings in this micro-market, totaling 1,426,895 square feet, of which 7.7 percent is presently vacant. Of these properties, 1415 L Street, 1201 K Street and 1215 K Street are considered the premium properties. Meanwhile, 915 L Street, 925 L Street, 770 L Street, the Senator and 1414 K Street are still considered Class A but are older and considered second tier properties.
Historically, the Capitol District micro market has been among the most resilient office markets in the State and certainly in Sacramento. Tenants in these office buildings must have close proximity to the State Capitol, and the nature of their businesses prohibits them from considering relocation out of the immediate area. From the 4th Quarter 1998 through the 1st Quarter 2012, the buildings that comprise this micro-market have averaged an approximately 7 percent vacancy rate. Meanwhile, the Senator averaged a low 3.3 percent vacancy rate from 1998 through the 4th Quarter of 2010 when the building’s primary tenant, the California Housing and Finance Agency, moved out of approximately 51,000 square feet.
As the economy continues to recover and with the excitement of the new downtown Arena, the Property is expected to rapidly absorb the current vacant space and once again average a significantly lower vacancy rate as compared to the rest of the Downtown submarket.
76%
78%
80%
82%
84%
86%
88%
90%
92%
Capitol District Occupancy CBD Occupancy
CBD VERSUS CAPITOL DISTRICT OFFICE MARKET ASKING RENTS
0%
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6%
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10%
12%
14%
16%
18%
(150,000)
(100,000)
(50,000)
0
50,000
100,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 YTD
Total Net Absorption Total Vacant %
CAPITOL DISTRICT OFFICE MARKET ABSORPTION AND VACANCY
28 29
OFFERING HIGHLIGHTS
THE SENATOR ESQUIRE PLAZA MERIDIAN PLAZA 1201 K STREET 1414 K STREET CAPITOL PLACE 925 L STREET 770 L STREET
Address1121 L St. 1215 K St. 1415 L St. 1201 K St. 1414 K St. 915 L St. 925 L St. 770 L St.
Size159,637 248,016 227,644 223,893 57,093 163,425 165,919 169,078
Occupancy (%)70.1 97.1 97.2 98 100 97.7 94.4 91.7
Asking Rate Range (PSF/Mo.) $2.45 - 3.20 $2.95 - 3.05 $3.00 - 3.30 $2.90 - 3.00 $3.10 $2.85 $2.75 - 3.17 $2.85
Year Built1923 1999 2004 1989 1929/2007 1988 1973 1984
Parking RatioOff-site 1.00/600 2.00/1,000 1.67/1,000 2.00/1,000 1.72/1,000 1.00/1,000 2.00/1,000
Max. Contiguous SF15,112 SF 2,879 SF 4,280 SF 2,197 SF 0 SF 3,039 SF 4,394 SF 11,709 SF
OwnershipLNR Property Corporation California Hospital
Association1415 Meridian Plaza
Investors, LPCalifornia Dental
Assn-Rotun da LLCSwitch Building
Investors LPGovernment Properties
Income Trust 925 L Street, Inc. AMP Capital-770 L Property, LLC
Notes 10-story Class A Office building. Located directly
across from the State Capitol, the Subject Property
is exceptionally located in the CBD Capitol Area
office micro-market.
22-story Class A Office building located two blocks from the Subject Property at the corner of 13th & K Street, features shower/
locker rooms, a full service restaurant and café.
12-story Class A Office building located two blocks from the Subject Property at the corner of 14th & L Street, features a fitness facility with shower/locker
rooms, restaurant and retail banking.
19-story Class A Office building located 1.5
blocks from the Subject Property at the corner of 12th & K Street, features a newly opened bar and full service restaurant.
6-story Class B “loft-style” Office building located two
blocks from the Subject Property at the corner of 14th & K Street, features
a fitness facility with shower/locker rooms.
14- story Class A building located 1.5 blocks from
the Subject Property at the corner of 9th & L Street,
features destination elevators and FedEx shipping center.
14- story Class A building located 1 block from the Subject Property at the
corner of 10th & L Street, features a ground floor café
(currently vacant).
13- story Class A building located 3 blocks from the Subject Property at the corner of 8th & L Street,
features renovated lobby and valet parking.
DOWNTOWN OFFICE: COMPETITIVE SET
30 31
OFFERING HIGHLIGHTS
DIVERSIFIED & RESURGING ECONOMY As the capital of California, employment in Sacramento has historically been dominated by the State government, accounting for nearly 15 percent of total nonfarm employment, while government as a whole employs approximately one-quarter of the area workforce. However, over the last several decades, the economy has become much more diversified. Major private-sector industries such as professional services, health care and trade, transportation and utilities have expanded in the Sacramento economy. Many green and clean technology companies have been attracted to the region in part because of the welcoming environment created by California’s progressive environmental policies and the opportunity to positively influence those policies. Sacramento’s two higher education facilities, The University of California, Davis and California State University Sacramento, help foster organic growth within the labor force, producing quality talent for many of the area’s top corporate occupiers. In addition, businesses from the Bay Area have historically relocated to Sacramento for the relatively affordable housing and cost of living, abundance of high-quality yet affordable office and industrial space and pool of highly educated workers.
Sacramento’s economy continues to build positive momentum. The local recovery has largely been fueled by the sustained resurgence of professional and business services and the emergence of healthcare as a regional economic engine. As an example, professional and business services have added 8,700 jobs over and above the number of jobs lost during the downturn, pushing sector employment to a new peak. Educational and health services emerged as the largest private sector share of total office employment in 2007 and have added over 24,000 jobs since the downturn. In addition, State of California government employment has exhibited consistent positive growth since January, 2013 with that sector recording 2.6 percent in job growth year-to-date.
According to the latest economic data, the region added 22,700 jobs over the past 12 months, bringing total nonfarm employment to 1,055,100 in October, 2014. At 2.6 percent, Sacramento’s annual growth rate outpaced both California and the United State’s job growth rates of 2.2 and 2.0 percent, respectively. The regional unemployment rate is 6.6 percent, down from 8.2 percent just one year ago.In comparison, California’s unemployment rate is slightly higher at 7.0 percent, and the U.S. unemployment rate now sits at 5.8 percent. Office industry employment gains have been reflected in 2014 leasing activity with healthcare, government and professional services accounting for the majority of leasing volume to date.
MAJOR PRIVATE SECTOR EMPLOYERSThe strength of the region’s labor force coupled with the availability of land, relatively affordable cost of living and ease of access to other major employment hubs continues to make Sacramento a desirable place to conduct business. Major companies that have maintained a strong local presence through recent years and continue to have a positive impact on the Region’s economy include: • Kaiser Permanente• Sutter Health• Dignity Health• Intel Corporation• Hewlett-Packard• Wells Fargo• Health Net• Pacific Gas and Electric
• VSP Global• Bank of America• Blue Shield of California• Aerojet• Delta Dental• Franklin Templeton• Siemens Rail Systems• DST Output
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Educational & Health Services Professional & Business Services State Government Finance & Insurance
SACRAMENTO AREA OVERVIEWThe City of Sacramento is the capital of the State of California and the seat of Sacramento County. Located within California’s expansive Central Valley, Sacramento is the seventh most populous city in California, with an estimated population of 475,122, while Sacramento County has a total population of approximately 1.5 million. There are 2.24 million residents living in the four county (El Dorado, Placer, Sacramento, and Yolo counties) Sacramento Metropolitan Statistical Area (MSA). Sacramento is the largest metropolitan area in the Central Valley and the fourth largest in California behind the Greater Los Angeles area, the San Francisco Bay area and the San Diego area. Sacramento County is bordered by Contra Costa and San Joaquin counties to the south, El Dorado and Amador to the east, Placer and Sutter to the north, and Yolo and Solano to the west. Lake Tahoe, the Sierra Nevada Mountains, the San Francisco Bay area, Napa Valley and the Pacific Ocean are all located within a two-hour drive from Sacramento.Sacramento is located approximately 85 miles northeast of San Francisco and at the crossroads of two major interstate freeways (I-5 and I-80) and two rivers (the Sacramento and American), providing convenient access to airports, rail and a deep-water port. Sacramento is broadly recognized as a premier business location given its strong government employment base, outstanding office space values, an abundant and well-educated labor pool, a relatively affordable cost of living, ample amenities and an overall enviable quality of life.
POPULATION GROWTHOver the past three decades, Sacramento has experienced population growth that has consistently outpaced the national rate. This growth has been fueled by people moving from both other parts of California and the nation who seek the high quality of life, housing affordability and ample job opportunities. In 1970, the population of the city of Sacramento was just over 250,000 residents while the Sacramento MSA contained approximately 750,000 residents. By 2010, the city of Sacramento had 486,189 residents and the Sacramento MSA had a population in excess of 2.1 million. The Sacramento Region’s population is projected to increase by ±482,500 to nearly 2.63 million by 2025. The region is forecasted to continue to grow at a faster rate (approximately 14 percent) than the state and nation (about 12 percent and 10 percent, respectively) over the next ten years.
Proj’d Population Growth 2010 2015 2020
CaliforniaProjected growth (%)
37,309,382 38,801,063 40,643,6434.00% 8.90%
Sacramento MSAProjected growth (%)
2,152,941 2,242,408 2,361,9564.20% 9.70%
Sacramento CountyProjected growth (%)
1,420,434 1,477,479 1,543,5224.00% 8.70%
San FranciscoProjected growth (%)
4,344,161 4,508,860 4,718,6233.80% 6.10%
Los AngelesProjected growth (%)
12,842,233 13,222,978 40,643,6433.00% 6.20%
*Source: California Department of Finance, Demographic Research Unit
SACRAMENTO AREA OVERVIEW
SACRAMENTO AREA EMPLOYMENT GROWTH BY INDUSTRY SECTOR
0% 2% 4% 6% 8% 10% 12% 14% 16%
Architectural, Engineering & Related…
Federal Government
Real Estate & Rental & Leasing
Information
Finance & Insurance
Administrative & Support Services
Professional, Scientific & Technical…
Local Government
State Government
Professional & Business Services
Educational & Health Services
201420001990
PERCENTAGE OF TOTAL OFFICE EMPLOYMENT BY INDUSTRY SECTOR
32 33
OFFERING HIGHLIGHTS
$0
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$300,000
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$600,000
$700,000
$800,000
$900,000Sacramento Metro
San Francisco Metro
SACRAMENTO AREA HOUSING PRICES AS COMPARED TO SAN FRANCISCO BAY AREA
HIGHLY EDUCATED WORKFORCESacramento is home to two highly respected public universities: The University of California, Davis and California State University Sacramento, and the area features a highly skilled and educated workforce with 28 percent of the population over 25 years old holding a bachelor’s degree and 10 percent holding a graduate or professional degree.
UC Davis is one of the nation’s top public research universities and is ranked 9th amongst public universities nationwide by US News and World Report while the UC Davis School of Medicine is ranked 4th among US medical schools in research funding. Current enrollment is over 34,000 students in over 100 undergraduate and 90 graduate programs. Sacramento State University provides a tremendous higher education value and boasts an enrollment of more than 28,000 undergraduate and graduate students.
RECOVERING HOUSING MARKETThe Sacramento housing market has exhibited marked signs of improvement over the past 24 months, evidenced by rising home prices, declining distressed assets sales and expanding construction sector employment. According to Zillow, median home values in the Sacramento Metropolitan Area have risen to $338,200, up 6.7 percent from May 2014, and forecast to increase by 4.9 percent in 2016. While home values were initially driven up by investment buyers, the percentage share of REO sales has drastically declined after peaking in 2009 at 76 percent. Comparatively, conventional sales accounted for 88 percent of total sales in April 2015, a strong indication consumer confidence has returned and the market has rebounded. At the same time, Sacramento continues to be an affordable alternative to the San Francisco Bay Area, a significant factor that continues to attract jobs and residents to the Sacramento region.
SACRAMENTO MARKET OVERVIEW
OFFERING CONTACTS
Cathedral Square Development Site is being distributed exclusively by JLL to a select group of investors. The buyer will be selected by the seller in its sole and absolute discretion.
JLL will be available to assist prospective investors to answer questions relative to information contained within this Offering Memorandum.
PLEASE INCLUDE THE FOLLOWING INFORMATION WHEN SUBMITTING AN OFFER:
• Offer should be in a non-binding, letter form• Purchase price• Source(s) of capital (including debt and equity and relative ratios)• Deposit structure, to include timing and amount of non-refundable deposits• Outline of proposed schedule for due diligence and closing• Description of any physical or environment assumptions affecting price offered• List of contingencies, including buyer’s internal approval process, required to close
Rob Cole Senior Vice President+1 916 491 4314 [email protected] CA Lic 01323882
Alan Stevenson Vice President+1 916 491 4339 [email protected] Lic 01890995
Greg Levi Managing Director+1 916 491 [email protected] CA Lic 00973235
34 35
Although information has been obtained from sources deemed reliable, Owner, Jones Lang LaSalle, and/or their representatives, brokers or agents make no guarantees as to the accuracy of the information contained herein, and offer the Property without express or implied warranties of any kind. The Property may be withdrawn without notice. If the recipient of this information has signed a confidentiality agreement regarding this matter, this information is subject to the terms of that agreement. ©2015. Jones Lang LaSalle. All rights reserved.
Rob Cole Senior Vice President+1 916 491 4314 [email protected] CA Lic 01323882
Alan Stevenson Vice President+1 916 491 4339 [email protected] Lic 01890995
Greg Levi Managing Director+1 916 491 [email protected] CA Lic 00973235