Monday, December 19, 2005

Saca unveils plan for third high rise condo tower

Sacramento Business Journal

From the December 19, 2005 print edition

Saca unveils plan for third tower
Mike McCarthy

Staff Writer

Developer John Saca is planning a third high-rise condominium tower in downtown Sacramento, this one at 10th and J streets and a bit more affordable than his first two.

"The Metropolitan" would have 320 condos, an "infinity" -- seemingly rimless -- swimming pool at top, plus stores on the ground level. Saca hopes to start construction late next year, "if we can get city approvals and the market is there."

The plans extend downtown Sacramento's recent streak of new-condo ventures, all seeking to tap into a perceived demand for more urban housing as the region gains population.

Saca has two 53-story condo high-rises in the early stages of construction. Known as The Towers on Capitol Mall, they would be built at 3rd Street and Capitol Mall, on the site of the recently demolished former home of The Sacramento Union.

The new tower "will be more cost effective," Saca said. "There will be fewer amenities."

The Towers would have about 800 condos, plus an upscale hotel, large health club, and 60,000 square feet of swank stores and restaurants in a two-story mall. Prices average about $600,000. The Metropolitan would have a smaller gym, the pool and 13,000 square feet of retail.

It's too early to really say, Saca said, but prices would probably start in the $300,000s and rise to $1 million for a penthouse.

The site would cover most of the half block on the north side of J between 10th and 11th, across from Cesar Chavez Plaza.

Echoes of Vancouver
The top of the building would be split into three levels, with the pool and penthouses on the lowest. Next would come an upstairs terrace for the penthouses, and then a room with mechanical systems.

Some penthouses could have two floors, said Darrell Chan, the project designer with San Francisco's Kwan Henmi Architecture/Planning, which is designing the building. Two-story lofts would also be available right above the ground-floor stores.

The condos would range from 700 to 1,300 square feet, feature ample window space and include open air balconies on all units.

The lower floors would wrap a four-story, 514-space parking garage. An arcade or plaza is planned across from Cesar Chavez Plaza, creating a place for outdoor dining.

The building partly reflects high-rise condo architecture in Chan's hometown, Vancouver, British Columbia, a West Coast center for such projects.

"Vancouver's towers are glassy, transparent and thin," he said. "It's an urban strategy so the towers won't cast big shadows, and it opens view corridors. And it lets more light into the units."

The building's steplike design reflects downtown's existing high-rise motif, which consists largely of distinct floors that typically step back from the street, Chan said.

The design will include as many "green" features as the project budget can afford. Environmentally minded construction is one of the firm's trademarks, said principal Dennis Henmi.

Other condos in the works
Saca now has proposed more than 1,100 high-rise condos in Sacramento, and is also working on another complex at 8th and K streets -- possibly with at least 500 more condos.

He was one of the first developers to push downtown condos, but others are pursing projects too.

Probably the furthest along is Craig Nassi, head of BCN Development of Denver. He plans to start on Aura, a 39-story, 265-condo tower at 6th Street and Capitol Mall, early next year. Nassi said he has deposits on all the units.

He also intends to start building a 54-floor tower, "Epic," at 12th and I streets next September. It would have 350 condos and offer "white glove" amenities, including valet service and dog walkers who put coats on your dog for you.

Other tall condo ventures that may start next year:

Sotiris Kolokotronis plans to start 92 condos priced from around $350,000 early in 2006. L Street Lofts would go up at 18th and L streets.
D.R. Horton Inc., the giant homebuilder, plans a 21-story tower with 295 less-expensive condos on I Street between 7th and 8th streets, on land it is buying from Sacramento County.
Saca and the others are trying to exploit a demand for downtown condos, but it's like pursuing slim evidence of a gold vein -- no one knows if it's there, just that they better scramble to be the first to stake a claim.

Analysts wonder just how many of these condos will get off the ground.

Risks and skepticism
"There's so much in the pipeline, and they won't all be financeable and successful," said John Schleimer, analyst for Market Perspectives, a local housing analysis firm. "It's like a feeding frenzy. I'm concerned it's too much unless it's properly phased."

It sounds like a lot of condos planned in the short term, said Greg Paquin, analyst for The Gregory Group. Maybe if they were all phased over five to 15 years, he said, they could be absorbed.

Analyst Dave MacIntosh of Hanley Wood Market Intelligence said similar projects are working in other U.S. markets. His gut intuition is that they will also sell here, although the situation deserves an extensive market study.

Saca expects to turn the refundable deposits on the Towers into non-refundable deposits early next year, allowing him to cinch the financing. Observers say that will be a strong acid test of the project's feasibility.

Saca pointed out that relatively few condo towers are approved and ready for construction. The ones that are represent a tiny number in a market that sold 17,000 new homes last year.

The lengthy entitlement and construction time for such projects ensures that they won't all come on the market at the same time, he added.

Brendan O'Neill, executive vice president of operations for Beazer Homes, agrees with Saca. All the condos combined are small compared to local demand for new homes, he said, and the Sacramento area is big enough to provide plenty of buyers.

Financing to build is available, he added, and people will buy "nice real estate" like the condos even in a down market.

The main risk might be that an economic shift would cause some buyers to back out during construction.

But the builders could change floor plans to match demand, O'Neill said, assuming the overall floor plans are flexible.

Saca intends to build The Metropolitan on land he bought from Dean Ingemanson this year. Ingemanson, the first developer to propose condos in a downtown Sacramento high-rise, wanted to make them part of a tower he planned at 8th and J. The city was a partner in the project. When it backed out, Ingemanson sold all his downtown holdings, including the 10th and J property.

The site includes the old Biltmore Hotel, a dump. It's not on any protected historical list, so Saca can raze it, said Jeanne Corcoran, the city planner who has discussed the plan with Saca's representative.

The project would need an environmental impact report, she said, and could take about a year to process.

Saca hopes to get approvals by mid 2006.

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