A good way to measure the city’s health is whether smart people invest money here.
By that gage, the recent purchase of the Wells Fargo Tower at 400 Capitol Mall is encouraging news for Downtown.
A partnership affiliated with late local developer Buzz Oates recently paid $117 million for the elegant building. That’s a big drop from 2019, when the tower sold for almost $200 million.
But if Downtown were dead or dying, as some suggested after the pandemic, remote work for state employees and civil disobedience in 2020, these savvy investors would not have made the deal, even for a discount.
“We did not have to acquire this building by any stretch,” Dan Corfee, one of the partners, tells me. “We felt we already have a big presence in Downtown Sacramento with our 555 Capitol Mall and we were not looking to expand our presence there.”
So why did Corfee’s Preferred Capital Advisors participate in a $117 million transaction for 400 Capitol Mall when the office market struggles and many state workers remain on hybrid schedules?
“Office is currently out of favor nationally and it’s certainly out of favor in Sacramento,” Corfee says. “But we feel the building presents a lot of opportunities. Sacramento may not be 100% back, but it’s a good market and it’s a nice place to work and there’s a lot of amenities. Compare that to some of the other suburban markets and I think Downtown has a lot to offer.”
The “Downtown is dying” crowd surely took notice of the reduced price for 400 Capitol Mall. Skeptics saw a steeper discount when Renaissance Tower at 801 K St. sold at auction for $21 million last year. Renaissance Tower went for $80 million in 2016.
But when we talk about the health of Downtown, it’s misleading to speak in general terms. Some blocks are doing much better than others.
Renaissance Tower anchors a stretch that feels rundown and deserted, especially at night. I parked near there recently for a Kings game. Afterward I looked over my shoulder as I walked briskly to my car.
Plus, the building is less than one-third occupied. The primary tenant has long been the state.
Wells Fargo is on the healthier edge of the business district. It’s about 90% occupied and a short walk to Golden 1 Center, Downtown Commons, the river and restaurants.
And it’s one of the best-looking buildings in the region, aging gracefully after 31 years. Renaissance Tower, age 36, lacks the open floor plans found at 400 Capitol Mall. The K Street building’s angular design always struck me as overdone.
“When you look at the rent (list) for this building and the activity levels, these are good companies for Sacramento,” Corfee says of 400 Capitol Mall. “If you’re betting on them moving out of town, I think you’re misreading things. The area has room for improvement, and we invest a lot to make sure the streets are clean and people feel safe, but it’s a nice place to be.”
If the soccer stadium planned for the railyards is built, people who work Downtown can walk from dinner to see the NBA, pro soccer and Major League Baseball while the A’s play several seasons in West Sacramento.
“How can you say Downtown is dead when you can walk to three major league sports venues all within a mile of one another?” Corfee asks. “That’s pretty appealing.”
Downtown still has problems. There are too many boarded-up buildings. Parts of the core don’t feel safe at night. Homelessness seems less widespread, but the problem is far from solved.
If you’re looking for hope amid the gloom, 400 Capitol Mall is a good place to start.
Gary Delsohn can be reached at gdelsohn@gmail.com. Follow us on Facebook and Instagram: @insidesacramento.
