What area is your expertise?
Sacramento Valley
What trends do you see presently in retail development in your area?
The retail market is experiencing declining rental rates for the first time in years. Mom and Pop retailers have virtually disappeared and national credit tenants are pulling back on expansion plans, while closing underperforming stores. The strip centers in many areas have been hit the hardest.
What type of retail product is doing well in your area?
Urban redevelopment projects have been the bright spot in the marketplace, particularly those that have located in underserved markets and filled by quality retail tenants.
What retailers are new to your area?
Boudin Bakery, The Counter Burger, Chico’s, Cold Water Creek, Orvis, New Balance, Smith & Hawkin, Sur La Table, White House|Black Market, Fresh N Easy, and CVS Pharmacy.
Who are the active retail developers in your area?
Donohue Schriber, Panattoni Development Co., Capital and Counties Development Group, Granite Bay Ventures, The Evergreen Company, Opus West, Peter Bollinger Investment Group, and Stonehenge Property Group.
Please name one or two significant retail developments in your area. What impact will these projects have on the market?
Florin Towne Centre — Florin Mall Redevelopment project. NWC of Florin Road & Stockton Blvd. Sacramento, CA. Jim Kessler of Stonehenge Property Group developed the site after demolishing the tired mall. Tenant’s include a Wal-Mart Supercenter, Mervyn’s, Old Navy, 24 Hour Fitness.
The Fountains — The first Lifestyle Center to be developed in the Sacramento area by Peter Bollinger of Peter Bollinger Investment Company. Tenants include Whole Foods, DSW, Orvis, Cold Water Creek, and Smith & Hawken.
Where is the majority of development taking place? Why is this area doing well?
There are four major growth areas of Sacramento. Roseville, Elk Grove, Folsom and North Natomas. Roseville and Folsom have remained relatively strong while Elk Grove and North Natomas struggle with rising vacancy and rental rates that are falling.
What area do you expect to be the next big retail development market? Why?
Rancho Cordova has three proposed retail projects poised for development. One power center and two grocery anchored centers. The grocery anchored sites should develop as the area rebounds from the housing crisis.
Please describe the retail leasing activity in your area.
While all of the major retail shopping center types that we track recorded increasing vacancy levels over the past three months, only Regional and Power Centers experienced occupancy gains. This sector recorded over 917,000 square feet of net absorption during the first quarter and though this number was still outpaced by new construction, vacancy increases for this product type were comparatively the lowest. By comparison, Neighborhood/Community Centers experienced occupancy losses of over 220,000 square feet throughout the region—the overwhelming majority of which came from smaller and inline space users. The same trend holds true for the Strip Centers in our survey, which recorded negative net absorption to the tune of 166,000 square feet.
Please give a measure of retail vacancy rates and a measure of available sublease space.
As of the close of first quarter 2008, vacancy for major retail centers in the Sacramento region stood at 6.6 percent, up from the 5.8 percent mark recorded at year-end.
What types of retailers should look into your market in the coming year? What type of retail is needed?
I cannot think of any retail that is needed in our market.
Submitted by Keith Mellor, vice president with the Sacramento, California office of Colliers International. Posted Online 05-16-08.
Keith Mellor