|Prime US REIT has purchased Park Tower, a 489.2k sf, Class A office building in downtown Sacramento, for $165.5 mil, or $338/sf. Prime, which trades on the Singapore Exchange Securities Trading, was assisted in the transaction by KBS, the firm’s U.S.-based asset manager. KBS sourced this asset on behalf of the portfolio.
Park Tower is a Class A property that consists of 24 stories of office space, retail and parking garage space. One of the tallest buildings in Sacramento, Park Tower is centrally located at 980 9th St and 1010 8th St in Sacramento. The building was 92% occupied at time of sale, providing strong in-place cash flow and a diverse base of credit tenants.
The asset is situated within walking distance of California’s state capitol; Downtown Sacramento’s retail and entertainment core, Downtown Common, a newly developed mixed-use entertainment and shopping complex with 670k sf of retail, entertainment; and Golden 1 Center, the NBA’s Sacramento Kings’ basketball arena.
Currently in development is a mixed-use project called The Railyards which will double the size of downtown Sacramento when it’s completed. It’s the largest in-fill development project west of the Mississippi River and will include up to 515k sf of retail, 10,000 housing units, a state-of-the-art 21,000-seat soccer stadium and a 1.22 msf, 18-acre Kaiser Medical Center.
A LEED Gold-certified property, Park Tower’s office tower was originally built in 1992 and renovated in 2019, while the parking area was constructed in 1961 and renovated in 1998. The building features a suite of robust onsite tenant amenities, including a recently renovated fitness center, locker rooms, conference center and tenant lounge.
The property also provides a host of state-of-the-art features including a three-story atrium lobby, highly efficient building systems, 15k sf – 28k sf of flexible floor plates, and above-market parking in two garages at a ratio of 2.4/1,000 – as compared to competing office towers at a ratio of 2.0/1,000.
Park Tower is situated in close proximity to the state government buildings and nearly 60,000 undergraduate students at UC Davis and Sacramento State University. A 15-minute drive to Sacramento International Airport and 90-minute drive to San Francisco, the property features easy access to major highways, trains, and the downtown Sacramento light rail system, as well as lifestyle destinations Napa Valley and Lake Tahoe.
Grant Lammersen, Steve Golubchik and Tyler Myerdirk of Newmark Knight Frank brokered the transaction. Bruce Fischer, Christine Fan, and Howard Chu of global law firm Greenberg Traurig, LLP’s Orange County office represented PRIME as legal counsel in the acquisition.
According to a Q4 2019 Sacramento Market Report from Newmark Knight Frank, the Sacramento office market maintained its positive momentum in the fourth quarter to finish the year strong. Net absorption was positive for the 13th consecutive quarter, totaling 159.3k sf, which brought the year to date total to a positive 780.9k sf.
Sacramento’s office market also features high barriers to entry with less than 5% vacancy in Class A office assets and no new projects under construction in the downtown market. Several major tech, biotech and healthcare firms have a presence in the region, including the Intel Corporation, Hewlett Packard, Apple, Sutter Health, Affymetrix, Lipomics Technologies Inc, Calgene LLC, Novozymes Biotech Inc and Volcano Therapeutics.