Just when Sacramento’s condo market seemed poised for liftoff, the economy hit the skids. Will Sacramento ever get the loft district it craves?
Talk about bad timing.
Earlier this year, just as large numbers of new lofts, condos and town houses hit the Sacramento market, real estate took a well-publicized dive.
Thanks to the subprime mortgage meltdown and the resulting credit crunch, buyers these days aren’t exactly lining up for the chance to plunk down three hundred grand or more for an apartment in Sacramento’s urban core.
Case in point: Dimitri Ojeda. A 38-year-old IT supervisor who works for the city, Ojeda had been toying with the idea of buying a condo. But right now, he’s got a bad case of the real estate yips.
Over the summer, Ojeda looked at a couple of lofts and condos with a real estate agent. He liked what he saw at Sutter Brownstones, a small complex of newly built brick-faced town houses on N Street near Sutter General Hospital. But before he could write up an offer, he opened his newspaper and read that housing prices had dropped almost 16 percent.
“I’m hesitant,” says Ojeda, who currently rents an apartment in East Sacramento. “I don’t think we’ve hit the bottom of the market yet.” In any case, he’s not in any hurry to buy. Someday, he says. Maybe next year.
Someday. The word hangs over Sacramento’s condo market like bad air over Beijing. After years of go-go development, the market is seemingly in a state of suspended animation. There are buyers, for sure—just not as many as developers had hoped for.
From Old Sac to the eastern edge of midtown, once-promising projects simply aren’t selling. Tapestri Square, the high-end town houses optimistically planned to fill an entire city block at 21st and T streets, is stuck in midconstruction. The Whiskey Hill Lofts at 22nd and S have been pulled off the market and converted to rentals. 9onF, a “green” development of town houses and contemporary lofts in the Alkali Flat neighborhood, is as empty as a ghost town. Even the glittery L Street Lofts—the jewel in Sacramento’s condo crown—are only about one-third occupied, despite the cachet provided by high-profile buyers Kevin Johnson, the ex-NBAer turned mayoral candidate, and Kings star guard Kevin Martin.
But according to local architect and developer Ron Vrilakas, this is only a temporary setback. Once the economy gets back on track, he believes, the market for condos and lofts will take off in Sacramento, just like it did in San Diego, Seattle, Denver and Portland, Ore.
Vrilakas has been plumping for urban development here since the early ’90s. A Sacramento native, he got his degree at the University of Colorado, then studied abroad at the University of Copenhagen in Denmark. It was, he says, an “enlightening experience” to live in a culture with a high regard for good design and urban planning. “Denmark,” he notes, “was sustainable before sustainable was popular.”
After working in Boston for a few years, Vrilakas returned to Sacramento in 1990. His goal: to help turn midtown into the region’s it place to live and work.
Vrilakas has been remarkably successful. He designed East End Lofts at 16th and J, best known for its popular ground-floor restaurants, Mikuni and P.F. Chang’s. He developed the Zócalo restaurant complex at 18th and Capitol. (His company’s offices are upstairs.) And he worked on 1801 L Street: 175 rental apartments with ground-floor shops and restaurants, including Buckhorn Grill and L Wine Lounge.
Since the late ’90s, Vrilakas and other local developers have been working to build the sort of high-density, transit-oriented projects that put cities such as Portland on the map. “If you’re interested in having a vibrant, dynamic city,” he points out, “it’s a straight line from high-density housing”—i.e., condos and town houses. Vrilakas blames Sacramento’s political leaders for a “lack of urgency” in helping get those projects off the drawing board before the real estate market hit the skids.
“Other cities—Portland, Oakland, Denver—took advantage of that wave,” Vrilakas says. “We missed that opportunity.”
Like Vrilakas, Bay Miry thinks Sacramento is ripe for a condo boom. Working for his father’s development company, D & S Development, Miry has been involved in several residential projects, including iLofts in the historic Mechanics’ Exchange building in Old Sac and the loft conversion of a 95-year-old bakery warehouse at 14th and R streets.
Miry doesn’t just sell lofts. He lives in one: a 1,350-square-foot, two-story condo at 2020 Lofts, around the corner from Old Soul at The Weatherstone cafe in midtown.
You often can find him at The Weatherstone, laptop open, taking calls on his cell phone. He’s the picture of the stereotypical urban loft dweller: young (27), professional, seemingly always at work. He eats out a lot. Eco-conscious, he drives a Prius—when he’s not riding his bike, that is.
Miry’s first loft project, 2020 Lofts, hit the market about 2½ years ago. The eight units sold out in less than a month. “The market was superhot back then,” he says.
He’s got similar high hopes for the bakery conversion project at 14th and R, next to Randy Paragary’s Cafe Bernardo, R15 and Empire nightclub complex. The second-floor space has been gutted, its original brick walls exposed. This past summer, workers were busy pouring stained-concrete floors, laying plumbing and putting up Sheetrock. The lofts should be ready by early next spring.
They’re priced to sell: from the low-200s to the high-3s. “We’re trying to stay below $400,000,” says Miry. “Who buys lofts? Young professionals. We have to emphasize the mid price range.”
That calculation seems to have paid off. After the city issued its “pink report” allowing the developer to take reservations from buyers, eight of the 12 units were snapped up.
One of those buyers is Samantha Peterson, a 24-year-old accountant (and Miry’s girlfriend). Raised in the suburbs, she says her family was flummoxed by her decision to purchase an urban loft. “Buy dirt,” her father told her, meaning land. “But I don’t want dirt,” she said.
Peterson doesn’t mind being an urban pioneer in the not-quite-gentrified R Street Corridor, where development has been more talked about than real. “I’m not married. I don’t have kids,” she explains. “I want to be downtown. This is where I spend my weekends and evenings.”
On weekends, she and Miry bike around the city and meet friends in midtown for dinner and drinks. Neither one can imagine living in a McMansion in the ’burbs—though they know that if they ever get married and have children, they may have to compromise their lofty ideals. “Maybe we’ll live in a midtown Victorian, remodeled to be really modern,” Peterson says.
A few blocks away, 28-year-old Billy Downing is in his fifth-floor apartment at L Street Lofts. A Jesuit High School grad, he’s already founded and sold one company and now owns another, The ESM Group, which provides educational services and college counseling to 19,000 high schoolers nationwide.
He bought his first house, on American River Drive, when he was 22, and sold it a few years later. While traveling on business to cities like Portland, Boston and Chicago, he became seduced by the idea of living in the heart of the metropolis. In March, he moved into L Street Lofts at 18th and L—ground zero for Sacramento nightlife.
“I take the 6:55 p.m. flight from Orange County on Saturdays,” Downing says. “It gets me in at 8. The street’s so crowded, I can’t even get into my garage. It’s really cool to be a part of that.”
From his apartment window, he can take in the dome of the Capitol building and the blue neon strip running up the side of the Imax theater. In the mornings, he runs to Tower Bridge and back; in the evenings, he walks to his favorite restaurants: Crepeville, Aioli Bodega Española, 58 Degrees, Zócalo. He loves the sheer busyness of his new neighborhood. “I finished a meeting at the Sheraton at midnight the other night, and there were still people on the streets,” he marvels. “Not everyone in Sacramento is asleep.”
At 59, Bruce Starkweather is several decades older than many downtown condo buyers. But earlier this year, he and his wife of 35 years sold their big house in the Fabulous 40s, got rid of much of their stuff at two massive garage sales and moved into a 1,200-square-foot town house at Sutter Brownstones.
Call them the New Urban Downsizers.
“It was part of our life plan,” says Starkweather. “I jokingly say we started our life together in a Volkswagen bus and we’ll end up in one.”
Why’d they move? With their four kids grown and out of the house, they simply didn’t need all that space. They were tired of yard work and house maintenance and wanted a simpler, more compact existence.
At this stage of their lives, a town house suited them to a T.
There’s a one-car garage on the first floor, an open-plan kitchen/living space and full bath on the second, and two bedrooms, bath and laundry room on the third. “It matches our current needs,” Starkweather says. Not having a lawn to mow or a big house to clean “frees up lots of time” for fun.
An architect, Starkweather has spent his career pushing the “smart growth” principles at the center of the urban condo movement. Global warming, high gas prices, suburban sprawl—all these forces, he says, are coming together to make his new lifestyle the future for many of us.
Until recently, condos were largely for the very young and the very old—“the newly wed and the nearly dead,” as Starkweather puts it. But he thinks Sacramento is at a tipping point of a big societal shift. Soon, we all may be living in condos—or wishing we did.
“Condos can be the key to revitalizing Sacramento,” he says.
For him, the condo is king
Rob McQuade knows condos.
A real estate agent who specializes in downtown and midtown, McQuade spends a lot of time escorting clients through condos in Sacramento’s urban grid.
He publishes a handout called “The Loft List,” in which he rates local projects on a scale of 1 to 5 in terms of design, location, amenities, value and how “green” they are. He also runs a website, ForSaleinDowntown.com, with descriptions and chatty assessments of condos, town houses and lofts for sale.
(What’s the difference between a condo, a town house and a loft? A condo is a single unit in a multiunit dwelling; the buyer owns both the unit itself and a common interest, with the building’s other owners, in the common areas such as land, roof and elevator. A town house is a two- or three-story house that’s attached to other houses. A loft has an open floor plan and few, if any, interior walls. But these are only loose definitions; you can find loftlike condos, detached town houses and even “town-house-style loft condos.”)
The tough economy is definitely making it harder to sell condos and lofts these days, McQuade admits. “Buyers have high expectations,” he says. “They want great price and great design. Anything that doesn’t offer both isn’t selling.” And developers have had to get more “flexible” on price.
McQuade’s favorite Sacramento projects? SoCap Lofts, 1600 Lofts, Sutter Brownstones and L Street Lofts. “Those developers are putting their best foot forward,” he says.