Monday, December 10, 2007

An Elk Grove Commercial Real Estate Photolog

There have been a number of posts and discussions recently on the health of the commercial real estate market. Notably, both Mish and Calculated Risk have both read the tea leaves and are predicting an increase in bank failures due to too much lending on the commercial RE side.

After a recent Sacramento Bee article on the problems the owners of Stonelake Landing are having finding tenants, I began paying attention to vacancies in the shopping centers I visit. In south Elk Grove, things look especially bad. The following are some photos I took recently that highlight these problems.

Former Ralphs Supermarket on Bruceville and Elk Grove Blvd. Vacant over a year.

Empty shops in the Trader Joes, Cost Plus shopping center on Bruceville and Elk Grove Blvd.

Corner of Bruceville and Whitelock. This strip mall has a Starbucks and a Round Table pizza to anchor it. Something tells me the cookie place won't be around too long.

Corner of Whitelock and Atkins. 50% empty.

Raley's Center on Elk Grove Blvd and Franklin.

Stonelake Landing, (yes, they have a blog) on the corner of Elk Grove Blvd. and Taron Dr. Notice the unfinished interior in the last photo.

Harbour Palms, Elk Grove Blvd. and Harbour Point Dr. Across the street from Stonelake.

Unnamed strip mall kitty-corner to Stonelake.

A bunch of strip malls on Harbour Point between Laguna and Elk Grove Blvd. The Reef Hermit is the only tenant in 9180 Harbour Point Dr.

Almost completely vacant unnamed strip mall on Laguna and Gropius Laguna Main.

These photos were taken within a six square-mile area in southern Elk Grove. In my opinion this area has double the amount of retail space it needs, and it will be a long time before vacancies are low enough for landlords to make a profit.


patient renter said...

Wow, as I was scrolling through the first few pictures I thought that it looked similar to some parts of Folsom and El Dorado Hills that I frequently see, but then after I kept scrolling down... damn. That is really bad. I do expect that sort of thing to continue to spread, and even as I type, more commercial RE is being built.

Lander said...

And they want to build a mall in that same area?

smf said...

If EG had 40% speculator purchases, it follows that commercial builders built enough space to cover the people that were supposed to occupy those speculator purchases.

What do we call that?

'Trouble Brewing'

I am quite familiar with some of those projects, having done them in-house.

Remember, a builder doesn't make money unless they build.

It takes several years of planning and expenditures to get a project to the ready to build stage.

Permits are time-dependent. In other words, all your permits lapse in case you don't build right away.

You get no return on your already substantial investment unless you finish your project.

We are starting to see some hesitation from investors in continuing projects.

Josh said...

And they want to build a mall in that same area?

It looks like it's well underway:

The Elk Grove Promenade

Elk Grove retail is so overbuilt. Just drive on Laguna between 5 and 99 and you'll find at least two of every kind of retailer.

The big draw for the "promenade" will be the theater. The only other theater is off of Sheldon, and the traffic over there is a nightmare.

ratlab said...

Patient Renter probably sees the old Ralphs shopping center in Folsom across from the nice new Raley's shopping center. That strip mall is maybe 50% full not even counting the anchor (Ralphs) leaving last year.

Anonymous said...

Re: movie theater - there is also Century on Big Horn between Laguna Blvd and Elk Grove Blvd. Re: the empty Ralph's - it is (allegedly) to become a Nugget market. EG has so many superpmarkets but none are west of Franklin - why is that??? The EG Promenade project predates the rise and fall of residential RE in the area; the closest full-sized shopping mall WAS Florin Mall which was a dump for the past 10 years. It's been demolished and a Super Walmart is being built in its place. Now the closest is Arden Fair, which is a good 15-20 miles from EG. A real shopping mall is one thing EG really DOES need.

norcaljeff said...

I see this in the South Placer area too, in real nice parts of town. I can take some pics if you want. I'm sure someone is profiting from this. I remember companies building huge projects and leaving them empty for the tax write off.

Anonymous said...

Not a big correction, but the strip mall you identify as on Laguna and Gropius is actually on the SE corner of Laguna and Laguna Main.

Max said...

Thanks, anon. I'll make the correction.

Bakersfield Bubble said...

Looks like Bakersfield.

Yet all the local media keeps printing stories that the commerical market is going to be great in 2008. UGH!!!

Anonymous said...

Very odd, the difference you see from town to town. Here in Santa Fe, New Mexico, we're having a HUGE boom in commercial and residential building, and having no problem finding people willing to buy or lease.

I suspect that could be due to our quickly-growing population. I'm hoping the local trend continues, despite the national outlook. My 1400sq/ft home appraised at $215k last year, and they are building postage stamp sized 750sq/ft 1b/1ba houses around the corner from me with big signs proclaiming "Starting in the 240s!". $240k for a 750 sq/ft home?!?! In Santa Fe?!?! Wow.

Josh said...

$240k for a 750 sq/ft home?!?! In Santa Fe?!?! Wow.

I doubt that will continue for very long. Like Sacramento, there's no scarcity of land in Santa Fe.

Anonymous said...

The part I find the most depressing is not the empty storefronts, but how similar (identical) Elk Grove Sacramento looks to every suburb/exurb in any city in any state.

I do want to say though, apropos the first pics, that I would really enjoy a nice bowl of pho today.

Max said...

I would really enjoy a nice bowl of pho today.

I should have called it a pho-tolog. :)

Unknown said...

Big Box Stucco Stores sell more cheap slave labor chinese crap because we can't afford American Labor?
It's sad: Americans who used to build things, craft things, now are no longer able to work, and are downsized to the service industry, at lower pay, and then can only afford all the asian crap they want.
This country is gonna fall hard...

Deborah said...

So, looking at the pictures, were they taken when the stores were closed? There were an awful lot of empty parking lots...

Max said...

So, looking at the pictures, were they taken when the stores were closed?

Well, a lot of the stores are vacant, so there's no reason for people to go there.

mikeshedlock said...

Hello Max
Nicely done.

mikeshedlock said...

Deb said: So, looking at the pictures, were they taken when the stores were closed? There were an awful lot of empty parking lots..

Mish replies: Deb look at the blue skies. This time of year I suspect those were taken mid-day.

Anonymous said...

I remember in the early 80's when Elk Grove was a literal cow-town and the biggest draw in the town was the Elk Grove High School football team. There was one stoplight in the town, and once you got west of 99 or east of the tracks, there was nothing there. It's hard to picture Elk Grove as a boom town. EG may have been a hick town, but at least it was a hick town with its own sorta weird, rough charm.

Max said...

Nicely done.

Thanks, Mish!

Anonymous said...

Nice work. I have two things to say:

1. The central valley is in big trouble. There have been a lot of fields put over to retail in the last five years, probably without a lot of sophisticated analysis of the downside by the relevant municipalities.

2. I follow land-use discussions on the central coast (SLO county), and what continues to amaze me is not that the local government sells out, but how cheap they come.

What is this stuff going to look look like in five years? You should go back every six months and repeat the shots.

Anonymous said...

What an utter waste of resources. This land could have been used to grow food. The REIC sucks beyond belief....kick a Realtor in the shin today.

Anonymous said...

Big deal. You were able to drive around your city and find vacant properties and take pictures of them. There isn't a single city in the U.S. where someone at some point in time couldn't have done the same thing. The only "problem" in Sacramento that you're experiencing is a temporary, cyclical oversupply of available real estate. The key word is temporary. I remember the oil bust of the mid 1980's and how badly it hit areas in West Texas and Eastern New Mexico. There were a lot of vacant properties then too. But people toughed it out and the area has recovered. Give it time.

Max said...

The only "problem" in Sacramento that you're experiencing is a temporary, cyclical oversupply of available real estate.

I don't know why everyone is so upset about hurricane Katrina either. New Orleans always bounces back when the city is destroyed after a giant flood. Look at what happened in 1849! Sure, 12,000 people were temporarily left homeless. But after 20 or 30 years, the city bounced right back.

Anonymous said...

Reading this Max person's last comment shows me that he is the sort of person one has to blame for the problems in this country. No consideration for the devastation, the suffering all those poor people in NOLA experienced after Katrina. The displacement and inhumane treatment. Perhaps karma should swiftly serve him up a heaping helping of the same and we can listen to him sing a different tune?

Josh said...

Perhaps karma should swiftly serve him up a heaping helping of the same and we can listen to him sing a different tune?

Guess the sarcasm didn't get through to some... :)

Anonymous said...

Look on the bright side! If Jesus borns again, there will be a plenty of empty malls in Sacramento to choose from!

And yes, give it a little time, like 50-60 years.

Anonymous said...

With a little imagination one can see the future of these vacant structures.
First, you need a suitable tenant.
Now the question is: Where do you find a tenant that can attract the kind of customers who are not put off by the creepy feelings these vacant structures generate?
Let me put forward a few possibilities:
1) Goth apparel stores
2) The gospel mission
3) New life Christian Center
4) Halo 2,3,or 4 live action set (With live fire weapons)
5) Harbor Freight tool stores
6) Tony Hawks super skateboard park
7) Goodwill supercenter
8) Tatoo parlor
9) "E" street streetwalker apparel center. (This may be more for downtown Sacto.)
(10) Slippery Dick's used car lot.
(11) Bingo parlor.
(12) Discount liquors supercenter.
(13) Your ideas welcome.

You see it is all a matter of findng the right tenant and location, location, location.

Anonymous said...

You left out body piercing store. Think they are really popular these days.

Anonymous said...

Hey I got one how about an "no able englase" indoor flea market.
Hey mr. potter is that like Harry Potter?

Anonymous said...

No not Harry Potter. Think Jimmy Stewart in It's a Wonderful Life. Remember Pottersville? It was pure capitalism back then and still is today. Isn't this country great! A little known fact is that Rush Limbaugh got his start in radio in Sacramento.

Anonymous said...

Limbaugh is so full of shit his eyes turned brown. Figures you would be cozy with him. Are you popping the same pills he is or something?

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

"You can check out any time you like but you can never leave"

The Eagles

California is a growth machine. AP Gianini (Bank of America)stated "you can't keep it from growing" back in the 1920's. The fact is California is slated to exceed 43 million residents within the next 20 years. It has more people than all of Canada and has been pulling away for years. Where do you think they are going to put those 6 million new residents? Maybe where the growth has been the fastest for the last 20 years? How about the central valley? And where is Sacramento? So all this talk that the end is near because their vacancy rates are a few hundredth of a percent above normal is just so much recycled curbside waste.
Does California have issues?
You bet. But it has a long tradition of creativity and open mindedness that has drawn people from around the world under far worse conditions that those we see today. As the rest of the world argues over how many angels fit on the heads pins or how many virgins one gets for blowing themselves up as long as California sticks with what it does best, inventing the furture, you won't have to worry about those vacant structures for long.

Galtscrapper said...

I know that leasing prices in Elk Grove (on the I-5 side) have been astronomical, making it difficult to make a profit. OTOH, Kan's ATA depicted in one of the pictures moved from their space, into the one on the opposite end, which is double in size, so they're doing well, and the leasor must be breathing a sigh of relief that one of their biggest spaces is no longer empty. OTOH... IF the economy SHOULD crash, are people really going to keep their kids in Tae Kwon Do? If things keep going the way they are, I will only be able to keep my oldest daughter in, and that's because she's prepaid for 2 years.

Anonymous said...

Thanks for the pictures.

I so agree with this.
"The part I find the most depressing is not the empty storefronts, but how similar (identical) Elk Grove Sacramento looks to every suburb/exurb in any city in any state."

I currently live in Madison, WI. You can see those same buildings here, in Illinois, Milwaukee Metro, Boston, and Connecticut to name a few areas that I have seen recently. It is like the same haliburton esque builder.
And they are UGLY!
I don't want to shop there. I like the lower profile shops of the 70s. More fun and Progressive.
The buildings are overly tall. Those ugly 1950s style Acorn lights with way OVER bright high-presure sodium bulbs have been done to DEATH. The ugly look of Republican in the last 7 years. UGGGHH.

But heres another thing. I buy so much stuff on line and the figures show that Online retail is growing, so why do we need all these retail stores. Download music. Order computers, home appliances, and even food on line and it will be delivered.

Considering the Empire like scale that todays ugly retail structures are built at. It is textbook over confidence. The same with the ridiculous mcmansions. Who needs all that space.
There is a long way to fall. Glad I am not an investor anymore. In other words I don't think it is simply overbuilt, I think we are seeing a total change in the way we shop and these hulking energy sucking structures are already outdated.
And as someone else said similar, it would be much nicer to see a field of strawberries and trees out there than hideous, nightly overlit, blacktopped over, cinderblock UGLY. And more useful.

Anonymous said...

Good Job! :)