Sunday, February 10, 2008

Natomas Area Commercial Real Estate Photolog

Last December I brought you An Elk Grove Commercial Real Estate Photolog and The Downtown Sacramento Commercial Real Estate Photolog. Mish's Global Economic Analysis and Calculated Risk have continued to follow the impending CRE crash very closely, and I'm still getting a lot of hits on my older posts. Now that the weather and my schedule has finally cleared, I am ready to do my small part and present the Natomas Area Commercial Real Estate Photolog.

Natomas is a suburb of north of Sacramento. It was the last major part of the city's area to be developed, and in the last five years thousands of houses have been built on what were once rice fields. The area is also home to Sacramento International Airport, and Arco Arena, where the Sacramento Kings play.

In addition to the residential and accompanying retail development, the area has been home to a large contingent of light industrial facilities, business/medical centers, and distribution warehouses. The number of these facilities has exploded in recent years, and now millions of square feet of space are available.

The following photolog is a very small sampling of what is happening in Natomas. There are still quite a few CRE projects under construction or planned in the area, and it looks like the glut will last quite a while. (The only beneficiaries of the glut appear to be the street racers. Every single empty street and vacant parking lot had circles burned in.)

View Larger Map

Walgreens and nothing else

Several vacant buildings along I5

Millions of empty sqft. *Edit: This is a collage of 21 photos I took while driving through the Natomas Business Park. There are over 1,000,000 sqft available according to these signs alone.

Bel-Air Shopping Center

Big new office building

Mostly empty office parks

Empty, unswept parking lot

Natomas Crossing

Unneeded Planned development

Empty corner restaraunt

Planned development near Arco Arena

Empty completed development near Arco Arena

130,000 SQFT empty

Office park under construction

Empty retail

Sign spinners/empty retail

2.3 million SQFT of planned retail


Tyrone said...

Bubble? What bubble?


wannabuy said...


That quantity of surplus retail/office is more than I can get my mind around.

To think, so much of the existing retail isn't really needed! What's going to happen when J6P cannot HELOC another 14 meals at week at his/her favorite restaurant?

We're already in a recession. I keep getting shocked at restaurants. The only time they're full is right after paydays.

Got popcorn?

smf said...

"That quantity of surplus retail/office is more than I can get my mind around."

We did some of that work in our office. And some projects are still in the pipeline there!

"We're already in a recession. I keep getting shocked at restaurants. The only time they're full is right after paydays."

Not only restaurants, but I have noticed the traffic is not as bad either.

Anonymous said...

Sign Spinners. That is a growth industry. They first appeared in new home subdivisions, then for the condos.

Now I see them for apartments and busted condo projects. One today had "Free Rent" in big letters.

I see sign spinners for commerical businessed also. They are hawking hot pizza at 11 AM on Saturday and targeting the 5:30 PM commuters for tax preparation work.

Pretty soon, we will may see freelancers on a corner with "Will Spin for Food". You have to admire people with that kind of work ethic to put in 8 hours on the street corner.

Anonymous said...

Hey Max,

I have been in Florida on a business trip and it is unbelievable the amount of vacant commercial and residential space. And the construction continues...

All the way from Jacksonville to Orlando. A complete mess. It is frightening.

smf said...

"the construction continues..."

Remember, by the time you are to the construction phase, you have already spent plenty of time and money to get there.

To decide at that stage to not build gives you no possibility of a return for your significant investment.

Ruy Lopez said...

As much as I would like to see our economy return to a normal state, it's sad to see the foundering of the aspirations of thousands of people and the investment of millions of dollars. It's such a waste.

Max said...

Tell me about it. The most surreal place was that empty parking lot. The leaves were never swept in the Fall, and now it's almost returning to its natural state. The reverse of a fallow field, I guess.

We're entering worst part of the blow-off in Sac IMHO. Property crime is already taking off, and it will be a free-for-all soon.

Anonymous said...

Max -

Absolutely slams me to the floor. I don't know the area, but was this farm land? If so it's a shame. We'll need community gardens and coops to grow food during the upcoming depress uh recession...

Max said...

I don't know the area, but was this farm land?

It was all farmland at one time, some parts more recently than others. The area in the collage has actually been a business park for 15+ years; there's been some new construction and expansion in the last 5, but I was surprised to see so much vacancy in an established business park.

As for the other areas, these are almost all < 3 years old; almost all "service related" (either retail, small office, or restaurant), and was farmland in 1999-2000.

Anonymous said...

I think the growth industry headed this way is for filming post=apocalyptic moves. Last man on earth type things. Omega man and such. You wouldn't even have to reroute traffic. There is no one there to get in the way.

Anonymous said...

even better - as the former owner or manager of some small businesses, i can bet almost all of the retail space will REMAIN empty, as the landlords will continue to ask for outrageous $/sq ft, or insist on AAA tenants only, or have ludicrous covenants, etc. in phoenix, i once tried to rent 1000 sq.ft in a sleepy strip and couldn't
get anything less than $5/sq.ft out of the agent. had to have huge lighted signs, my cost. 4 years later, that place is STILL empty.

i think these CRE folks could still make money by turning those properties into flophouses for all the people losing their house (rentals and owned) in the next few years.

Anonymous said...

I see your Sacramento, and raise you Phoenix.

Anonymous said...

Looks like the movie "The Day After"

Anonymous said...

The rice fields were very pretty....

Anonymous said...

At least everything that's going to seed was new in the past few years. Been to Detroit lately? Most pathetic place in the country right now.

Max said...

And actually, this is just a small segment of Natomas. I simply ran out of time (and memory card space).

There are huge, new, empty buildings all around Sacramento county.

Sinomania! said...

You can see the same scenes on the 5 before Anaheim and on the 405 before Irvine and the new highways built north of the border in east Chula Vista (San Diego metro).

Anonymous said...

But Dubya says he brought us the "ownership society." I can't imagine people being stupid enough to even consider voting Republican and extending Lord Pissypant's disastrous policies.

I hope to GOD we get a Decmorat in the oval office. Our nation can't afford another four years of Republican mismanagement.

Max said...

But Dubya says he brought us the "ownership society."

You can define "ownership" in so many ways these days. The only true owners of these buildings are street racers and tumbleweeds.

Once Spring springs around here the pictures will be far more dramatic.

Anonymous said...

I'm happy to see this kind of shitty, soul-less sprawl development going empty. Maybe it'll save a few acres. The legitimate neighborhoods of Sacramento (and most other places) are doing fine...

Chuck Ponzi said...

couldn't get anything less than $5/sq.ft out of the agent

You're kidding, right?

Retail here in OC is low-end $35/sq ft. That's gotta fall. Under $5? That's just a joke.

Chuck Ponzi

Anonymous said...

In an inadvertent irony, one of the brokers listed on the CBRE signage is "Cole Sweatt."

Near eponymous name for the sentiments of CRE brokers in much of the nation.

Max said...

In an inadvertent irony, one of the brokers listed on the CBRE signage is "Cole Sweatt."

And only one bank brave enough to list itself on a "funding provided" sign. If I had money in Silverado Bank, I'd check their balance sheet right about now...

Anonymous said...

I lived in SF and my work territory included Sac from 1990-99. I know that area well. At least I did. Last time I was there the area around Arco was empty. Rice field and nothing more. Now, sadly, it's still empty but developed with cheesy strip centers and commercial buildings of, obviously, questionable need.

Like Neil said, I'm having trouble getting my mind around the amount of growth. On one hand I welcome the necessary correction that this bubble bursting and recession are bringing but I'm also sad to see the rampant over-development that's part of it.

Anonymous said...

I spent nearly 14 years in a different part of the US working on policies and legislation for farmland protection, better urban design, safer cities. Time after time, I got slammed as 'an environmentalist' simply for trying to talk sense to grown adults.

Anti-sprawl policies are not rocket science. But in a corrupt political system, driven by contributions from developers to elect well-intentioned, but ill-informed city, county, and state officials, time after time (after time) I saw people cave to greed.

There was so much money to be made by paving farmland, converting it to office space and subdivisions, that people couldn't build enough, fast enough to cash in on the greed.

Money is the least of our worries - all of this type of development leads to more global warming, and endangers the food supply. But the Chambers of Commerce, the bank loan officers, the bank board members, and the car dealers didn't want to hear it.

Pardon me for lacking empathy, but I saw this disaster happening. Many of us did. We did our best to try and bring people to sense, but greed got the better of them.

And now they're wailing, and we're all supposed to help subsidize their stupidity.

Count me among the seriously contemptuous. It didn't require a PhD to see this coming.

Anthony said...

That is a devastating series of photos. Simply unreal. Thanks for this -

Anonymous said...

Great photolog! I lived in Sacto for a couple of years at the beginning of the new millenium. The empty retail created during this bubble is just staggering and you have shown it here. This is all going to end badly, there is no way to avoid it. Postpone it, sure, but avoid collapse? No way.

And for Chuck Ponzi: I think Snotsdale's $5/ft is the per month rent = $60/ft/year. Your SoCal price of $35/ft is = $2.92/ft/month. That is about right for decent retail at the moment. $35/ft/month can get you fairly nice office space in markets like San Francisco. Asking $5/ft in Phoenix is just retarded.

Anonymous said...

At some point, I suppose some enterprising person could come in, buy up some property, tear down the buildings and revert the land back to farming. You know, something useful.

Anonymous said...

Natomas is a flood plain. Living there is literally living on borrowed time. I consider a sort of poetic justice that people are avoiding it now as the developers who built it lied and lied about it being a flood zone.

Fuckers, serves them right. I am sorry for the people who lost their homes.


Alan Tomlinson

Unknown said...

Sales Taxes
That is why they got approved. City and County Greed for sales taxes.
Happy Prop 13 to you all.

dryfly said...

I followed a link over from CalcRisk's blog - wow what a series of photos.

I sell industrial components in the Midwest and used to take pictures of sites like that - just to tell my grand kids about it someday.

Last summer in KC I was shooting some newly completed and semi-empty development and the police (not even rent-a-cop) stopped me and went through everything I had... looked at every photo and searched the car... 'Probable cause'? Who knows.

A bit chilling let me tell you.

The pretense I was given was 'stalking'... that there were realtors & their clients working the site and I might be stalking them.

I still take photos occasionally... but not as often and am very careful of what (or whom I shoot). Just something to consider.

Krellan said...

I've been to Natomas. Was there with a friend who had a job maintaining equipment at certain movie theatres and bowling alleys in the area.

There is at least one thriving shopping center, where a very large movie theatre is. However, there's tons of youths of various ethnicities, from teenage to mid-twenties, just hanging around. There's not enough jobs for them.

It's scary. The youths are driving away the older customers with money, who are afraid to shop there. This in turn hurts the business, which could close stores, throwing even more youths out of a job. It's a downward spiral.

The empty strip malls and office buildings here would normally have been keeping these youths happily employed, as cashiers and clerks. Now, however, there is nothing to do, except race cars at night, as seen in the videos.

There is a large, thriving, underground street racing culture in the Sacramento area. I wish the city would build a public racetrack. At least that would give them something to do!

Anonymous said...

Sac has its own raceway.

Anonymous said...

To Anonymous @ 1:00- a lot of development has taken place on once pristine lands because of the unintended consequence of environmental legislation. CERCLA (1980), commonly known as Superfund, made the current owner of a property liable for damages and cleanup, even if it had been done by someone else long before, and even if they had no idea that it was polluted. That drove everyone away from potentially polluted industrial sites to undeveloped land. It's only in the last few years that there has been some movement on relaxing strict, joint and several liability. Some states have been more active in shielding innocent landowners. Until that's done, expect more farms to be paved over.

Anonymous said...

Since when did another nation drop a neutron bomb on Natomas?

MN said...

You know, of course this sucks, on a purely artistic level I find this fascinating. I would love to wander through empty, bare office parks like that.

Stealth4 said...

At some point they'll pave over enough farm land so that we wont have enough food to eat.

Sad how the greed of a few destroys a landscape and taxes the rest of us.

The bailout attempted government at the behest of these greedy people wont be overt - it will be covert and we need to keep our eyes open and ears to the ground - and rise up and fight it and hopefully stop it.

They will try to tax us to pay for their mistakes.

the bewilderness said...

This happened in the eighties, when the oil prices were high, they bought up block after block of houses in the cities to build office space. When the speculation bubble popped it took years for them to fill the empty office buildings with businesses. The cities never did recover from the exchange of people houses for office buildings.

Anonymous said...

Hard to believe this much new empty space could exist in such a small area. Whatever were they thinking?

Great job putting it all together like this. Eye-opening to say the least.

Anonymous said...

These photos are amazing. Reminds me of a trip I took to Mexico a few years ago, shortly after an economic crisis (I forget which kind) took root. Lots of construction projects, frozen and incomplete, for years. Welcome to the Twilight Zone, USA.

Anonymous said...

I call bullshit!

The sign spinner isn't for the retail. Rather, it's for a housing development further up East Commerce Way.

Anonymous said...

1. Pic #3 - has construction stopped on this one - its a little hard to tell from the pic.

2. Sign-spinner - what is going on here - is that guy just standing there waving a sign hoping to attract commercial leasing traffic? is there any traffic going by?

3. Its tough to get my head around this - are these vacant sites mixed in with functioning residential/retail sites or is this one big wasteland??? what percentage is this of the area??? would google maps
help?? are these a small percent of the area or a big percent of the total area?

Max said...

I call bullshit!
Sign-spinner - what is going on here - is that guy just standing there waving a sign hoping to attract commercial leasing traffic? is there any traffic going by?

3. Its tough to get my head around this - are these vacant sites mixed in with functioning residential/retail sites or is this one big wasteland??? what percentage is this of the area???

This area is a mix of in-use and vacant, but there is a huge amount of vacant square footage. There is a large, mostly full shopping center near Truxel and I80 that attracts a lot of business, but that's about it. These photos are representative of this area; if anything, they are flattering.

And yes, the sign spinners were advertising a residential development; didn't mean to confuse anyone.

Anonymous said...

wheat has reached $20/bu on the Minneapolis exchange... other ag crops expected to follow... this means there will be a TON of money to be made by tearing down all these worthless subdivisions and planting crops again... THIS IS THE REAL ESTATE PLAY WHICH WILL MAKE YOU RICH FOR THE NEXT 20 YEARS... this is also clearly our financial salvation - we can use the profits from clearing the land and farming to pay off all the losses from the speculation which built all this useless crap in the first place - ITS JUST WONDERFUL HOW THE FREE MARKET WORKS...

christiangustafson said...

I'm seeing this in the Eastlake neighborhood of Seattle as well.

Come visit me at Deflationland! Where we photoblog the collapse in Seattle!

bobn said...

The empty strip malls and office buildings here would normally have been keeping these youths happily employed, as cashiers and clerks. Now, however, there is nothing to do, except race cars at night, as seen in the videos.

You're still partly living in the delusion of "normally" where there were people with the income to fill the houses nearby and shop at those strip malls. We're going back to normal, only the new normal is going to include a lot of abandoned RE.

Anonymous said...

I worked at EPA back in the days when it was handing out big bucks to build sewage treatment plants. We put a condition on the grant to the Sac Regional Treatment Plant to prevent growth on this prime ag land - some of the best in the world. They eventually backed out and paid back some of the money so they could develop. I doubt it will ever be reclaimed for agricultural - too expensive to demo all that concrete. On the other hand it will make a good set for Mad Max sequels ...which won't be futuristic. Neil - pass the popcorn.


Anonymous said...

car-dependent sprawl = OOPS

Anonymous said...

Wow, so many good comments here.

With Internet shopping increasing, I doubt that we would ever need as much hideous shopping space. Even in areas that aren't overbuilt, vacancies are rising.

Is it too much to hope that a large dozer will be called in, after the buildings have been looted of their AC units, copper pipe and the like, and all this concrete crap can be scraped off the map. Maybe trees planted or a community garden. Smell the clean air. see the happy neighbors interacting.
Either that or wait for a flood and it will be a mess anyway.

How much of our tax dollars do you think were illegally used to pay for this republican greed inspired mess?

Anonymous said...

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