Thank you for sharing!

Your article was successfully shared with the contacts you provided.

SACRAMENTO, CA-Cawley Partners is looking to sell 10000 Goethe Rd., 126,000-square-foot office asset here with 780 parking spaces here that is leased long-term to the California Department of Corrections & Rehabilitation. The Dallas-based real estate investor has tapped Grubb & Ellis Co. to market the two-story building and the 10.42 acres it sits on within the South Bradshaw Business Center.

Constructed in the mid 1990s, 10000 Goethe Rd. is currently 100% leased to the state agency through 2016 under an agreement that includes annual rent increases. The asset is coming to market un-priced officially, though word on the street is that the sought-for amount is approximately $24 million. Given the property’s expected 2010 NOI of $2.05 million, that price would translate to an 8.5% cap rate.

“It is located in one of the strongest submarkets in Sacramento, home to the vast majority of state and county tenants outside of downtown Sacramento,” says listing broker Edward Suharski, an executive vice president with G&E who works with associate VPs Steven Golubchik and Seth McKinnon.

The South Bradshaw Business Center sits along the Highway 50 Corridor office submarket, adjacent to the Sacramento Mather Airport, near the Bradshaw Road off-ramp. The center is reportedly well leased, mostly to government tenants.

With 13.4 million square feet, the Highway 50 Corridor submarket is the largest office submarket in the Sacramento region. As of the end of March, vacancy stood at 15% and the average full-service asking lease rate was $1.70 per square foot per month for class A space, according to Grubb & Ellis. The only other large submarket in the region with a lower vacancy rate is Downtown Sacramento, which has 10.4 million square feet and an 11.1% vacancy rate.

“Despite current downward pressures in the general marketplace, 10000 Goethe Road is well located in the midst of a still vibrant sector populated with government and private sector credit tenants,” explained Steve Golubchik, associate vice president.

The overall vacancy average for the overall 58-million-square-foot Sacramento market is 20.7%, according to Marcus & Millichap’s 2009 National Office Research Report, which forecasts that contraction in Sacramento’s government sector, along with additional layoffs in other white-collar fields, will result in rising vacancy for the third consecutive year. Vacancy is forecast to increase 400 basis points this year to 21.1%, following a 320 basis point increase in 2008. Asking rents are forecast to retreat 4.1%, while effective rents are projected to be down 5.7% by the end of the year.

“Deteriorating fundamentals stemming from job cuts and an over saturation of space resulted in a steep decline in office transaction velocity last year,” says Robert Hicks, regional manager of the Sacramento office of Marcus & Millichap. “Sales activity is not likely to proceed at a normalized pace until price corrections are implemented.”

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.