When his firm Ellis Partners bought a nine-building portfolio of office buildings in Roseville from Hines in 2012, co-managing principal James F. Ellis said he believed the region was poised for better times. With Sacramento still in the early stages of recovery from the Great Recession, vacancy on the Douglas Boulevard corridor was 23 percent, so there was definite room for improvement.
Ellis’ optimism paid off over the next six years, as the San Francisco firm employed an aggressive strategy of improving the buildings and going after tenants. From then until now, according to Newmark Knight Frank, Ellis’ Roseville properties saw 180 deals.
Ellis Partners wrapped up its local investment last week, selling the last two properties in the portfolio, 3721 and 3741 Douglas Blvd., to Los Angeles-based Vectra Management Group. The sales price was $44.5 million.
The sale of those addresses, totaling 185,000 square feet, came on the heels of three sales in 2016 and 2017 for the other parts of the portfolio:
- Ridge Capital bought the Slate Creek Corporate Center at 3300 Douglas Blvd. for $23.15 million in late 2016.
- Los Angeles-based Barker Pacific Group and WHI Real Estate Partners acquired 3001, 3005, 3009 and 3013 Douglas Blvd. in a joint venture in January 2017 for $33.85 million.
- Auburn-based Flyers Energy LLC, under the name Roseville Corp. Center LLC, bought Roseville Corporate Center at 2998 Douglas Blvd. in October 2017 for $23.34 million.
Chris Lemmon of Newmark Knight Frank, which will continue to lead leasing efforts at 3721 and 3741 Douglas, said the sale shows Ellis’ strategy for the buildings worked. When Ellis Partners bought the portfolio, he said, they were only about half occupied.
“Just old-school blocking and tackling,” he said of how Ellis turned those properties in a positive direction. The company recognized Roseville as an executive-driven market where people making big real estate decisions often want to live there or in nearby Rocklin or Granite Bay.
Unlike Sacramento, Roseville doesn’t have the state of California as a big player, so its base is either large companies or local entrepreneurs. When economies recover, those entities start looking for space.
Ellis Partners also approached management and oversight with a lean, efficient strategy that enabled deals to get done creatively and quickly, Lemmon said. Blake Simas of Hines, who continued managing the properties, especially deserved credit, he added.
“Everything was so textbook,” Lemmon said. The firm also proved Sacramento can be a worthwhile investment market even when times are tough, he added, which helps attract other firms to look this direction.
“In the underwriting, they saw the market already improving,” he said of Ellis’ initial 2012 move. “What it shows is that Sacramento is strong on the fundamentals.”
Lemmon, Zac Collie and Todd Eschelman are handling leasing for the properties, which total about 200,000 square feet and were about 85 percent occupied at time of sale. Lemmon said several deals to further boost leasing for the buildings are pending.
As appeared in Sacramento Business Journal by Ben van der Meer.