Regional Malls, Big Boxes Flood Sacramento Retail Market
There is no doubt that the Sacramento metropolitan area is awash in retail shopping development, but whether or not the region is facing an excess of retail stores is subject to debate.
The question arises while a 1.1-million-square-foot regional mall prepares to open in Roseville this summer, and regional malls of similar size are proposed in Folsom and Elk Grove. Plus, the City of Sacramento continues to consider large-scale downtown retail development.
In three recent studies performed for the City of Sacramento, David Wilcox of Economics Research Associates, warned that the region faces an unhealthy glut of retail shopping development. Wilcox examined a fast-growing four-county area (Sacramento and Yolo counties, south Placer County and western El Dorado County) with about 1.7 million people, and compared it to similar-sized metropolitan regions.
"What I found was just this enormous amount of retail space that is being built, or has been built in the last five years," Wilcox said. "Then there was this whole huge amount of place-holder projects there was being proposed. … Sacramento would have a massive amount of retail if all of these speculative proposals would get built."
Some analysts contend that retail development is only following the residential and industrial growth that has occurred in the lower foothills east of Sacramento. Indeed, Wilcox found that power centers (collections of big-box stores such as Home Depot and Wal-Mart) have closely followed residential subdivision development in the Placer County cities of Roseville and Rocklin, where the population has more than tripled during the last 20 years to approximately 110,000. Plus, there is a great deal of additional wealth in the area thanks to an increase of high-tech jobs.
Roseville Planning Director Patty Dunn said she sees no problem, at least in her rapidly growing town, which is a net importer of jobs.
"We've really striven to have a balance of land use. Right now, in terms of commercial zoning, we might have a little bit of an overage. Based on models, about 80% of it will be absorbed by 2020," Dunn said. "But if you look at most city or county general plans, you see a little bit of an overage in commercial because residential typically is absorbed much faster."
The cities of Roseville and Rocklin, on the I-80 corridor, and Folsom, along Highway 50, will see 2-million-square-feet of retail space open this year alone, Wilcox said. The largest project is the Galleria at Roseville, a 1.1-million-square-foot regional mall aimed at higher end shoppers. Nordstrom, Macy's, J.C. Penney and Sears will anchor the Galleria. Across the street from the Galleria at Roseville is proposed Creekside Town Center, a 400,000-square-foot power center.
The Galleria at Roseville undoubtedly will compete with Sunrise Mall, about six miles west in Citrus Heights. Sunrise has served the region for decades and recently underwent a $10 million facelift.
Less than 15 miles south of the Galleria at Roseville and about six miles east of Sunrise Mall lies the site of the proposed Broadstone Mall in Folsom. The city approved the 1.1-million-square-foot regional mall in 1991, but it has yet to be built. However, Broadstone Plaza, a smaller retail and entertainment center, is scheduled to open before year's end in Folsom, whose population has more than quintupled to about 50,000 in the last two decades.
While all of this retail development plays out in Sacramento's eastern suburbs, the southern suburb of Elk Grove, which voted last November to become a city, is the site of a proposed 1-million-square-foot regional mall called Lent Ranch Marketplace. Although Lent Ranch could divert Elk Grove shoppers from south Sacramento's retail opportunities along Florin Road, Lent Ranch would have little other competition within close driving distance.
In Sacramento itself, city officials have had to consider new retail proposals in North Natomas, a collection of farms along I-80 and I-5 where long-planned development is finally becoming reality. Some North Natomas landowners requested that their property be rezoned from industrial and office designations to commercial. The landowners proposed six of what ERA's Wilcox called "intercept centers" ranging from 250,000 to 680,000 square feet apiece. Landowners said commercial development would do more for city finances than office buildings.
But Wilcox said the proposed commercial centers would seriously harm the prospects for neighborhood shopping centers that are planned throughout North Natomas, which is projected to have a build-out population of 60,000. In late March, the Sacramento City Council refused to approve the rezoning and stuck with the North Natomas plan.
The Sacramento council also has continued to focus on the long-struggling, pedestrian-only K Street Mall. Westfield Corp. has recently consolidated much of the mall under one ownership for the first time, and in March Westfield hired renowned architect Jon Jerde to create a plan for about seven blocks of the K Street Mall from the Downtown Plaza to the Sacramento Community Convention Center. Both the Plaza, an enclosed shopping mall, and the Convention Center received major upgrades during the 1990s, but the K Street Mall still languishes, especially at night and on weekends, when state office workers are absent.
The City Council had been weighing plans of Mills Corp., a Virginia-based developer, for a mixed-use project on an old railroad yard just north of downtown. Wilcox, however, said that the retail aspect of the Mills project would have competed with the K Street Mall effort. The potential conflict was solved when Mills withdrew its plans at about the same time its request for a $75 million city subsidy was reported by the Sacramento Bee.
Contacts:
David Wilcox, Economics Research Associates, (310) 477-9585.
Patty Dunn, Roseville Planning Department, (916) 774-5276.