Sunday, June 17, 2007

John Saca Back For More, Blames Plunging Real Estate Market For Failure

From the Sacramento Business Journal:

Developer John Saca says he's still in the high-rise business.

While a little bruised from the unsuccessful effort to save The Towers on Capitol Mall, Saca is forging ahead with another downtown Sacramento project -- a 39-story condo tower at 10th and J streets.

The Metropolitan, which if built at its projected 420 feet, would be taller than any building in the capital today, is on the agenda of the city of Sacramento's Design Commission for Wednesday.
In an interview this week, Saca sounded a little disheartened about the fate of his pet project, but said he expects to find success the second time around. He blamed the plunging real estate market for The Towers' failure, deflecting claims that he overreached or lacked enough experience.

Despite a housing downturn, developers such as [Shepard] Johnson are still building in Sacramento's central city, attempting to capitalize on demand for homes in the downtown and midtown areas. The projects have concepts and plans that differentiate them from suburban housing. But the verdict is still out on whether they can draw buyers who will pay a premium to live there.

According to the city of Sacramento's Development Services Department, there are 580 units, in 17 projects, under construction in the central city....[T]he construction doesn't mean that sales have been brisk. Loft projects in the central city and West Sacramento are selling at an average of about 1.8 units per month, slower than the 2.88 average rate of sale for all types of housing this year, according to data from Hanley Wood Market Intelligence.

And more housing could be built, but isn't because of a lack of funding and a soft housing market. Developers are sitting on about 900 units that have been approved by the city but not built, ranging from small projects to the 262-condo Aura tower.


smf said...

Glutton for punishment, isn't he?

And of course the plunging RE market was what caused the project to fail. After all, if people could not flip them for a profit, there was no purpose in buying them to LIVE there, right?

The way I read and see the market is that way too many higher end homes were built for the 'move-up' buyer. But of course, since the low end starter home market is frozen (aside from everything) due to HIGH prices, that gets the whole market to ball up.

RMB said...

Guess Saca has a few more payments on the Bently and the mansion, so it's time to start another project and skim some management fees before dumping the whole thing is someone elses lap.