Sacramento Downtown Plaza is doomed to fail

Want a new building close to the Roseville Galleria?

It was a hot afternoon in 1983 as I walked by the concrete monoliths and broken water features that adorned the automobile and shopper free zone known as K Street Mall. There was a vacant weed filled lot across from Macy’s and plenty of skate punks and homeless people trudging along K Street in the hot summer sun. This incarnation of K Street Mall was a 1970′s post modern architectural design that promised to lure shoppers back downtown. It didn’t work.

Redevelopment De Jevu

By the late 1980′s there were renewed calls to transform the originally transformed K Street Mall into a shopping destination, again. “Rip out the ugly concrete art that allow vagrants to hang out”, was a familiar refrain. The final result was the Sacramento Downtown Plaza. It was fun to shop at the Downtown Plaza with new stores that were interesting like Gap, J Crew, Banana Republic and Structures. Today, the Downtown Plaza doesn’t look too much different from the K Street Mall I used to frequent: empty stores, no cars, and no shoppers.

Totally tubular suburban malls

The Sacramento downtown business district accused the first mall in Sacramento, Town and Country Village, with siphoning off shoppers in the 1950′s. K Street Mall blamed Arden Fair and Sunrise Mall for its lack of success. Downtown Plaza supporters acknowledge the role that the Roseville Galleria, the Fountains and an expanded Arden Fair Mall have on pulling consumer dollars away from the central core on K Street. Since the late 1940′s, the Sacramento downtown shopping core has fought the suburban shopping malls for attention and shoppers.

It’s a game changer! Really?

It was with particular amazement that I read the laudatory statements by public officials at the sale of

Even strip mall locations in Roseville have a difficult time finding retailers to rent to.

the Downtown Plaza from Westfield Group LLC to JMA Ventures LLC. It has been reported that Westfield had resisted any improvements to Downtown Plaza and had wanted to sell it for the past couple of years. The failure of Westfield to invest in the Downtown Plaza is not the reason why the Plaza is failing. The Westfield Group did not purposely avoid improving the Plaza in an effort to drive the ultimate selling price down. Rather, Westfield could not rationalize additional improvements based on the return on investment.

Do the math

While it is great the Downtown Plaza has a new inexperienced retail mall management owner, that doesn’t change the economics of the situation. Westfield not only has reams of economic and demographic data on all the malls they own and manage, they can also perform detailed comparative analysis between malls. The Roseville Galleria, which Westfield manages, has had a major expansion since opening, is still thriving even through recession, fire and the opening of the more upscale the Fountains right across the street.

It’s all about demographics

You don’t need an advanced degree in retail economics or a powerful research firm on retainer to find the numbers. I went to ZipWho.com and quickly gathered data showing the income disparity between the suburban areas and down town Sacramento.

Zip Code Area Median Income Median Age Population
Sacramento 95818 SLP $39,412 37 22,000
95831 Pocket $57,329 40 43,000
95819 River Park $55,811 40 15,000
95816 East Sac $35,282 35 16,000
Ave., Total $46,959 38 96,000
Roseville 95747 West $69,922 39 26,000
95661 East $58,606 38 25,000
95678 Central $49,615 34 31,000
95746 Granite Bay $100,986 39 21,000
Ave., Total $69,782 37.5 103,000

When you couple current numbers with past performance, it is plain to see that the Sacramento Downtown Plaza is doomed to fail as a regional shopping mall.

Polls are not reality

Some folks will point to the success of 2nd Saturday in MidTown as an indicator of how the Downtown Plaza can succeed. However, 2nd Saturday is only once a month and is more of a party than a shopping experience. People have cited that a poll of consumers said they would shop at the Plaza if they felt safe and it had a larger variety of stores. However, polls are not reality.

Comfort zone

I wonder if “feeling safe” is not a euphemism for wanting an all white dominated shopping experience. If you ever read the comments on the Sacramento Bee website you will see how blatant the racism and bigotry is from the Sacramento suburbs. Down town is an urban center with a spectrum of ethnicities and diversity from Sacramento. There is virtually no shopping experience that will attract shoppers who are opposed to rubbing elbows with someone different looking from them.

Decisions are based on numbers

There are people under the illusion that with new management, retailers will flock back to the Downtown Plaza. It’s not the management company, it’s the economics. Westfield already works with Hugo Boss, Tiffany & Co., Brook Brothers and Apple. If they can’t entice these stores to open in Downtown Plaza how is JMA expected to pull them in?

I heart Sacramento

I am a big supporter of downtown Sacramento. It was my escape from bland suburban conformity when I was younger. While it is no San Francisco, Sacramento still has some of same originality and inspiration that can only come from visionary small business people. Governments don’t create urban buzz and critical mass, it is business owners and patrons.

Another shade of gray

There are alternatives for a successful Downtown Plaza. JMA could look at attracting a technology campus similar to what Facebook is building in Menlo Park. They could also try poaching some of the art galleries and eclectic retailers that populate the MidTown area. But a campus situation still leaves the core area vacant after 5 pm and the higher mall rents might be too much for the little shops in mid town to tolerate.

Sacramento Downtown Plaza has a future. But it may not be the future some folks are hoping for in an upscale urban regional mall.

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Sacramento Downtown Plaza is doomed to fail
Sacramento Downtown Plaza will never be a regional high end shopping mall like some people envision because the location and demographics are absent. There are alternatives for a successful venture.
Written by: Kevin Knauss
Sacramento Downtown Plaza
Date published: 08/18/2012
  • http://girlonpoint.com Rosemary

    Excellent …well written and perfectly examined elementary facts, Kev!

    • http://www.insuremekevin.com Kevin Knauss

      Thank you Rosemary. I was inspired to review some of the history of the Plaza/Mall after our local “media” fumbled over themselves promoting the positive spin by local leaders with no apparent perspective of economic reality. Actually, I think JMA bought the Plaza for the land, not the retail operation. At $25 million it is a good deal.

  • http://home.comcast.net/~RushYYZ/ Thomas Perine

    Thank you Kevin, those are interesting stats on incomes by Zip Code. I am surprised East Sac, 95816 is so low. I thought that area might include the Fab 40’s area but perhaps not. (I will look it up.) I am just over the City line in 95864 across from the American River. My income is probably bringing the average down. Those damn State Employee furloughs! Sort of strange having my income as public record in The Bee but is really does show the major impact of the furloughs.

    When I was growing up in the Maryland suburbs of Washington, D.C., Rockville did an “urban renewal” program like lots of areas in the 1970s. Rockville had a really quaint but someone frayed little downtown area with old shops and Victorian homes. The City wiped all those out and built Rockville Mall, a concrete structure with a parking garage underneath, very much like Downtown Plaza but it was not open air. Though there is a West End adjacent area with a great stock of real Victorians that is untouched and very pricey.

    The Mall was a failure from day one. People in the ‘burbs were not used to parking in a underground structure and I think some did not feel safe because it was so urban though the crime rate was very low. Plus it was just ugly. Downtown Plaza always reminds me of the old Rockville Mall. It became a very depressing place with closing shops, though it was a great hang out since it was in walking distance from my high school, Richard Montgomery. We had a 70 minute lunch/”interact” period that gave us lots of free time in the middle of the school day. (Not a smart move for high school students during those times, or probably any time, though it was not like there was a lot of violent crime then, but a lot of … well, let’s say mischief.)

    During one of my visits back to the D.C. area a few years ago I met some friends there and it was completely redeveloped; nice little shops and Victorianish mixed-use housing. The more things change, the more they stay the same?

    It does make me think that the only way to save Downtown Plaza is an urban housing mix in the complex, though the demographics in Montgomery County are different than Sacramento, and they did not suffer the housing bust like the rest of the country did because of the stability of federal government jobs and Beltway Bandits (government contractors).

    I was just at Downtown Plaza today, for a meeting at the Holiday Inn Capital Plaza and was surprised to see so much activity. Not great, but not a ghost town. Once the housing market picks up again in Sacramento perhaps a housing mix around K Street and the Plaza could revitalize the area. With the proximity to Old Sac and the riverfront (which really is a gem waiting to be polished) there is potential.

    Thanks for the great blog. Always good information for thought.

    • http://www.insuremekevin.com Kevin Knauss

      Since the Plaza has essentially been revalued with the sale, estimated at $25 million, there may be some opportunities for innovation that Westfield just could not justify. But let’s face, do you ever think the Plaza will host Drag Queen Bingo? Now that’s urban baby.

      • Thomas Perine

        DGB would be great for the Plaza. The Lavender Heights area in midtown is alive and thriving. That is a fun event and the funds go to a good community group.

  • Filippo

    De Jevu!!!!???? God learn how to write please…other than that,great article =D

    • http://www.insuremekevin.com Kevin Knauss

      I think God already knows how to write, but I will pass it along in my prayers this evening. Some folks may be to young remember the Yogi Bera expression, “It’s de jevu all over again” A redundant poorly constructed redux is what I was aiming for. Either way, we all learn by practice and accepting the critique of others with a gracious heart.

      • YouSoSpecial

        It’s “deja vu.” Consulting a dictionary would serve you better than praying.

        • http://www.insuremekevin.com Kevin Knauss

          My humor tanked obviously. My point was they got it wrong to begin with.

  • http://gravatar.com/scotteggert Scott Eggert

    Bold analysis Kevin, and a thoughtfully constructed argument. This will be an interesting development to watch. Two observations, do you think that the Westfield ownership of the Galleria caused them to restrain investments in a regional mall that could compete with the Galleria? Also, you have provided income stats for those living in the zip codes. How would you capture the income of the commuting population? It would seem to me that the professional services professionals and other industries that have attached themselves to the center of State government would have an average income higher then that of the inhabitants.

    I do not suggest that your are wrong, but am curious about how you feel these may impact your analysis.

    • http://www.insuremekevin.com Kevin Knauss

      Those are all legitimate observations. Most of the folks I knew that shopped at the Downtown Plaza were from SLP, Pocket, Elk Grove and East Sac. area. I think that is the Plaza’s natural market including south Natomas. While the recession impacted all shopping malls, the Downtown Plaza market was obviously more sensitive to the economic down turn which reduced visits and sales. I don’t see why Westfield would curtail Plaza improvements since their closest competitor is Arden Fair. I have to believe they surveyed the retailers that left and saw that the demographics, in store sales, and traffic just did not warrant investment to entice those retailers to return.

      The little statistical demographic I provided was more an illustration on how easy it is to get data on surrounding neighborhoods. If I can get relatively accurate data off the web, just think of the detailed economic analysis that can be done with current numbers and household surveys. My larger point is that Westfield, and hopefully JMA, have far more data to crunch when making economic decisions then we will ever be privy to. I am excited that JMA recognizes an opportunity with the Plaza.

      Macy’s is in an enviable position that their building is probably paid for and many state, city, county, and federal workers shop at the downtown location. But I remember Weinstocks, and smaller specialty retailers for men’s and women’s clothes that left the downtown market years ago. The reality of the situation is that unless you are downtown, the majority of folks will not travel downtown to shop. So the question is; What will bring a critical mass of people downtown on a regular basis that can be converted into shoppers? Then you have to match the retail operations with attracted demographic to equal sales. JMA thinks they know how and I am wishing them all the luck in the world.

  • http://www.facebook.com/SacramentoRealEstateJeffGrenz?ref=hl Jeff Grenz

    Great post (retweeted by Kelly Johnson of the Business Journal) Downtown Plaza isn’t in the same league as the Galleria, where they spent $270 million just on the expansion….. and that doesn’t include the Fountains or the big box stores across the street, as well as several miles of retail just across highway 65. Why? because that’s where the money is. Why? Because they live and work out there. From the perspective outside of downtown, we forget and ignore that the Plaza and the rest of K Street are supposed to be independent ventures, because from the outside, K Street reflects on the entire Mall and Plaza. Does further development of subsidized housing nearby bring customers with enough income? Not likely. The entire area needs a plan and it needs to be executed in a short period of time, not over decades. What brings PAYING customers to an urban retail setting? Nearby work, residences, tourism, and conventions. What would make it a destination for PAYING customers? Unique shopping, food, retail, nightlife.

    • http://www.insuremekevin.com Kevin Knauss

      Well said! My sentiments exactly.

  • YouSoSpecial

    You have provided a suburban perspective on an urban retail setting. As did Westfield, which resulted in their continued disinvestment and failure at Downtown Plaza. The biggest problem at Downtown Plaza is not the market or demographics. It was Westfield, a fact recognized by most of the economic development professionals involved in downtown.

    Before Westfield took over, Downtown Plaza was my primary shopping destination. Living and working close to downtown, with household income well over $100k, I never shop in Roseville and try to avoid Arden Fair. Let’s hope JMA has a more enlightened retail strategy than you have described or Westfield delivered.

    • http://www.insuremekevin.com Kevin Knauss

      I loved the Downtown Plaza. I really have no use for shopping malls, but I understand the commercial concept. JMA needs to be talking to you about what went wrong and how to bring you back.

      I am fairly certain that the high end boutique chain stores probably not return until they see some serious cash from shoppers in the area. If Sacramento can get continuous draw of folks into the area (sports, entertainment, arts, events) then the Plaza has a chance.

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