La Borgata center seeks right mix of tenants

By: Art Garcia
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La Borgata, intended to be El Dorado Hills’ showcase show place, still has a few cracks in its fancy Tuscan façade with the crippled national economy blockading the arrival of new tenants to replace the many who have left. There’s a lot of empty space but there’s also “definitely a lot of interest, La Borgata being one of two high-rent projects in El Dorado Hills,” said Toss Vallentine, an associate at Grubb & Ellis in Sacramento, which is handling office and retail rentals for what was intended to be an upscale gemstone property. “What we’re seeing is a whole lot of tenants getting all the way to the finish line then deciding to wait a little longer to figure out if their budgets are going to get passed,” said Vallentine, who books office space. “Things definitely are stewing and brewing,” added Graham Clemons, a vice president in the Grubb & Ellis retail group. “The market in the past few months has been reevaluating itself, tenants and landlords alike, trying to find out where the win-win scenarios are going to take place and at what rate. Landlords and tenants in this market have to equally benefit each other to stay alive.” Clemons has some large spaces to fill such as the former Masque Ristorante and Cantinata location’s 9,500 square feet and 4,500 square feet at the late Le Petit Chateau store, with its towering ceiling. Also on the La Borgata market are about 1,500 square feet of additional retail space. He’s had three proposals to lease the Masque space, offers that are under review, while “gathering a couple of more as well,” Clemons said. “We don’t want to re-tenant this place in the wrong direction. So it’s not for a lack of tenants wanting to come to this area; it’s that we’re trying to build the right tenant mix.” Lease quotes for office space in this market are “negotiable,” he noted, typically starting at about $2 a square foot, “actually more like $2.25 a square foot and up, depending on lease terms, financial strength and wherewithal, proposed conditions of delivery and lease terms.” Office space at the Tuscan center is priced at $2.30 a square foot, “modified growth,” which in real estate-speak means tenants pay for their own utilities and janitorial service. “But, of course,” he quickly added, “in this market everyone has to be flexible.” Financial Title, an upstairs tenant, had one of the largest office spaces at 3,000 square feet, before practically vanishing. Also listed upstairs is a space of 1,500 square feet that’s “move-in ready” with new carpet and paint, plus some furniture available. What’s Vallentine’s outlook? Hopeful? Optimistic? “Yeah, you’ve got to be,” he replied. “Basically, all we’re doing is waiting for all the uncertainty in the market to dissipate.” Clemons “absolutely” sees hope for leasing Masque. “I’ve just had too much activity, too many bites for it not to go.”