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Experts Welcome Return-To-Office For State Workers, But Downtown Sacramento Still Has Challenges

Source: Sacramento Business Journal

Brokers: Ken Turton

Downtown Sacramento will get a shot in the arm this summer with more state workers set to return to the office, but there are issues still to solve, according to experts on the central city’s economy.

Politico and other media outlets reported Wednesday that all California state employees will return to the office at least two days a week beginning in June. That’s an improvement, but not a panacea, said Turton Commercial Real Estate President Ken Turton.

“That’s a step in the right direction,” said Turton, whose firm specializes in urban core properties. “But two days is 40% occupancy, which means you still have 60% vacancy.”

What will bear watching, he said, is whether having state workers back two days a week is an interim step, or a more permanent one. For the retailers who rely on daytime foot traffic, two days is good if it eventually means going to three, four or even five days in the office.

Many of those retailers operate under a model of using daytime traffic to cover costs, then making money from people coming downtown at night or on weekends, Turton said. They’ll continue to struggle until the first half of that equation is reliable again.

In an email, Downtown Sacramento Partnership Executive Director Michael Ault said the return of state workers is welcome, but there’s more to do.

“Over 70% of the office inventory in the central city is owned or leased by the public sector, and clearly there have been significant impacts to Downtown over the last four years,” he said.

“And while we’re grateful for increased daytime visitation coming this summer, we will also continue to do our part in making Downtown a destination of choice for employees, residents, businesses and visitors,” he added.

His comments echo those made by speakers at last month’s State of Downtown event, where it was acknowledged that hybrid schedules are likely to be an institution for many employers, public and private, for years to come.

As a result, Downtown Sacramento is in the early stages of a pivot to having a larger residential base, speakers said.

Turton said that’s a likely path to follow, but it brings its own challenges. To make Downtown attractive for people to live, he said, there has to be good access to amenities like a grocery store, child care and public transportation.

“If there’s assistance that’s needed to make it happen, there’s where the focus needs to be,” he said of policymakers, noting that’s a challenge for downtowns in large cities everywhere. “It also needs to be clean and safe.”

People are attracted to live in downtowns because of the access to cultural amenities, short commutes, and typically more locally based, well-established retail and restaurants. But if there’s a feeling that doing so isn’t safe, he said, they’re just as likely to choose suburban places to live instead.

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