Hotel Boom Erupts In Natomas
Mark Anderson, Staff Writer
From the November 22, 2002 print edition Sacramento Business Journal
Alleghany Properties Inc. is preparing part of its large land holdings in
North Natomas for three new hotels between Arco Arena and the airport.
The hotels, which would be major franchises of 100 to 150 rooms apiece,
would be built by Capitol Avenue Development & Investments of West
Capitol Avenue Development is doing groundwork on the project now for an
unnamed investment group, said Dave Bugatto, president of Sacramento-based
Alleghany. The investment group owns and operates local hotels.
Meanwhile, other development teams are looking at building four other
hotels on sites from South Natomas to the airport. The potential projects
include a 100-room hotel at Gateway Oaks Drive in South Natomas, a 90-room
hotel on Del Paso Road near El Centro Road, a 100-room hotel at El Centro
Avenue and Interstate 80, and a long-planned hotel project at Sacramento
The interest in Natomas is based on the area's stunning growth, plus the
resilient local hotel market.
"Sacramento is one of the few markets equity investors are still
considering for investing. No one is looking for anything in the Bay Area,"
said Kimo Bertram, hotel analyst with PKF Consulting in San Francisco.
"There is a lot of interest in Natomas now," he said. "Right now it's
preliminary interest, but there could be a lot of activity."
The Capitol Avenue Development hotels could be among the first
developments in Natomas Crossing, a two-mile, 215-acre strip of freeway
frontage on the east side of Interstate 5 from Interstate 80 to Del Paso
The hotels are planned on 9 acres at the northwest corner of the
property. Construction of roads, curbs and gutters for the parcel will start
Why they're interested: The new hotels would get business from downtown,
the airport and the fast-growing areas of Natomas.
Zoning for offices and industrial buildings stretches down Del Paso Road.
The Alleghany land itself is zoned for more than 3 million square feet of
office space, plus housing, restaurants and stores.
The long-term community plan for North Natomas predicts the 9,000-acre
area, four-fifths of which sits inside the city of Sacramento, will
eventually have 33,000 homes, 72,000 workers, and up to 66,000 residents.
The plan includes 2,194 acres for offices and retail.
The area between downtown and Sacramento International has long been home
to successful hotels. The eight properties around Richards Boulevard do well
consistently. The two Marriott Hotels Corp.-franchised properties in South
Natomas have racked up high occupancy and rate numbers for a decade, and the
Hilton Garden Inn that opened four years ago in South Natomas does strong
Bugatto said the three new hotels at Del Paso would be the closest rooms
to the airport outside of the airport hotel, which is solidly booked.
He added, "The market potential out there is amazing."
Sacramento bucks the trend: Hotel rates in Sacramento rose 2.2 percent
for the first nine months of 2002 from the previous year. Sacramento and
Napa are the only regions in Northern California where rates rose this year,
according to figures supplied by PKF Consulting.
Sacramento's average room rate for the first three quarters rose from
$90.49 to $92.53. But the rates in Northern California as a whole were down
13 percent, from $148.45 to $129.23.
Every other Northern California market saw rates fall. The San Francisco
airport area saw the biggest plunge, with average rates down 24 percent,
from $136.64 to $104.19. Downtown San Francisco average rates slipped 16
Rates in the San Jose/Peninsula market were down 20.1 percent. Oakland/
East Bay average rates slid 8.6 percent.
Occupancy, too, was down almost across the board through September.
But occupancy in Sacramento, among the highest in Northern California at
71.1 percent, was up 0.4 percent from a year earlier.
© 2002 American City Business Journals Inc