By Jon Peterson
Sacramento-based Petrovich Development Company has placed on the market for sale a 37,000-square-foot City Sports Club fitness center in Elk Grove located at 8438 Elk Grove Florin Road. The property, located 13 miles south of downtown Sacramento, is on the market for an asking price of $14.3 million, as written in the offering document circulated across the industry. According to marketing materials, the asset is under construction now and should be completed sometime within the next 30 days or so.
The property’s current owner has offered the asset up for sale through the Net Lease Group of Cushman & Wakefield. Two people involved in the sales process are Andrew Bogardus, executive director, and Christopher Sheldon, executive managing director. Both work out of the company’s office in San Francisco.
“We have had this property on the market for the past 90 days. There are three types of capital sources that we think the asset will attract. These would be 1031 Exchange buyers, family offices and private individuals,” said Bogardus.
The project sale would achieve a 5.5 percent cap rate if the asking price is reached. This would be based on the first-year net operating income, which is projected to be $786,250, according to the marketing materials.
The City Sports Club development will be rebranded under the LA Fitness Club name.
The property sits on a lot that totals around 3.4 acres. The commencement of its lease is set to start on January 15th, and it will last until mid-January of 2038. The lease also includes three five-year options to extend the lease beyond the initial lease term. There will be a 10 percent rent increase every five years. The new fitness property is located in an area where people already come for workout sessions; the property is just a few blocks away a 24-Hour Fitness building.
The LA Fitness property is located within the 240,000-square-foot Calvine Pointe Shopping Center. This retail property was first developed in 2008, and some of the tenants in the center now include Kohl’s, Walgreens, Bank of the West, Bank of America and El Pollo Loco.
Other national retail chains in the immediate area include Safeway, CVS Pharmacy, Petco and Starbucks. The immediate area surrounding the center has shown strong retail occupancy with a vacancy in the region of 0.5 percent, according to the LA Fitness property’s offering document. In addition, the property up for sale is in an area with strong demographics. The area boasts an average household income of $99,926 within a mile of the asset and a population of 130,000 within three miles.