Petrovich begins selling Whiskey Hill Lofts nearly a decade after he built it, developer Paul Petrovich said he’s glad he rode out the tough times and kept his midtown Sacramento residential development, Whiskey Hill Lofts.
A week after he put them on the market as condominiums, seven of the 28 units are already in escrow, he said.“I had a pretty good feeling,” Petrovich said about bringing them back to market now. “I was just wondering where exactly we were.”
Petrovich said he applied for entitlements on the project in 2005, after acquiring an empty Buzz Oates industrial building on 22nd Street north of S Street. Petrovich planned to convert the building into lofts, with eight ground-up carriage houses built along S Street.
But the entitlements didn’t come through until 2007, and the market turned south as construction got underway. Petrovich said he had eight units in escrow when lenders said it would be better to shift to rental apartments instead. That meant buying out the buyers before they closed escrow, and eventually paying $6 million to the bank because the project changed.
The condos average around 900 square feet, though one is as small as 300 and two are 1,800 square feet. The carriage houses are each about 1,100 square feet, and every unit has a garage, Petrovich said.Leasing was consistently at 100 percent in the years since, Petrovich said, but with what he invested in them, he’s better off selling them than continuing as a landlord. Ken King of TriCap Development is handling the sales on Petrovich's behalf.
After watching the market, and paying for a market study, Petrovich stopped renewing leases and started listing Whiskey Hill for sale. Based on the response so far, he said, he could have all of them in contract by year’s end, though some leases don’t expire until March.
“It’s really offering homeownership at under $500,000 downtown,” Petrovich said. Buyers so far include a couple from El Dorado Hills who wanted a second home closer to work, and parents who bought one as an investment and a place for their young adult children to live and work nearby. But even with some positive results now, he said, he’d caution someone considering a similar project to do their homework. Faded industrial buildings in urban corridors aren’t the bargains they used to be, he said.
“Study it hard,” he said. “You can do it, as long as you can bring it to the market quickly. Time kills all deals.”