Shopping center makeover

Ethan Conrad is starting off the year with another big acquisition.

The prolific Sacramento buyer of commercial real estate on Friday scooped up Granite Bay Village, an 86,000-square-foot shopping center at the intersection of Douglas Boulevard and Auburn-Folsom Road.

The $9 million deal is right in the wheelhouse for Conrad, who likes purchasing neglected properties in upscale neighborhoods.

The center, now anchored by Ace Hardware and Ripped Fitness, has maintenance issues and a 35 percent vacancy rate.

The location? “It’s phenomenal,” Conrad said, noting the surrounding area has perhaps “the highest per capita household income of anywhere in the region.”

His plan is to spend about $400,000 fixing up the center over the next several months – upgrading lighting, improving landscaping, repainting and adding two monument signs, among other moves to give the center “some pop.”

“We’re taking it, on a 1-to-10 scale, from a 4 to at least an 8 and maybe a 9,” he said.

Then he will work at bringing in upscale tenants suited to the demographics of the neighborhood. In lease talks already are a “higher-end” sporting goods store and a restaurant, the investor said.

It’s a repositioning strategy Conrad has employed successfully numerous times while building a local real estate empire worth more than $500 million.

Over the past three years, for example, he has acquired the Briggs Ranch in Folsom, Folsom Pavilions and Fairway Commons in Roseville. All three shopping centers had vacancies of 50 percent or more when they were purchased. Now Briggs is 100 percent leased, and the other two are approaching that level.

Even though real estate prices have been rising, Conrad said he continues to look for deals – and thinks plenty are left in Sacramento and the Central Valley.

The Sacramento market remains 25 percent below its 2007 peak, he said, while other Central Valley towns –a recent Conrad hunting ground – are as much as 35 percent below their highs.

The investor said he recently talked with a friend who owns a building in San Francisco – a superheated market Conrad regards as likely at its peak.

“I told him to sell his building and buy some property in Sacramento,” he said.