Knight Ridder/Tribune Business News
Aug. 5 -- Sutter Health, the largest non-government employer in the Sacramento region, will move its headquarters next summer to a new complex off the Garden Highway in South Natomas, officials said Thursday.
The nearly $3 billion health care system has agreed to a 15-year lease for the 80,000-square-foot headquarters on River Plaza Drive. The complex will be just east of the new California Farm Bureau Federation headquarters, across Garden Highway from the Sacramento River.
The headquarters complex, estimated by industry sources to cost $12 million to $13 million, will be developed by a partnership between The Allen Group of Sacramento and Separovich/Domich on about seven acres that will be purchased from the farm bureau.
Anthony R. Giannoni, president of the Allen Group of Sacramento, said the headquarters would be a striking, signature complex.
Architect Ed Kado said the three-story building would include two wings with a central core and have a slate veneer. The large, all-glass lobby will have a decorative stairway to a second-floor mezzanine, Kado said.
Giannoni, whose Christofer Co. developed the farm bureau headquarters, said his group was 'absolutely thrilled' to land the Sutter deal over a long list of prominent developers.
'It's also a great deal for the farm bureau,' Giannoni said. 'It gives them a real good neighbor and they really want this to be a corporate headquarters campus, rather than a group of multi-tenant buildings.'
About 400 employees in Sutter's finance, human resources, administration and legal services departments are expected to work in the new complex.
Most of those workers will move from Sutter's current headquarters at One Capitol Mall near Old Sacramento, where the health care network's lease on 68,000 square feet expires next September. Other employees are expected to move from Sutter's worker's comp center on Tech Center Drive.
Terms of the lease, which could be signed as soon as today, were not revealed. But Joel Grey, senior vice president for administrative services, said the move will cut Sutter's occupancy costs by about 10 percent, give employees free parking and provide greater flexibility for growth of the giant health system.
The deal with Allen and Separovich-Domich does not include an additional 80,000-square-foot building that was part of Sutter's initial request for proposals from developers, Sutter spokesman Bill Gleeson said.
The second phase of the project was planned to house Sutter's information and technology center, which has more than 300 employees in a building that Separovich-Domich helped develop in Granite Park, near Power Inn Road and Folsom Boulevard.
Gleeson said Sutter has option rights for possible future expansion at the River Plaza Drive site, but not for another 80,000-square-foot building.
'No decisions have been made about what our campus might look like over the long term,' he said. 'For the foreseeable future, our information technology department will remain at Granite Park.'
Sutter has more than 35,000 employees, including about 8,100 in the Sacramento region. The non-profit system serves more than 3 million people in Northern California and has care centers in more than 100 communities.
In 1998, Sutter had $39 million in net income on revenue of $2.9 billion. That compares to revenue of $2.7 billion and $60 million in net income in 1997.
The Sutter project represented a rare opportunity to build a headquarters complex for a blue-chip tenant with a long-term lease. It spurred a lengthy bidding war among between the best-known developers in the region and involved sites on both sides of the Sacramento River.
Sutter's current landlord, Legacy Partners, also reportedly waged a serious effort to keep Sutter in the middle three floors of One Capitol Mall. But Nico Coulouras, vice president and regional manager for Legacy, was confident Thursday about filling the space.
'We already have started marketing,' Coulouras said. 'We think this represents one of the best opportunities in the downtown Class-A office market in quite some time.'
Coulouras also confirmed that the eight-story One Capitol Mall building is for sale.
Coulouras said Legacy and Lincoln Property Co. of Washington, D.C., will conduct a competitive bid process for the 201,707-square-foot building next to the Tower Bridge.
No purchase price has been set. But industry sources said the distinctive complex probably would draw bids in the $40 million range.
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