Can Midtown survive its latest gentrification wave?

There’s a time machine in Midtown, a portal on the corner of L and 20th streets. It’s one of those Midtown insider things. But, anyway, this secret wormhole transports you a few years into the future. Seriously. Step inside, flash-forward to just 2018, and you’ll be surprised: This very street corner, where a keyboardist usually plays quirky compositions on weekend nights and collects money inside a glowing plastic skull, has been transformed. In the future, this muddy, unlandscaped plot is the flashy new entrance to a Whole Foods Market.

Women in spandex toting yoga mats and men in chic, strategically torn jeans—you know what they look like—they’re definitely there in a few years. Look upward and the new Whole Foods mixed-use building stretches nearly seven stories into the Midtown sky. Some 200 new residents call these tony apartments home, and they pay on average more than $2,000 a month for this urban-living experience.

Two thousand a month!? (That sound you hear is old-school Midtowners spitting out their Pabst Blue Ribbon.)

Yet this scene is no fantasy. Whole Foods will likely be the future of L and 20th, and while that’s exciting for developers and property owners, it’s concerning for those who fear that big-paycheck residents and national retail brands will change the tenor of Midtown.

It’s the G-word: gentrification.

Ken Turton, who has his hands in perhaps more Midtown property than any other local real-estate mogul, says gentrification is like porn: You know it when you see it.

“Gentrification is a word you see commonly associated with Midtown, and there’s certainly some validity to that. It comes with the territory,” he said.

Whole Foods in the heart of Midtown is about as X-rated as gentrification gets. It’s happening. So the more pressing question now is: Will this latest wave of gentrification be a good or bad thing for Midtown?

These new young professionals and well-off empty nesters, will they price out old-school Midtowners? As the Sacramento Business Journal recently reported, Midtown rents are up, and in a big way. Two-bedroom-apartment prices jumped 32 percent over 2006. “Market rate” spaces at new loft apartments, like those popping up on 16th Street near Fremont Park, start at around $1,600 a month—for a studio. Yet these units are basically sold out. All this has longstanding Midtowners, 90 percent of whom rent, concerned.

National retail brands also are opening, from BevMo! to Domino’s Pizza to Pieology Pizzeria.

“Some of these giant chains that put businesses like mine out, I think that that is worrisome,” said Susan Rabinovitz, owner of a small independent art gallery and jewelry boutique Little Relics on 21st Street.

Tim Foster—longstanding central-city denizen and editor of the now-defunct Midtown Monthly—thinks that gentrification already has run its course in Midtown. But he’s still worried as the community witnesses the “closing the noose on gentrification.”

“Whole Foods is exactly something that’s a concern to me,” Foster said. He gets why people want a healthy supermarket, a place to get food. “I’m just not sure a place like Midtown can support two organic supermarkets,” referring to the nearby locally owned Sacramento Natural Foods Co-op, which is opening a new store near R Street soon.

Gentrification is also cultural. You see this in the Bay Area, where white tech employees boot Hispanic kids off of soccer fields in San Francisco’s Mission District, and hipsters overtake formerly black neighborhoods of downtown Oakland. In Sacramento, gentrification is less about displacing minority groups. Yet it remains disconcerting.

To that end, the fear here in Sacramento is that the newest gentrification will be some form of suburban, McMansion-inspired entitlement making its urban-core homecoming after decades of white flight. Will Midtown become the new “Roseville West”—complete with sexy-suburban chains like Anthropologie and generously coffered denizens buying $800 toasters?

Is this the end of Midtown as we know it?

Midtown year 2014 has been a metamorphosis nearly 50 years in the making.

Local historian and Midtown resident William Burg, who’s written multiple books about the central city and Midtown’s genesis, says people were concerned about the grid and gentrification as far back as the Carter administration. “It’s a word that they were using in the ’70s, too,” he explained. “And not that it might happen some day, but that it was happening.”

But Burg’s thesis is that Midtown’s long, slow gentrification has in fact been anything but. Tens of thousands of grid dwellers left in the 1950s and ’60s. People slowly—slooowly—moved back. “What we’ve seen instead is economic integration,” he said.

This means that, instead of prices and rents going up and poorer residents getting the boot, Midtown has gently ushered in modernized economic engines without disenfranchising its pioneers.

Fellow Midtowner Julie Murphy, who moved to the community in the late 1980s and now heads the Marshall School/New Era Park neighborhood group, is one of the neighborhood’s early adopters. She says she’s witnessed this slow, crawling economic transformation firsthand. “We have a lot more people down here on the weekends now. It used to be on Saturday afternoon, you saw no one on the sidewalk,” she remembered. “There was a time when Ernesto’s was the only place” to eat out.

That’s an embellishment, of course. But one can’t under-emphasize the Midtown doldrums prior to the turn of the century.

And Midtown remained a sleepy grid into the 21st century. Local developer Sotiris Kolokotronis tells a story of a night out in 2002, when the Kings were in the playoffs. After a game one night, he was hanging with stars Vlade Divac and Peja Stojakovic. These guys were on top of the NBA world back then, but all they wanted to do was grab a simple bite and enjoy a drink. It was around 10:30 p.m. They went to Harlow’s. Closed. They went upstairs to the bar above the club. A waitress came up, said it was last call. This was at 10:45.

“We forget that, 13 years ago, you could hardly find a single place open at 11 o’clock,” Kolokotronis reminded.

Gallery owner Rabinovitz bought her Midtown home in 1998 and can attest to those sleepy, dark Midtown days.

“I’ve lived here for a long time. I bought my house back when Midtown was not so desirable a place to live,” she said. There was crime and not enough residents to support schools and grocery stores.

But people stuck with the neighborhood, she says. “Midtown seemed to wear on them, like a comfortable coat.”

Midtown started to catch on and expand its reach in the 1990s. “It’s the one single area in the entire Sacramento region that best embraces diversity,” said Turton. “No matter who you are, you can go and be accepted.”

In a cowtown region, Midtown’s open arms were a beacon of possibility. Cowboys rubbed elbows with lawyers and hipsters at clubs like Harlow’s. Gays and straights danced all night in the blossoming Lavender Heights clubs on K Street. Young punk kids and live-music fans fostered a scene in loft attics and bars.

All the while, developers began taking risks, building new housing, offices and retail destinations. CADA surgically eliminated a lot of the transient motel blight along 15th and 16th streets, a pivotal move, and built the Capitol Area East End Complex of state offices. Kolokotronis erected the Fremont Mews housing near P Street, and later the 1800 block apartments and lofts.

A gentrification amuse-bouche was served.

There are a few ways to gentrify a neighborhood, and both have impacted Midtown this century.

“There’s the improvement and modernization of a neighborhood, where you push out the lower demographic, and the organic culture that doesn’t have the money to remain in the area leaves,” Turton explained. This is perhaps a threat to Midtown now, but hasn’t quite taken hold yet.

“But the other way is to homogenize the area through national brand representation,” or chain stores like P.F. Chang’s or Chipotle, which has also started to impact Midtown as well.

There’s also a third way, according to UC Davis professor Michael Rios, who also lives in Sacramento. “It’s also about shifting cultural values, about taste, about aesthetics, about food,” Rios said. “It all creates this bundle that is called gentrification.”

The Midtown cultural gentrification has definitely outpaced that of its topography.

Brian Holloway is a land-use and urban-planning consultant and former board president at the Midtown Business Association. He says the unique “artsy, small business and independent businesses that you find in Midtown is important.”

These stores flourished in the past 15 years and are essential to the neighborhood’s identity.

“Midtowners love supporting Midtowners. They love that local vibe. They love the small family shop,” Rabinovitz explained of the attraction. “They like that neighborhood feel, and they are buying into that.”

There’s a challenge in keeping this indie vibe alive, though, as land-use attorney and Midtowner John Hodgson pointed out. “One tougher issue is that, as things get desirable, rents go up.” That’s what’s happened in the past decade: a dramatic, nearly recession-proof surge in housing demand. And so, property owners keep raising the rent.

Hodgson and others insist that old-school Midtowners shouldn’t worry about rising costs, or being priced out. He plans to release a study soon, and says one piece of data shows that 70 percent of Midtown’s housing offerings are considered affordable or low-income, even though they are not subsidized, Hodgson explained.

If that’s true, then perhaps the larger threat might be less about gentrification’s impact on one’s wallet, but instead its potential as a cultural virus.

“You can damn well bet that if In N Out Burger could secure a corner in Midtown, they would be here,” Turton said. “But they are not going to get here—I doubt—because I don’t think that corner exists.”

But they want to be here, because Midtown is the cool place. And, as Holloway put it, “Anything that gets too popular usually ends up getting ruined.”

Midtown is a business district, a place where small-business dreamers want to open shop. “But the challenge to me is we have some of the lowest vacancy rates in Midtown,” explained Midtown Business Association head Emily Baime Michaels. “You can’t get into grid. You need big money and a lot of know-how to get into grid.”

Enter corporate America.

Midtown property owners for years have rebuffed national brands such as 7-Eleven (which is dying to be in Midtown, according to sources). But, on the heels of a recession that saw tempered growth, some landlords are itching to cash in. They want to raise rents, they want to sign up blue-chip and less volatile national brand tenants. And these brands are hunting Midtown now.

Trader Joe’s was one of those big chains in the mix. That is, until Whole Foods submitted plans for a mixed-use market and residential six-story building on L and 20th streets. “Apparently we’ve hit some kind of ’sweet spot’ with chains,” says neighborhood leader Murphy.

Will Midtown become the next Roseville? “I wouldn’t go that far,” she answered. “But we certainly could become Fair Oaks Boulevard.”

Burg agrees that things are changing, but he’s not afraid of urban suburbanization. “I think the opposite is happening. I think Roseville is going to become more Midtown in the long term,” he said, explaining that suburbanites are looking for more authentic experiences, such as the new housing and amenities in old Roseville and Historic Folsom, which boast noncorporate, Midtown-esque restaurants and bars.

Holloway says avoiding the Roseville-ification of Midtown is about “keeping a smart balance.” But he’s also not that worried. “I’m not seeing a [Gaslamp Quarter],” he said of the popular downtown San Diego nightlife destination that brims with big national restaurants and bars. “I don’t see that.”

And, as Baime Michaels reminds, occupancy is super high in Midtown, and that’s a major obstacle to corporate businesses getting what they want. “I think that’s a bigger issue than gentrification,” she argued. “We just don’t have space.”

Midtown also has a track record of rejecting corporate insurrection. A case in point: The now shuttered California Pizza Kitchen on L Street.

“I think some people fear homogenization, but that’s a less of a fear for me, based on how Midtown’s responded to homogenization in the past,” said Clay Nutting, who puts on events in Midtown and co-owns LowBrau.

That’s a relief for locals who don’t want a McDonald’s in their backyard. But the threat to Midtown’s culture comes not only in corporate form. It can also be human.

UC Davis’ Rios says “gentrification is used as a big banner” to project negativity on something that actually has very little to do with gentrification. For instance, if Midtown hipsters don’t like Roseville bros moving into the grid, they blame gentrification.

“Is it really gentrification people are worried about? Or is it ’I don’t want to see those type of people anymore’?” Rios asked.

“I think you’ve got a lot of class competition, culturally, here,” Rios said.

The Catch-22 is that most experts say Midtown needs more people living here to sustain its small businesses. That’s right: Despite increasing rents and the potential to disenfranchise old-timers, many agree that the only way to preserve Midtown’s indie vibe is to, conversely, bring in even more of these newer classes of residents.

Sacramentans want to live in Midtown. The trend, according to city planners, is that people want to return from suburbia to the central city. But, according to online real-estate database Zillow, the average home value in the Midtown/Winn Park neighborhoods south of J Street is $390,000, up $110,000 in the past four years. That’s a lot of money. On top of this, there's the already established uptick in rental prices. And, on top of that, there’s really not that many new housing options.

But developers, business owners and even guys like Rios want more people on the grid. They say the Midtown economy needs more customers, that it’s doing OK, but won’t sustain unless thousands more converge on the central city.

“What we need is to create a little more critical mass,” said Nutting. “We need that pie to grow, we need more people coming into our area. It’s more of a density question.”

That density is a conflicting issue for many Midtowners. They at once rebuff the idea of adding another 25,000 residents on the central city grid, because they embrace Midtown’s quaintness. But they also love the restaurants and local shops. And business owners need customers—just look at Le Petit Paris, an adored cafe on 19th Street that boasted loyal customers, but not enough; it closed a few years back. Ditto for so many music venues over the years, such as the soon-to-be shuttered Witch Room, also on 19th Street: If there was a denser Midtown, there in theory would be more live-music fans.

So maybe more people—despite the gentrification impacts—isn’t a terrible thing. “I don’t think density is a four-letter word. If it’s done well, it really can enhance a neighborhood,” UC Davis’ Rios argued.

“I personally think you’ve got to have density in the grid,” Foster said. “But, obviously, I like Midtown the way it was. … I will also be really sad to see the good ol’ $600 apartment leave, if those aren’t gone [already].”

How does Midtown get more people on the grid, people who have money to spend, while also preserving the low-income and indie spirit endemic to the community?

“There’s not a cookbook on how to do it,” said Kolokotronis. “There are different ways.”

One crucial ingredient, he says, is to have a champion for market-rate housing. Someone who puts density on the front burner, like what then-Mayor Jerry Brown did in Oakland, or what Mayor Pete Wilson did in San Diego. “You can’t substitute good political leadership,” Kolokotronis said. “More housing will require someone to champion it in a big way for it to happen. But right now, what we are doing is very, very small-scale.”

Indeed, the hundreds of new housing units in Midtown by no means match what the suburbs have seen in the past 15 years. But recent developments, such as 16 Powerhouse and Legado de Ravel along 16th Street, have nearly sold out all their units.

Rios argued that we don’t need a champion for more housing; we just need smarter urban planning. “We’re still stuck in a development mindset of ’the developers might go someplace else’” and Midtown will just have to take what we can get, he explained.

But Rios insists that places like Sacramento don’t need to cater to developers any longer. Midtown has what he calls “use value.” It has tangible assets. It’s no longer in competition with Folsom and Elk Grove and the suburban strongholds. Midtown sells itself.

“And why would we want to compete against Roseville? We don’t want to be those places. And that’s not a critique against Roseville. That’s fine. But let’s just be who we are.”

And, at the end of the day, maybe it’s as simple as Midtowners believing in their community. Not buying coffee at Starbucks. Not ordering holiday gifts at Amazon.com. Shopping local, living local.

“If we want to have our small businesses here, we have to spend money with them and support them,” reminded Baime Michaels. She says this is Midtown’s No. 1 threat, greater than gentrification: “The impact of spending dollars locally is the most important thing that we can do.”

It’s ironic: Midtowners spend so much time blaming outsiders, the other, for how the city is changing. But perhaps, at the end of the day, it’s on them to save the things they love about Midtown.

“Oftentimes, the people who are so against gentrification are complicit in creating it in the first place,” Rios said. “That’s just a contradiction of urban living.”