Sacramento Office Market Report
Sacramento’s office market continued showing signs of stabilization in the first quarter, with the total vacancy rate increasing just 10 basis points over the quarter to 16.0%, an improvement from the end of last year when vacancy was 16.5%. Availability ticked up 30 basis points to 19.9%, a drop of 10 basis points from one year ago. Net absorption was negative 314,624 square feet, following two consecutive quarters of positive absorption. Leasing activity in the first quarter slowed down to a level not seen since the fourth quarter 2023 as occupiers appear to be waiting on the sidelines as they wait out recent fluctuations in the overall market. We anticipate seeing leasing activity pick up once the markets settle down.
Sacramento Industrial Market Report
The industrial vacancy rate stood at 5.4% at the end of the first quarter, up 10 basis points over the quarter and 50 basis points from one year ago. The increase in vacancy over the last three years can be mainly attributed to the delivery of new construction, and that pipeline has slowed considerably. Absorption was 550,764 square feet in the first quarter. Class A warehouse absorption was negative 218,758 square feet. The amount of sublease space on the market has increased by 37% over the past year, and it now totals just under 1.7 million square feet. Sublease space is no longer concentrated in 2-3 submarkets. The construction pipeline dropped off in in recent years given the weakness in market fundamentals as well as the lending environment.