Sacramento Office Market Report
Sacramento’s office market continued showing signs of stabilization in the third quarter. The total vacancy rate increased by just 20 basis points over last quarter’s rate of 15.7% landing at 15.9% but still remained well below the 20-year average and has remained stable for the previous four quarters. While availability increased by 20 basis points to 19.4%, it remained 130 basis points lower year-over-year. Leasing activity eased modestly in the third quarter as many occupiers paused to reassess needs amid recent market shifts. As the return-to-office trend continues we anticipate leasing momentum to see an upturn in future quarters. After showing signs of stabilization in the second half of 2024, Sacramento’s 2025 office market has seen fluctuations but landed with net positive absorption of 382,834 SF year-to-date.
Download Sacramento Office Market Report 3Q25Sacramento Industrial Market Report
The industrial vacancy rate stood at 5.4% at the end of the second quarter, down 50 basis points over the first quarter and the same as one year ago. The slowing construction pipeline has allowed the Class A market to slowly drive down vacancy, though the contracted lease rates were still lower than developers anticipated. Absorption was 718,329 square feet in the second quarter. Class A warehouse absorption was 857,599 square feet. In the face of much market uncertainty, the second quarter leasing totals were better than expected. The amount of sublease space on the market has increased by 43% over the past year, and it now totals just under 2.4 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.