Sacramento Office Market Report
Sacramento’s office market continued showing signs of stabilization in the fourth quarter, with the total vacancy rate dropping 50 basis points over the quarter to 16.0%, an improvement from the end of last year when vacancy was 16.4%. Net absorption was positive 292,596 square feet, marking the first time since the first half of 2020 in which absorption was net positive for two consecutive quarters. Net absorption for the year was positive for the first time since 2020, totaling 387,813 square feet. Leasing activity in 2024 surpassed 2023 leasing levels, and it was nearly on par with 2021 and 2022 leasing. However leasing levels remain nearly 25% lower than the 15-year annual leasing average and nearly 34% lower than the 10-year pre-pandemic leasing average. While there is still quite a gap to full recovery, the market trended in a better direction in 2024.
Sacramento Industrial Market Report
The industrial vacancy rate stood at 5.3% at the end of 2024, up 150 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. Annual absorption was 326,136 square feet for the year. The amount of sublease space on the market has increased by 52% over the course of 2024, and now totals over 1.5 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.