Sacramento Office Market Report

Demand for offices buoyed by government sector. Sacramento appears to be on the road to recovery, following two years of persistent negative net absorption and rising vacancy. The final three months of 2021 were a historic span for the metro, as tenants absorbed a net of 930,000 square feet of space, the highest quarterly total on record. While momentum stalled in the first quarter of this year, the effects of the omicron variant were just a temporary blip in the recovery. State and local government move-ins are driving a demand rebound, with agencies occupying more than 1 million square feet over the past 12 months via recently completed projects and select new leases. The metro's dependence on its government sector, however, is not without caveats. If certain departments adopt hybrid or remote work models over the long term, the potential for an increase in available sublease space exists.