Sacramento Office Market Report
Private Sector’s Recent Performance Partially Eases Concerns Surrounding State’s Future Space Needs
Government agencies’ movement clouds near-term outlook. Prior to the health crisis, office vacancy in Sacramento was at a more than 10-year low. Since, the volume of available space has increased by more than 3 million square feet. Nevertheless, metro fundamentals are outperforming the national as a whole. Entering the second half of 2021, vacancy was 170 basis points below the U.S. average and the local mean asking rent was near a record level. Still, uncertainty looms. Government agencies, which are the keystone of the local tenant base, added just 200 positions in the first eight months of this year. Additionally, state agencies’ future office needs are hazy. Six government buildings totaling 3 million square feet are slated for delivery by the end of 2022. If agencies that occupy these properties no longer require their current floor plans an influx of space could re-enter the market.