Sacramento Office Investment Forecast
Private Sector Aids Outlook Amid Agency Ambiguity;
Migration Trends Fuel Medical Office Investment
Metro projected to record positive absorption for the first time in three years. The volume of vacant office space in Sacramento has grown by roughly 4.5 million square feet since the onset of the health crisis. Nevertheless, fundamentals are outperforming the national market. Entering 2022, vacancy was nearly 100 basis points below the U.S. average, with the local mean asking rent holding at a record high. Other reasons for optimism are emerging as government agencies, which are the keystone of the market's tenant base, added nearly 5,000 positions last year, bringing headcounts in the sector to within 1 percent of the pre-pandemic mark. The private sector has also shown signs of improvement. For example, Penumbra recently committed to nearly 100,000 square feet of office and lab space in Roseville, with General Dynamics, Progressive Insurance and Child Action, Inc. inking midsize leases in the suburbs. While uncertainty looms over state agencies' future office plans, government tenants continued to make on-time rent payments last year. This and private sector growth will lift demand for recently vacated spaces at a time when the metro lacks speculative development.