Redding’s commercial real estate market shows mixed momentum across property types heading into the close of the year. While vacancy rates remain relatively healthy in industrial and office sectors, retail and multifamily segments reflect broader regional economic uncertainties. For investors and tenants evaluating commercial property in Redding, understanding these sector-specific dynamics is key to making informed decisions.
Industrial Sector Maintains Stability in Redding
The industrial market in Redding remains one of the most stable segments, marked by a 3.1% vacancy rate, which is below the five- and ten-year averages. No new industrial space has been delivered or is under construction, indicating a pause in supply growth. Despite this, net absorption reached approximately 44,000 square feet over the past 12 months, reflecting healthy demand for warehouse space in Redding and surrounding submarkets.
Asking rents average $9.30/SF, with flex space commanding higher rates around $12.10/SF. However, rent growth has largely plateaued, with a 0.0% year-over-year change. This is below the national industrial rent growth rate of 1.4%.
Sales activity over the past year involved 23 properties totaling $13.8 million in volume. Market pricing is favorable at $86/SF, significantly below the national average of $157/SF, which could attract value-focused investors.
Office Market Sees Soft Demand, Steady Rents
Office vacancy in Redding stood at 4.0% entering Q4, lower than both the five-year (4.9%) and ten-year (4.8%) averages. However, the market experienced negative net absorption of 17,000 SF, signaling weakening tenant demand for office space in Redding.
With no new office construction underway and an availability rate of 5.4%, the sector shows little risk of oversupply. Asking rents remain stable at $18.90/SF, with 4 & 5 Star buildings commanding up to $30.00/SF. Year-over-year rent growth is up 2.0%, outpacing the national average.
Recent office sales totaled $22.3 million across 35 transactions, with pricing averaging $166/SF. Despite soft leasing activity, the office segment maintains steady investor interest, particularly for quality assets in core submarkets.
Retail Sector Faces Rising Vacancy and Slowed Absorption
Retail is currently the softest segment among commercial property in Redding. Vacancy climbed to 5.9%, up 1.6 percentage points over the year. The market delivered 31,000 SF in the past 12 months but absorbed -130,000 SF, pointing to demand challenges across Redding retail corridors.
Despite this, retail rents rose modestly by 1.7% to $21.00/SF. Mall properties remain strong with a 1.7% vacancy rate and the highest average rent at $32.39/SF. General retail and neighborhood centers showed more pronounced weakness.
Construction activity remains consistent with 49,000 SF underway. Investment activity, however, surged with $136 million in retail property sales, driven by a few high-profile transactions including Mt. Shasta Mall and Sprouts.
Multifamily Market Treads Water
Multifamily fundamentals in Redding reflect a stable yet unremarkable performance. The vacancy rate rose slightly to 3.5%, with no new deliveries and -26 units of net absorption. This aligns closely with long-term averages.
Average rent stands at $1,220/month, well below the national average of $1,760. Year-over-year rent growth of 1.9% slightly outpaces the national rate. However, the lack of new construction or redevelopment suggests limited growth in near-term supply.
Sales volume reached $17.0 million across 14 transactions, averaging $99,000/unit. Cap rates hover near 7.9%, which remains competitive for regional investors.
How to Assess Commercial Property in Redding: 5 Steps
Evaluate Vacancy and Absorption Trends: Low vacancy and positive absorption indicate strength. Industrial remains favorable, while retail requires caution.- Compare Rent Growth and Asking Rates: Sectors with positive rent momentum and stable asking rates often reflect better tenant retention and investor confidence.
- Monitor Construction Pipelines: No industrial, office, or multifamily developments are underway. Retail is the only active construction segment.
- Analyze Sales Volume and Price Per SF/Unit: Lower-than-national-average pricing across sectors offers opportunities for buyers.
- Consider Long-Term Growth Factors: Stable rent trends and vacancy levels suggest that well-located assets in Redding may outperform over time, especially as broader macroeconomic conditions stabilize.
Summary: A Mixed Bag of Opportunity and Caution
Redding commercial real estate is showing a mix of resilience and recalibration. Industrial remains strong with low vacancies and reasonable pricing. Office assets are steady, but demand softness warrants strategic leasing approaches. Retail shows weakness in absorption, but strong investment activity signals optimism among buyers. Multifamily sits at equilibrium with moderate rent growth and limited new supply.
Stakeholders should closely monitor sector trends and submarket performance. Capital Rivers Commercial offers the expertise and market insight to guide your strategy.
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Market data and statistics referenced in this article were compiled from Capital Rivers Commercial’s Q3 2025 Market Reports, licensed from CoStar Group.
