Sacramento – Office Market Report – Q2 2022

Capital Rivers Commercial -Sacramento Office Market Report Q2 2021

Market Summary.

Prior to the pandemic, employment growth came primarily from defensive labor sectors, specifically government, education, and healthcare. While that helped to limit the number of layoffs during the pandemic, these typically grow slowly. Nevertheless, they are driving market activity. One of the most significant deals of 2022 was a 30,000 SF expansion by Thermogenesis in Rancho Cordova. The deal represents more than a 100% increase in its current footprint, one of a number of local firms looking to capitalize on a softer real estate market for growth. The largest lease of 2021 was also an expansion of an existing firm, the 97,000 SF lease signed by the Penumbra at 620 Roseville Parkway in Roseville/Rocklin.

Key Takeaways.

  • Demand for office space is beginning to return, as leasing activity totaled 3.7 million SF in 2021, increasing by 24% compared to 2020 figures but still off the prepandemic pace.
  • Initial pricing shock at the start of the pandemic have leveled off with annual rent growth of 1.8%, very close to the national figure of 1.1%. High-quality assets have seen the biggest decreases, as 4 & 5 Star properties have seen rates grow by only 0.4% in the past 12 months.
  • Sacramento has seen very little large-scale office construction over the past 10 years. Most of the construction that is taking place is build-to-suit with various state government agencies slated to occupy the majority of the 1.9 million SF under construction.

The numbers.

Sacramento Office Key Indicators

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