Sacramento Retail Investment Forecast
Sacramento's Retail Sector Stands Above Many California Metros;
Affluent Submarkets Warrant Investment
Population gains and diversified hiring fortify retailers' confidence. Sacramento's retail sector has proved to be more insulated from the impacts of the health crisis than other California markets. Entering this year, metro vacancy was just 10 basis points above the year-end 2019 mark, whereas availability in the state's seven other major markets was on average 100 basis points higher than pre-pandemic readings. Sacramento's strong rate of household formation last year and projections for similar near-term growth have motivated a collection of necessity-based retailers and gyms to recently enter or expand in local submarkets off Interstate 80 experiencing population growth. Expectations for steady job creation in both the public and private sectors this year have the potential to spark additional vendor growth, with most prospective tenants assessing existing floorplans amid a dearth of construction activity. Despite the potential effects of COVID-19 variants and inflation on retailers and consumer spending, positive demographic demand drivers will reduce vacancy to a three-year low and support positive rent growth in 2022.