Sacramento Office Market Report
2023 Investment Forecast
Government Agencies Reinforce Commitments;
Investor Pool Augmented by Regionally Low Entry Costs
In-state companies reshuffle while looking to reduce expenses. Over the last two years, Sacramento’s completion total surpassed 2 million square feet, the most active period for supply additions since 2008. However, government-owned and occupied facilities and built-to-suit projects accounted for most of these projects, like the State of California Military headquarters and the Capitol Annex Expansion, subverting a large jump in availability and enabling positive net absorption. Similarly, in 2023, vacancy will inch up by only 40 basis points, marking the second-lowest increase among major California markets, due in part to a moderate pipeline. Sacramento will also maintain the second-lowest mean asking rent in the state through year-end. As companies evaluate their physical footprints and look to reduce expenses, the metro offers an opportunity for companies looking to stay in state, but relocate to a lower-cost metro. One such firm is SPI Energy Company, which last year announced its global headquarters’ move from Santa Clara to an existing property in McClellan Park. Solidigm, an international semiconductor firm, will also enter Sacramento in 2023, with 230,000 square feet of office and lab space.