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Market Report

Sacramento Office Market Report

2024 Investment Forecast

Government Presence Bolsters Offices in Central Sacramento,
While Leases are Being Evaluated

Core group of properties performing fairly well. While Sacramento is not immune to the challenges offices are facing nationwide, demand is holding up comparatively well in the most established areas. Vacancy in Sacramento County, which holds 60 percent of the market’s office inventory, ended last year nearly 200 basis points below the metro’s overall level. Only 15 other major metros can claim to have below-market vacancy in their largest office submarkets. The state capital’s more prevalent public sector may be providing some stability, as the largest planned move-ins for this year belong to state agencies. Older or sub-optimal space may nevertheless be relinquished down the line as California’s Department of General Services is reviewing leases in the region. For the coming year, however, the outlook for Class B/C space is positive, as vacancy has been falling in this segment since mid-2022 amid ongoing leasing for smaller floor plans. The near-term horizon is stormier for Class A buildings, particularly those built before 2010, as larger companies looking for space continue to favor more contemporary options.
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