Sacramento Industrial Market Report

Construction slowdown eases supply pressure amid softening demand. Sacramento is expected to record negative net absorption in 2025 — the first time since 2011 — as the post-pandemic e-commerce boom fades but excess supply persists. Demand remains tight for spaces under 50,000 square feet, where speculative development is limited and vacancy held near 4 percent as of June. In contrast, larger properties over 200,000 square feet experienced vacancy of about 10 percent. Moreover, the recent construction wave has pushed vacancy in properties delivered since 2024 to nearly 50 percent. That said, supply-side pressure is beginning to ease. Nearly three-quarters of this year’s already reduced pipeline is tied to Amazon’s new distribution center in Rancho Cordova, signaling a sharp drop in speculative builds. As a metro supported by strong job gains and ongoing in-migration, Sacramento maintains a generally positive long-term outlook, especially as the market gradually absorbs the surplus supply.