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Market Report

Sacramento Office Market Report

2Q 2023

Work Habits Result in Few Additions and Proposed Conversions;
Class B/C Performance Improves

Stabilizing factors on the horizon. Amid the long-term adoption of hybrid and remote work schedules, some office tenants are re-evaluating their space needs, which continues to weigh on availability this year. By the end of 2023, vacancy will have risen by at least 100 basis points for the third time in four years. Consistent pullbacks in office demand contribute to Sacramento welcoming its smallest delivery slate since 2018 this year. Office-to-multifamily conversions may also restrict inventory growth. A state-funded affordable housing redevelopment of EDD’s headquarters headlines projects that would reduce some local obsolete stock. Combined with slowed construction, this may stabilize fundamentals down the road. The fully leased 1.3 million-square-foot Richards Boulevard complex opening next year also adds to the list of state-sponsored projects in Sacramento. 
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