Sacramento Retail Market Report

Headwinds emerge to start 2023. Sacramento’s retail sector is off to a lackluster start. The 247,000 square feet of negative net absorption from January through March was the metro’s weakest quarter since 2009. This produced a vacancy rate that topped the other seven major in-state markets’ recordings by 20 to 250 basis points. Big-box moveouts are plaguing fundamentals, with sizable plots of space saturating the market. Bed Bath & Beyond closed several local sites recently, including spots in Elk Grove, Folsom and Natomas. Similarly, Tuesday Morning shuttered three Sacramento-area stores in a nationwide scale-back early this year, putting additional square footage on the market. While the aforementioned retailers backed out of space across the country — not just Sacramento — the metro’s relatively higher vacancy rate provides tenants with more options. Larger plots may stay on the market for longer, although experiential and discount retailers have been absorbing some of these sites.