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Market Report

Sacramento Office Market Report

2Q 2021

State Agencies’ Uncertain Plans Cloud Near-Term Outlook; Redevelopment Potential Emerges

Performance hinges on government sector. Sacramento’s office market is in a state of flux after recording a 200-basis-point-plus rise in vacancy last year that ended a span of declining availability. The increase can be partially attributed to a reliance on government agencies as primary office tenants, a factor that will weigh on fundamentals moving forward. California plans to fully reopen in mid-June, which would return private employees to offices, yet a percentage of state workers are expected to continue remote work or adhere to a hybrid schedule. As state agencies review their current footprints under these circumstances, those slated to occupy buildings currently underway or in planning stages may partially vacate or divest of aging buildings, placing upward pressure on vacancy, namely in the downtown area.
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