Marcus & Millichap

Sacramento Industrial Investment Forecast

2019 Outlook

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Vacancy Reaches Historical Low; Investors Throughout California Attracted to Listings

Expanding populace warrants industrial expansion. Sacramento witnessed the net migration of 55,000 individuals over the past three years, largely driven by job creation and the metro’s regionally low cost of living. Resident growth generated an increased need for consumer products, heightening demand for industrial space among companies that store and distribute these goods. Those combined market conditions equated to the absorption of 10 million square feet over the three-year span, lowering metro vacancy more than 500 basis points to the low-4 percent band. Leasing activity was widespread as more than 2 million square feet was filled in each Sacramento, Yolo and Placer counties. Amid the lack of available space, more than 1 million square feet will be absorbed in 2019, an indication that the speculative supply slated for delivery will be occupied and users with expiring contracts renew their leases. As vacancy reaches 4 percent this year, the high cost of construction will continue to limit new supply growth.

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