Q1 2024 Sacramento Office Market Report

In early 2024, Sacramento’s commercial real estate market mirrors the national trend of declining demand in office spaces. Despite historically lower vacancy rates compared to national averages, Sacramento has witnessed negative net absorption of -880,000 square feet over the past year, mainly due to reduced space requirements from key private sector tenants like healthcare and financial services.

Within Sacramento’s submarkets, tenant activity reflects a shift towards downsizing and subleasing excess space. Many tenants, even with years left on leases, are opting to reduce footprints, leading to an increase in available sublease space. This surplus, accounting for 10 percent of the market’s availability at 16.1 million square feet, remains favorable compared to other West Coast markets. Despite ongoing construction projects, mainly pre-leased, landlords are struggling to raise rents, resulting in flat or negative rental growth, especially in Sacramento’s high-end inventory.

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