Q2 2023 Sacramento Office Market Report

The Sacramento office vacancy rate at 11.1 percent is above its average of 9.5 percent with net absorption rate falling to -720,000 square feet with most of this figure coming from local companies downsizing. In addition, governmental agencies, which are a major component of the Sacramento region, have prolonged “work from home” policies with the State of California continuing to shrink its office footprint. Centene, one of the larger Tenants in the region, recently put over 500,000 square feet of Sublease space on the market.

Sacramento is home to a growing healthcare sector, leveraging two public universities for talent and research to grow the local biotech sector. The tech industry has mostly stayed closer to the coast, which has protected Sacramento from the sharp employment declines experienced in San Francisco and San Jose. The benefit is that smaller companies have called Sacramento home, creating a buffer from dramatic swings in increasing vacancies. Demand fundamentals are still recovering from shifting work policies.