Q3 2022 Sacramento Market Report
The unemployment rate in the Sacramento--Roseville--Arden-Arcade MSA was 3.5 percent in August 2022, up from a revised 3.3 percent in July 2022, and below the year-ago estimate of 6.3 percent. This compares with an unadjusted unemployment rate of 4.1 percent for California and 3.8 percent for the nation during the same period. The unemployment rate was 3.0 percent in El Dorado County, 2.8 percent in Placer County, 3.8 percent in Sacramento County, and 3.4 percent in Yolo County.
Downtown Sacramento largest office submarket has seen vacancy rise from a low of 8.8% prior to pandemic which is up slightly to 9.1%. The main reason for increase in vacancy is many companies shrinking their footprints and either allowing work from home or reduction in workforce. Over the past 12 months rental rates have been relatively flat with rents in 4 and 5 star properties have increased slightly by 1.3%, and 1 star, 2 star and 3 star rents increasing by 2.3%. A recent CBD transaction was HCL who leased 21,000 square feet on 21st floor of 621 Capitol Mall and plans to make it’s new home in Downtown Sacramento bringing more then 650 jobs to the Sacramento region. Looking ahead office vacancy is expected to increase as leases expire, and companies downsize including the State of California who is the largest Tenant in the region and expected to give up a significant amount of office space depending on their “work from home” strategy. The Sacramento region’s industrial market continues to be strong with a very low vacancy rate of 3.9% and rent growth of 8.7% over the prior 12 months. Average rents have risen to $.88 psf/mo. NNN ($10.53 psf/annually) with upward pressure on industrial rents. "