Q4 2023: Sacramento Industrial Market Report

Sacramento’s industrial real estate sector faces slowing demand, with leasing activity dropping to 6.9 million square feet in 2023. Strong construction activity continues in the market, adding 2.5 million square feet. Rents appreciated modestly at 4.8 percent, reaching $11.07 per square foot. Rising interest rates, a challenging debt market, and economic headwinds have led to tepid sales activity. As result, realized sale prices have trended lower.

Despite strong year-end demand of 1.7 million square feet absorption, leasing moderation is noted, especially for larger spaces, causing some to linger on the market. The vacancy rate currently sits at 5.5 percent and is expected to increase due to light user demand amid an overall economic slowdown. Sacramento’s appeal lies in its large population and workforce, with comparable lease rates and development opportunities.