Q4 2023: Sacramento Office Market Report

Sacramento’s 2023 office market faces a national demand slump, driven by tenant downsizing in healthcare and finance. With vacancies at 11.1 percent, which is well below the national average, the rate is expected to sharply increase as the market confronts a 35 percent to 40 percent decrease in office space utilization. Further, downtown Sacramento’s foot traffic remains 40 percent below pre-pandemic levels.

Subleasing is prevalent in the market, constituting 10 percent of available space (16.1 million square feet). Capital markets activity is near standstill. As a result, office sales volume is anticipating the lowest annual figure in over a decade, with a 30 percent loss in value for vacant properties. Leasing activity, which has been down in both the number of deals and the average deal size, is expected to remain weak in the near-term.