Marketbeat Industrial Snapshot, Sacramento – Q1 2015

Marketbeat Industrial Snapshot, Sacramento – Q1 2015

Sacramento Industrial Snaphshot 1 quarter 2015

By Richard Lin
Research Analyst

The employment outlook for Sacramento continues to be optimistic. According to the latest numbers from the California EDD, the unemployment rate in the Sacramento MSA stands at 6.3%, down 180 basis points (bps) from a year ago and 50 basis points bps below the California rate of 6.8%.

Total non-farm payroll increased by 26,000 jobs, or 3.0%. The manufacturing industry added 1,200 jobs, a 3.0% year-over-year increase, while construction added 2,600 jobs, a 6.2% increase.

Overall vacancy at the end of Q1 was 10.9%, down 160 bps from Q1 2014. Warehouse product closed the quarter with an overall vacancy of 10.9%, manufacturing at 8.0% overall, and flex buildings at 18.4% overall. Direct and overall rental rates were $0.38 per square foot (psf) at the end of the quarter, up marginally from $0.37 psf in Q1 2014.

Statistics C&W Sacramento Commercial Real Estate


Leasing totaled 1,800,934 square feet (sf), very much on par with the 1,796,821 sf of activity in Q1 2014. Warehouse leases accounted for a staggering 94.6% (1,703.729 sf) of all industrial deals.

Strong demand for warehouse/distribution space in the market has not gone unnoticed by developers. Current construction activity totals 1,375,188 sf in the Sacramento market. Three build-to-suit / owner occupied projects totaling 473,000 sf are under construction, a manufacturing facility for Shinmei USA for 28,000 sf in the Southport Business Park, El & El Wood Products for 220,000 sf in Galt (Elk Grove Submarket) which is a distribution and manufacturing facility, and Bogle Vineyards which will occupy 155,725 sf of a 225,000 square foot building. The remaining projects are all speculative, demonstrating developer and investor confidence in the warehouse market moving forward.

A recent leasing success was the 385,077 sf transaction in the old Campbell Soup plant by Macy’s which will invest $10 million to outfit the facility for e-commerce fulfillment with expected hiring of 350 new employees.

Finally, with the flood moratorium being lifted in the Natomas basin in the next month, the 1,800 acre Metro Air Park may see development activity.


Statistics page two Q1 Sacramento Cushman & Wakefield


Investors, developers and tenants are all contributing to what is once again becoming a stabilized industrial market in Sacramento. Look for continued moderate rental growth in Class A product and good absorption to spur further reductions in vacancy.

For more information, contact: Richard Lin, Research Analyst 415.658.3664

The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals.

2018-05-08T14:05:31+00:00 April 1st, 2015|Featured, In the News|