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September 29, 2022
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ETC... ETC... NEWS
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E-Commerce and Logistics Companies Fuel a Recovery in the Sacramento Industrial Market

12/29/21

Sacramento Industrial CRE Market Update 4th Qtr 2021
This report was provided by real estate services firm Kidder Mathews

Market Drivers

Direct vacancy rates decreased 43.3% year-over-year (YOY) from 6.0% in 2020 to 3.4% in 2021. The total availability rate had a similar drop of 22.2% YOY over the same timeframe to 5.4%.
Asking lease rates for all industrial property types gained 17.0% YOY to $0.69/SF NNN for 2021. Asking lease rates for warehouses and flex properties were at $0.65/SF NNN and $0.94/SF NNN respectively.
Direct net absorption was at 1.5 msf for 4Q 2021. Direct net absorption for all of 2021 stood at 8 msf.
Leasing activity dropped 52.9% YOY from 2.7 msf in 4Q 2020 to 1.2 msf in 4Q 2021. Compared to 2020, leasing activity for 2021 dropped 9.6% YOY to 9.5 msf, nearly double 2019s leasing activity of 5.5 msf.
Sales volume leapt 53.0% YOY from 4.6 msf in 2020 to 7 msf in 2021.

Economic Overview

Manufacturing jobs for the Sacramento Roseville Arden-Arcade MSA gained 7.7% YOY to 37,700 jobs. Transportation and warehousing jobs also rose 1.6% YOY to 39,100 jobs.
Unemployment in California stood at 5.4% for November 2021. During this period, the Sacramento Roseville Arden Arcade MSA reported a 4.7% unemployment rate.

Near-Term Outlook

The Sacramento industrial market has largely recovered from COVID-induced slowdowns during 2021. Compared to 2019, sales and leasing activity has roughly doubled. The direct vacancy rate fell 25% from 4.6% in 2019 to 3.4% in 2021. E-commerce and wholesale distribution companies help drive direct net absorption to 8 msf. These factors signal a tightening supply and help drive asking lease rates and sale prices upwards. There are currently 4.1 msf of industrial properties under construction to help satisfy industrial needs.
Source: CoStar; State of California Employment Development Department

Market Highlights

Asking lease rates for all industrial properties were $0.69/SF NNN.
Direct vacancy rates stood at 3.4%.
Direct net absorption for 2021 was 8 msf.

This report was prepared by Kidder Mathews Director of Research Gary Baragona





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