|Proposed Vanir Tower at 601 J Street - Sacramento, CA|
As of yesterday, the Vanir Tower project has not submitted any revised plans to the city after withdrawing them shortly after November of last year. A city planner has labeled the project as "inactive" because they haven’t worked on the project for several months. In my opinion, this is a big indicator that despite being located across the street from new Golden 1 Center, the downtown office market vacancy rate is still to high to absorb a project of this size. Colliers-Sacramento predicts that Class A asking rates will increase 4% year-over-year due to activity surrounding the Golden 1 Center. As of the end of the third quarter, there is currently 813,617 SF vacant class A office space in downtown and another 586,408 SF vacant class B office space open. Combined, that’s about the size of 3 ½ 25 story towers vacant in downtown. Even with all the improvements the market has shown from several years ago, actual rents are not currently at a level high enough to justify new construction.