Colliers Sacramento Office Snapshot: Q3 2025

We have now seen two consecutive quarters of declining vacancy and positive absorption in the Sacramento office market. Colliers International is reporting that available supply is shrinking and downtown’s Class A vacancy rate has been held below 20% throughout 2025. This report by Colliers also discusses the office market recalibration in downtown, including the disposal of the 25-story state office building at 450 N Street that has been defective for decades with the state spending approximately $60 to $100 million trying to repair the never ending problems. Also being considered is turning three state properties along Capitol Mall into mixed-use Sacramento State event spaces.

BOE Building Waiting For Renovation

Is the Board of Equalization (BOE) building at 450 N Street ever going to be renovated? It’s actually on a state of California list to be repaired but it’s only ranked as 12^th among those with the greatest need. The 24-story office was completed in 1993, but since 1994 the building has experienced maintenance problems including water intrusion, visible mold, corrosion in drainage pipes, and spandrel glass panels falling from the building.

Capitol Square - 450 N Street, Sacramento, CA 95814

The original cost of the building was $79 million, today the cost to renovate are estimated to be over $100 million. As of 2015, General Services have already spent $70 million in repairs.

https://pdfsecret.com/download/board-of-equalization-facilities-state-of-california_59f82bd8d64ab28ae24d662e_pdf

https://lao.ca.gov/Publications/Report/3516

https://capitolweekly.net/boe-headquarters-falling-plaster-shattered-glass-even-bats/

 https://www.kcra.com/article/state-workers-want-new-structure-to-replace-boe-building/6414491#

Capitol Square Lemon

Capitol Square - 450 N Street, Sacramento, CA 95814

If there was ever a reason to demolish a high-rise in downtown, Capitol Square can certainly make the case. After being constructed only 21 years ago, $70 million has already been spent to repair all its ongoing mold growth, falling windows and other serious problems that have plagued the building. This 24 story tower was originally built by CalPERS in 1993 for $79 million, so spending nearly that much to fix its ongoing problems should be recognized as a reason to tear it down.  

The state bought Capitol Square from CalPERS who originally financed the high-rise in 2006 with the Board of Equalization occupying the entire tower with around 2000 employees. The sick building started showing signs of trouble back in 1998 with water infiltration. Costs to make repairs are now over $70 million and an additional $159 million could be spent over the next few years.

Currently moving through the State legislature, Assembly Bill 1656 would authorize the state to move forward with a site selection for the new headquarters, but the appropriation would need to be revisited by the Legislature and would not be made until the 2015-16 or 2016-17 fiscal year. In addition, it looks like nothing will change for Board of Equalization for at least 4 or 5 years while the scope of work is developed and construction documents, with repairs to the wastewater and decorative glass expected to take about three years to complete.

Whether or not the state decides to relocate the employees, it still must pay for the property’s bond debt service through 2021. The cost of that debt is currently $77 million.

Just last week a $50 million claim hit BOE over mold-related illness. On a good note... oh wait, there are none.