Colliers Sacramento Office Snapshot: Q4 2024

Facing record vacancy, Sacramento’s office market is now just below a record high. Also reported in Colliers International Sacramento office market report, the State of California is set to vacate a sizable amount of space next quarter and its shedding of 1.1 million square feet of leased space. Occupancy losses are outpacing new signed leases with the Department of Corrections moving out of 283,504 square feet at 151 S Street in Q1 2025 as well as others if you read the report.

After the highest sales activity in Q1 2020, both office volume and sales have been falling since then. Some of the available office space will be converting to alternative uses, the former historic Capitol Bank Building built in 1915 at 700 J Street was recently sold to Hume Development for $11.06 million and they have plans are to convert the 7-story building in to 107 guestrooms. Colliers forecast for 2025 is renewed optimism, with most large move out finished by Q2 2025, availability could stabilize.

Macy’s To Close In Downtown

Macy's Department Store at 414 K Street Sacramento, CA

Sacramento’s Macy’s department store downtown has been named one of 66 planed locations to close in the next three years. The K Street location was originally built in 1962 for $13 million and has been the anchor for the former mall and shopping area. CBS News Sacramento says there is significance interest in the location. The Greater Sacramento Economic Councils Berry Broome says there is a need for support from the state about economic development and policy infrastructure. The Citrus Heights Sunrise Mall Macy’s will also close as an underperforming store.

New Sacramento Republic’s Stadium

Today, the 12^th of November the Sacramento City Council is expected to approved a proposed term sheet to build a soccer stadium in the Railyards downtown. The Wilton Rancheria tribe has become the majority owner of the Sacramento Republic FC and is now in the process of purchasing the land needed to build the new 12,000 seat stadium. The estimated cost will be $321 million and completed in 2027.

Redevelop Capitol Mall Offices Into Housing

Last year in August the State of California requested architects and general contractors to look at three state office buildings along Capitol Mall downtown and see if they can be converted into housing. Fast forward to today, the State of California has now declined any further request for money to move forward with the project... possibly because the crazy cost to continue and the States budget not as healthy as it once was. The three buildings that were under consideration were 800 and 801 Capitol Mall and 751 N Street. The three building could have add 700 units of housing. and it was clear the state didn’t have the funds for the adaptive reuse study. It will be interesting to see what other opportunities The California Department of General Services has for these buildings in the near future.

Update: Capitol Mall Redevelopment Proposal

 In April of 2021 I posted a grand vision the City of Sacramento has for the scenic Capitol Mall promenade west of the Capital up to the Tower Bridge. The city presently wants to spend $500,000 from Sacramento Area Council of Governments (SACOG) to move forward with the design. As reported by KOVR 13, the estimated cost to develop this plan could be $16 million, but if you have been paying attention to government spending (like many have) the real cost could be closer to $20 million or more.

The proposed design would be to reconfigure the street  to host large festivals and small farmers markets without shutting down the street. This would include removing 4 lanes of traffic and only have one in each direction, the center median of grass gone, wider sidewalks and another row of trees. I personally prefer  grand approach to Sacramento's Capitol Mall from the west this is a scenic promenade with a two lanes of traffic and a wide center strip devoted to vegetation. Today as we drive across the Tower Bridge, local residents as well as visitors have a clear view of the Capitol. Like I said in the previous post, what planners are doing is social engineering people to change driving habits. After Capitol Mall has the number of lanes reduced, traffic will be worse, hoping this congestion get you out of your car and take public transit instead. Manipulating people, changing behavior. This is happening on many downtown streets, often referred to as a road diet.  Your tax dollars at work as cities shut traffic lanes. On many streets and roads, road diets don't leave adequate capacity for cars and trucks. That pushes traffic onto other streets.

Renaissance Tower Sold

       Renaissance Tower at 801 K Street, Sacramento, CA

Last week the Renaissance Tower sold in an auction for $21 million to Ethan Conrad Properties as reported by KCRA 3. The 28-story office building has a current occupancy rate of 27%, but the new owner plans to renovate the office space and add restaurants into the building as well. The last time the tower was sold was in 2016 for $80 million, so this is a good price.

Colliers Sacramento Office Snapshot: Q3 2024

Vacancy have moved higher according to Colliers Sacramento 3^rd quarter report. Colliers states that because the State of California is vacating 278,000 square feet across four buildings, occupancy losses have pushed higher but there is hope of a recovery in mid-2025.

Two Downtown buildings sold at substantial discounts, reflecting the office sector’s pricing reset. Ethan Conrad Properties acquired 770 L Street for $22.5 million ($132/SF), a 52% drop from when New York Life bought it in 2018. Ethan Conrad also purchased 630 K Street for $10.3 million ($119/SF), a 63% drop in value since early 2020. An affiliate of Buzz Oates is reportedly under contract to acquire 400 Capitol Mall from Manulife for $117 million, which would be a 41% decline from the 2019 purchase price. 801 K Street, which is only 27% leased, is going up for auction on October 21 at an $8.5 million starting bid. It sold for $79.2 million in 2016.