Colliers Sacramento Office Snapshot: Q2 2026

The Sacramento office market has seen momentum that has driven vacancy towards 20%. According to Colliers International Sacramento, the lack of new supply has allowed the market to absorb vacant space with nearly 200,000SF for this quarter. Many industry experts expect the increase in government requirements to return to the office as of July 1, 2026 will help the market in the coming quarters.

Colliers Sacramento Office Snapshot: Q1 2026

The regional office market trend appears to be flat, according to Colliers International Sacramento. Because the lack absorption especially on functionally obsolete properties, office conversions and redevelopment will continue. One of the conversions currently underway is the reuse of 700 J Street, a 69,000 SF office building converted into the 95-room hotel Eleanor. It should also be noted that the State of California has finished renovations to 1416 Ninth Street former Resources Building. The 17-story tower will now house the Employment Development Department which is moving out of their longtime offices on Capitol Mall.

The high vacancy rate for the Sacramento office market peaked in Q4 2024 at 24.1%, since then leasing has been steady and vacancies have been declining. Demand from healthcare sector is growing, most of the new leases have been from existing tenants relocating into other buildings. Read more here.

I Street Bridge Over Bid

If you have not heard, the design chosen for the new replacement I Street bridge was bid waaaay over budget. What was supposed to be about $300 million had bids coming between $398 million to $517 million. In my opinion, the design should be tamed down which would also bring down the estimated cost, that’s what I have to do when I realize my budget does not match my vision. If the project stalls for an extended period of time, the funding might be redirected to another project that appears ready to go? Sacramento City Express

10K Proposal Teasing 2027 Groundbreaking

10K Proposal at 10th & K Streets Sacramento

There is a buzz that Mahanna Development is planning to break ground on a 15-story mixed-use project (220-room hotel, 186 multi-family residential units) at the corner of 10^th & K Streets. The 10K Project would include the demolition of three existing buildings and a proposed timeline to begin construction in 2027. This project was first proposed in 2019, shortly before Covid shut everything down. Mahanna Development finished the project 19J in Sacramento in late 2019, so it’s good to see they have completed projects recently. The renderings for this project are odd, none of the buildings next to the proposed structure are actually in Sacramento. I wonder if this is AI generated? Strange for sure since HRGA is a local architect in Fair Oaks and done many projects in Sacramento.

The Hallmark Tower - Proposal From Times Past

 
Hallmark Tower
North West corner of 15th & L Street
32 Story tower/ 502 ft
TDK Architects & Planning
Developer: Joseph Benvenuti
539,190 total sq. ft.
15,586 sq. ft. ground floor retail
387,090 sq. ft. office
164 hotel rooms on floors 24-32
Swimming pool
865 parking spaces

 Proposed 1990 and died in 1991 due to the City of Sacramento new law to limit heights of skyscrapers as a way to protect the view of the State Capitol. Back in 1990 when the tower was first proposed their were no height restrictions for the area but shortly after this tower and two others were proposed, both Mayor Anne Rudin and Sacramento Assemblyman Lloyd Connelly pursued an ordinance to limit height and protect the Capitol. At the time the City imposed the restrictions it ended up wiping out a total of three high-rise proposals, one by developer Giannoni at 14^th & L Street at 19 stories and another by Benvenuti at 15^th and K Street to be 14 stories, and the Hallmark Tower at 502’. The new law at the time limited all building to ten stories or 135’. All three buildings would have been to tall and blocked the Capitol view. At the time, councilmember’s said “they were committed to smaller buildings around the perimeter of the entire park” which discouraged the developers who started getting entitlements for their projects a year prior  to cancel all three towers out of frustration and uncertainly as to what the City might do to further scale down their projects

It looks as if the towers design was used two years later in San Diego for the One America Plaza here.

The Civic Tower - Proposal From Times Past

Civic Tower proposal in Sacramento 1989

The Civic Tower
North West corner of 10th & H Street
27 Story tower/ 370 ft
Architect James R. Loen
365.935 sq. ft.
9000 sq. ft. ground floor retail
490 parking spaces

Proposed 1989 and died in 1991 due the tight financing forces and the Federal government mandate that banks cut back their real estate lending as well as new pre-leasing requirements.

In late 1989 the Civic Tower was proposed at the corner of 10^th & H Streets in downtown Sacramento. The project was a 27-stories office building with 356,935 sq. ft. of office space with 9,000 sq. ft. of ground floor retail and 490 parking spaces. The proposals footprint was .587 acres with the merging of four parcels into one. It was probably canceled for similar reasons as other did during this time, slowing in economic growth and credit shortages, which historically made large, high-rise development projects difficult to finance. Back in the mid 1980’s, the laws changed when financing proposed office buildings, before financing could be released for any new construction office building, the barrower must have 60% of rentable property pre-leased. Of course, if the proposal is self financed, it removes the owner from having to meet any of these financial guidelines. 

Civic Tower proposal in Sacramento 1989

Civic Tower proposal in Sacramento 1989

Civic Tower proposal in Sacramento 1989

Civic Tower proposal in Sacramento 1989

Civic Tower proposal in Sacramento 1989

Benvenuti Tower - Proposal From Times Past

The Benvenuti tower proposal at 7th & L Street in Sacramento

 

The Benvenuti tower proposal was first proposed in 1989 at the former Greyhound terminal at 7^th & L Streets in downtown Sacramento. The 31-story high-rise proposal by Joseph Benvenuti was part of a broader economic trend to invest more development in downtown Sacramento. Joseph was also involved in the development of three Sacramento landmark projects: the Hyatt Hotel, the Emerald Tower, and the Renaissance Tower. Joseph was also an original and majority owner of the Sacramento Kings when they relocated from Kansas City, and played an integral role in the development and construction of both Kings' arenas. The late 1980s and early 1990s did experience a slowing in economic growth and credit shortages, which historically made large, high-rise development projects difficult to finance. However, the specific 1989 proposal failure cited as being due to a recession is not mentioned specify.