Market Report Q4 Sacramento

Colliers-International Q4 2015 Research & Forecast Report

Locally, 2015 office market ended positively. Colliers-International stated that the Central Business District absorbed 61,156SF of both class A & B space. The overall vacancy rate fell 90 basis points in Q4, from 16.7% to 15.8%. Downtown vacancy decreased slightly to 14.8% in Q4, due mostly to new occupancy in Class A properties. Asking rental rates increased 8 cents, an increase of approximately 3.3% quarter over quarter. Investment volume reached a peak in the 4 quarter with $247.3 million.

The new construction outlook shows no significant spec office developments under construction. Even though rents have shown some growth, they are still not at a level that justifies any new spec development in Sacramento. Colliers-International believes in 2016 the new Downtown Entertainment and Sports Center will remain the big driver. Interest in the ESC as well as growth in Government and the improvement of existing businesses will continue to drive tenant demand Downtown.

What I have observed and stated before, nearly all new construction in the CBD has received subsidies which has been the case for nearly ten years. Although trends are moving upward and rents are rising, they’re not high enough to bring construction cranes according to a local managing & leasing professional.

When it comes to economic growth, the US economy barely grew in the final three months of 2015 as manufacturing sputtered and consumer spending cooled.

Expansion in the world’s most important economy (USA) slowed to an annualized pace of 0.7 per cent in the fourth quarter, sharply down from 2 per cent rate in prior period.

Hang on… the ground might be shifting again and not in a good way.