Colliers Sacramento Office Snapshot: Q3 2023

The third quarter of 2023 recorded more of the same across Sacramento’s office market. As stated in the Sacramento Colliers Office MarketReport, the shift toward hybrid work will lead to higher vacancy rates for a prolonged period and some office properties will need to be repurposed to alternative uses. The regional vacancy rate rose to its highest level since the end of 2012 as it approaches the all-time high of 21.7% from Q4 2011. Total occupancy losses since April 2020 have now surpassed 4.86 million square feet. With the State of California planning to vacate approximately 300,000 square feet of leased space in early 2024. It’s possible the market will set a new record-high vacancy rate by mid-2024 if current trends fail to change course.

The market report by Colliers also stated that some office owners will have to seriously consider converting properties to alternative uses to generate income. The State of California selected McCormack Baron Salazar as the lead developer to convert three state office buildings on Capital Mall in Downtown Sacramento into upwards of 400 affordable apartment units. Many local office buildings fail to meet the criteria for viable conversions to housing. A National Bureau of Economic Research report found only 33 buildings totaling 1.3 million square feet that could realistically be converted into apartments.

How Not To Add To A Historic Building

 Now that the former Capitol Annex is demolished, it’s puzzling to see that the state has not shown an official rendering of what will replace the old structure. Here are some images from 2022 of the proposed Capitol Annex replacement buildings.  Much larger, with a glass exterior, overpowering the historic 1860's Capitol, and diminishing the view of the architectural front. It also appears that all approaches to the historic 1860’s capitol are now below grade, changing the historic character of the building.

You could argue that the proposed rendering negatively impact the historic 1860’s capitol.

Constructing a new addition on or adjacent to a primary elevation of the building which negatively impacts the building's historic character.

Attaching a new addition in a manner that obscures, damages, or destroys character-defining features of the historic building.

Placing new construction too close to the historic building so that it negatively impacts the building's character, the site, or setting.

Constructing a new addition that is large as or larger than the historic building, which visually overwhelms it (i.e.; results in the diminution of loss of its historic character).

Adding new construction that results in the diminution or loss of the historic character of the building, including its design, materials, location, or setting.

Constructing a new building on a historic property or on an adjacent site that is much larger than the historic building.