On-Hold: 201 N St. Residential High-Rise

It’s been reported in the Sacramento Business Journal that the proposed 28 story residential high-rise at 201 N Street has officially been paused. With no activity with the city of Sacramento to secure building permits since 2022, it’s a safe bet Southern Land Company is feeling the pinch from the slowing economy. The proposed project exterior looked to be made with high quality materials and lots of details. Does Sacramento have enough deep pockets to rent out or own enough of these high-rise units to make them profitable? I would say no, that is why downtown sees lots of residential projects being built up to eight stories, after that the construction costs to go taller are to high and there are not enough people in Sacramento willing to pay that high amount to live there. I could make an extensive list of all the failed high-rise residential projects in Sacramento in the last 40 years, this might be another.

Colliers Sacramento Office Snapshot: Q2 2024

I’m a little slow on getting this posted, but ColliersSacramento Q2 office market report shows several challenges that appear show a trend for the region. As stated in Q2 2024 Sacramento Office Market Report, Sacramento’s office market maintained its trajectory toward setting a record high vacancy rate later this year. Downsizing and consolidation has pushed the market towards record high vacancy rate. There was a negative absorption of -140K sf in the quarter with more planned in the next 12 months with multiple large vacancies slated for the second half of the year (read more under Absorption & Demand).

But on a positive note, Capitol Mall’s properties are recording significant occupancy gains through the first half of the year. 400 Capitol Mall went on the market for sale this quarter and will test buyer demand for stabilized Class A high rises.

Colliers forecast that the State of California’s return to office this summer, two days a week will increase foot traffic in the urban core. The Sacramento office market has been downsizing for the last four years. With the lack of demand, local office inventory will likely diminish in years ahead. There are approximately 1 million square feet of office properties being evaluated for conversions to alternative uses, including medical office, apartments and hotels.