Colliers Sacramento Office Snapshot: Q2 2025

Colliers Sacramento Market Fundamentals

In looking at market indicators provided by ColliersSacramento, it appears to show that office downsizing and vacancy levels have leveled off. For the first time in several years, net absorption was positive. I hardly believe all is well again after only one quarter of optimistic demand, but overall activity appears strong with demand and rents and the State of California’s four day return to office in July 2026 has also provided some hope. The Colliers report shows a fragile office market, but several of the graphs show a hint of promise of recovery in the near or distant future.

Colliers Sacramento Historic Comparison

State Capitol Annex Project

Capitol Annex construction looking south from L Street

The new California Capitol Annex building will have 537,444 square feet of floor space over 8 stories at a cost of $1.3 billion and counting. Demolition was completed of the 1950's in 2023 on the East side of the Capitol building, which housed the Governor's office and legislator offices. The project’s plans include a new annex and an underground visitor center on the west side of the Capitol and an underground parking garage on the southern side.

Capitol Annex construction looking south from L Street

Rendering of how Capitol Annex could look

Rendering of how Capitol Annex could look

Rendering of how Capitol Annex could look

Rendering of how Capitol Annex could look

UC Davis Medical Center’s California Tower

Looking north from 45th St. on the medical center campus

On the eastern side of the existing UC Davis Medical Center, two tower cranes are in place to construct the 14-story hospital tower. At a total construction cost of $1.2 million (project cost: $3.7 billion), the building will connect to the existing Surgery and Emergency Services Pavillion to over 909,000 square feet of space in the new structure. When completed in 2030, the project will have a total of 334 beds, intensive care, and medical/surgical bed types; 12 hybrid operating rooms; and two rooftop helipads.

Looking east from Stockton Blvd. and X St.

Looking west at 45th and X Streets

Seen from Hwy. 50 and 65th St. looking west

Seen from Hwy. 50 going east

Demolition of Arco Arena Parking Lot

Arco Park in the foreground 

Over the weekend I was driving on Truxel and Del Paso Roads and noticed what appeared to be several giant concrete/asphalt piles while looking west towards the former Arco Arena location. My curiosity made me wonder if they were also removing the unfinished Arco Park stadium foundation. I found no such thing, the Arco Park foundation is still there but 2/3^rd of the parking lot that surrounds the former arena has been removed and roads for the new Innovation Park are being built. The most southwestern part of the land has a proposal for California Northstate University Medical Center project on 25 acers and is expected to generate $4.04 billion in regional economic output in the next 10 years as it’s developed.

1986 proposed Arco Park

Kaiser Permanente Medical Center Railyards Sacramento

With the ground breaking in March of this year, the 8-story Kaiser hospital in the River District appears to currently drilling piles into the ground as well as shoring up walls that are below grade. This $1.5 billion project is expected to competed in 2029.

365 Railyards Blvd. Sacramento, CA 95811