RECORD YEAR FOR ABSORPTION, DEVELOPERS TESTING WATER ON SMALL SPACEAbsorption in 2017 exceeded the previous record set in 2005 by 18 percent. Even more impressive, the record absorption last year started from a 7.9 percent vacancy rate, compared to 12.6 percent at the start of 2005. Demand from industrial users and investors reached feverish pitch amid a perfect storm of e-commerce growth and the entry into the cannabis industry. With the lack of available 5,000- to 20,000-square-foot spaces, we saw some of this demand spill over into flex space, where absorption in 2017 beat the 5-year average. A few developers are bringing smaller multi-tenant buildings to market in 2018 that will address a small portion of the unmet demand from other displaced users. However, lack of supply will continue to be an issue as current construction amounts to less than half of what was delivered in 2005.
2017 Q4 Sacramento Industrial Report
Author: Tim Shaw
Date Published: 01/25/2018