SACRAMENTO OFFICE MARKET SEEN AS A SAFE HAVEN FOR INVESTORS

Rents escalated more rapidly in the first quarter of 2018, as vacancy reaches below pre-recession levels and investors see opportunity to chase yield without much risk of oversupply in the market. An increase in construction employment would traditionally signal a return to development, but developers are seeing more speculative opportunity in housing and warehousing. Two sizeable projects were announced during Q1, including Centene’s regional headquarters in Natomas and the State of California’s new building in Downtown. As fundamentals continue to improve, large tenants will be forced to consider building to suit, while small- to medium-sized tenants are facing fewer space options and rising rents. All of these are very promising indicators for investors looking to deploy capital in Sacramento’s existing office inventory.