SETTING RECORDS: SACRAMENTO INDUSTRIAL POSTS ALL-TIME LOW VACANCY RATE, RECORD-HIGH ASKING RATE
The Sacramento industrial market dropped to an all-time low vacancy rate of 3.9 percent in the first quarter of 2019 and with little available space to lease, quarterly absorption numbers have continued to taper off from 1.9 million square feet in Q1 2018 to 366,000 square feet this quarter. With minimal options for tenants looking to lease new space and costly cannabis-permitted spaces distorting the numbers overall, asking rates have continued to skyrocket. However, the cannabis market is beginning to soften and rates are dropping closer to traditional spaces. There is 1.29 million square feet of industrial product under construction across the market with speculative developments making up three-fourths of the new supply underway. Expect to see a slight uptick in vacancy later this year as these projects deliver and more development to break ground. Large users should land at these new developments in the next three to nine months. The market’s enticing fundamentals will continue to attract institutional investors like Irvine-based LBA Realty, which acquired 3771 Channel Drive in West Sacramento this quarter.