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Commercial Real Estate Market update for Sacramento Industrial Market

If you are the owner of an industrial building in the Sacramento market, the news is basically all good. The two graphs at the top of the page tell the story. Vacancy for industrial properties is very low at 3.7%. The historical average for vacancy is 10%. This means that lease rates have continued to rise, with a very solid 8.5% rent growth over the last 12 months. Low vacancy and high rents have also driven up the sales price of industrial properties, the average price per square foot has reached $147. That is a new record for this market. The three-year average for sale price per sf is $106, so this is a significant jump.

3620 Ramos Drive

One notable sale that contributed to driving up that average came at the end of 2021, with the sale of 3620 Ramos Drive in West Sacramento. This 182,000 sf building sold for nearly 92 million dollars, or $504 per sf. This is the highest price point ever recorded on a building of 20,000 sf or more. The building is occupied by Amazon, and continues the trend of E-commerce dominating the sales in this market. Of the 8.7 million sf built in the industrial market since 2017, Amazon and Walmart have taken up 51%. It is also worth noting that many of the existing industrial properties do not meet the requirements of E-commerce, lacking such things as adequate clearance. Currently there is about 4.1 million sf of industrial space under construction, and much of that will go to the E-commerce giants.

Overall, the story of the Sacramento industrial market is one of rapid development, strong demand, and increasing property values.If you have an Industrial building you are thinking about selling, now is a great time to put it on the market.While the market looks to remain strong for the time being, rising interest rates and inflation are a concern.If you would like an opinion of value for your building, or to discuss the current market, feel free to contact us anytime.

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