Condition of Sacramento Retail

Condition of Sacramento Retail

Over the course of the pandemic we saw many sectors take a hit, most notably office and retail, as less people were active in their communities and more people spent time working from home. However, thanks to both demand and supply side factors, we have seen the retail market prevail. Regarding the demand side, we have seen support from government actions such as relief checks, which went a long way in spurring economic growth and gave people a reason to go back and spend within their own communities. There has also been a surge of consumers that wanted to go back to physical brick-and-mortar stores after the hiatus, resulting in record sales for many retailers, even when compared to pre-pandemic numbers. Regarding the supply side, there has been a decrease in planned developments while there has been an increase in retail space demolitions.

So how exactly does this help the retail market? Well, there has been a growing demand for different types of spaces (i.e. Multi-Family, Medical, and Industrial), so by limiting supply of retail spaces, the demand for them has increased[1].

This has been the retail market trend throughout the nation, but more specifically, how is the Sacramento retail market performing?

Sacramento has seen increased investment throughout 2022, with a total of $1.5 billion in sales over the last year. The strength of this market is furthered through the fact that vacancy is only around 5.7%, a number that has been declining in the past 12 months. Retail leasing has also held strong in 2022, as net absorption reached over 740,000 SF. An external factor that plays a large role in the success of retail properties is the economy, and Sacramento is healthy in that department. Unemployment in the area has fallen to 3.7% and total employment has reached 1.1 million jobs. Sacramento’s location and relative affordability compared to the bay has also resulted in an increase in population growth post-pandemic. People throughout California are turning to the area as a place of affordability and interest, helping to keep the Sacramento retail market strong[2].



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