Sacramento Industrial Market
All Classes of Product Q1 2025
Sacramento Industrial Market: Supply/Demand/Vacancy
Source:GallelliRealEstate;CostarGroup
Laguna, Folsom/El Dorado Hills, Natomas/Northgate, and Richards Boulevard submarkets all closed out the quarter with modestly positive occupancy growth and lower vacancy rates.
These, of course, were outpaced by losses in just a few trade areas. The Davis/ Woodland trade area took the biggest hits in Q1. The 320,000 SF 550 N. Pioneer Avenue came back to market in February, as did a handful of smaller spaces including 50,000 SF at 700 Santa Anita Drive in the Ventura Industrial Park. All told. The market posted -456,000 SF of negative net absorption as vacancy climbed from 8.3% to 11.0%.
While the Roseville/Rocklin submarket also experienced a large space giveback (Save Mart), we are not anticipating that vacancy to last long. After recording -443,000 SF of negative net absorption in Q1, vacancy in this trade area still stands at a tight 4.3% (up from 2.0%).
McClellan, the former air force base that now serves as an industrial incubator, experienced multiple smaller space givebacks in Q1. It recorded -311,000 SF of negative net absorption over the past three months as vacancy here climbed from 3.9% to 5.8%.
In addition to the Highline Warren space giveback, the Power Inn submarket saw a handful of new smaller vacancies come to market as this trade area ended
Q1 with -193,000 SF of occupancy growth and vacancy levels that inched up from 3.7% to 4.4%. Lastly, both the Auburn/Newcastle and Northeast trade areas recorded negligible occupancy declines in Q1.
CONSTRUCTION PIPELINE CONTINUES TO DIMINISH WHILE RENTS HOLD FIRM
After years of aggressive development, Sacramento’s industrial development pipeline continues to diminish substantially. Driven by a spike in eCommerce fulfillment and distribution center demand, we saw deliveries climb from just 235,000 SF of new product in 2019 to 3.6 MSF in 2020, 4.1 MSF in 2021, 4.0 MSF in 2022, 3.9 MSF in 2023 and 2.2 MSF in 2024. Against a total inventory of 180.9 MSF, the 16.3 MSF of new product delivered over the past five years represents 9.0% of the region’s total industrial space. Yet, the market has managed to absorb most of this space with little disruption. Vacancy stood at just 4.7% at the close of 2019 and has only slowly climbed to the current rate of 7.0%. But only two buildings came online in Q1 (totaling 197,000 SF) and the development pipeline now stands at just 1.4 MSF—its lowest level since 2019. Q2 2025 will see the delivery of 1.2 MSF of that space, which—if the greater economy cooperates—
Select Sacramento Region Industrial Leases - Past 12 Months
