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Out of market buyers showing significant interest in Sacramento’s office assets

  • ​After several years of stagnant market fundamentals, the Sacramento office market kicked into gear in 2016 and has not let up since. Market wide vacancy fell to 12.2% in 2017, down 100 basis points from the year before, with CBD Class A space hitting single digit vacancy (9.6%) for the first time in a decade. Rental rates have also grown at a healthy pace with CBD rents increasing 3.0% year-over-year and Campus Commons leading the way with 6.1% rent growth year-over-year.

  • This has led to considerable interest from out-of-market investors looking outside of typical gateway cities for quality assets that potentially yield stronger returns. An example of this is the recent sale of 621 Capitol Mall to a buyer based in San Francisco for the high watermark price of $439.49/SF. A deal brokered by JLL. 

  • Overall, sales where the buyer was from out-of-market have increased 342% over the last 5 years, compared to 210% for sales where the buyer was based out of Sacramento. In addition, sales with an out-of-market buyer have accounted for just over 60% of all completed arms length deals and 73% of total dollar volume spent over the last 2 years. 

Source: JLL Research

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