The Sacramento Market is comprised of Placer, Sacramento, El Dorado, and Yolo counties. These are historic times that we are living through with the recent outbreak of the Coronavirus. The Sacramento area has only been affected by changes from the outbreak for about a month now, but we are already noticing changes in the commercial real estate market. The industrial, retail, and multi-family markets have all been hit hard with a plateau in rent growth, increase in vacancy rates, and transactions have slowed down. On the other side, the office market has been prospering in recent years and has continued to have lower vacancy and higher rents. This may change due to the shelter in place order the Governor Newsom recently signed. This order requires all non-essential workers to stay at home, so many people have left the office for their home. There is no indication of what the market will look like after this pandemic, so we will have to pay attention to the changes that take place over the next few months.
Rent growth has fluctuated throughout 2020, but rents have plateaued within the past month. Many tenants are not able to pay rent at this time. There is no indication of where rents will sit after this pandemic.
Vacancy rates have continued to rise through 2020 among industrial, multi-family, and retail properties, whereas office buildings have seen a decrease in vacancy. This may change as many people may continue to work from home.
Sales activity has slowed since the outbreak, but the most recent sales indicate that cap rates aren't affected. Keep in mind that these sales likely took place before the outbreak, so they may not be representative of the future.