The following reflects Sacramento industrial market conditions as of 2Q 2026.
MARKET DRIVERS
Sacramento’s industrial vacancy rate held largely steady in the second quarter, coming in at 6.5% marketwide. Although this remains above the year-ago level, the market is stabilizing as space delivered in recent quarters is absorbed and new construction activity slows. Total availability climbed to 10.2%, giving tenants a wider range of options and pushing landlords to compete more actively for occupancy. With the development pipeline continuing to shrink, supply-side pressure on the market is expected to ease in the coming quarters.
Average asking lease rates edged down to $0.79 per square foot NNN as landlords adjusted pricing to attract tenants, though rents remain well above pre-pandemic levels. Leasing activity topped 2.2 million square feet for the quarter, driven by several large requirements concentrated in the region’s primary distribution corridors, which helped support positive net absorption. Sales activity slowed from last year’s pace as elevated borrowing costs continued to weigh on investment decisions, though Sacramento’s strategic location, relatively affordable pricing, and long-term distribution fundamentals continue to draw investor interest.
ECONOMIC REVIEW
The Sacramento-Roseville-Folsom MSA unemployment rate registered 4.2% in May 2026, improving from a revised 4.5% in April 2026 and below the year-ago rate of 4.4%. By comparison, unemployment stood at 4.7% statewide and 4.1% nationally over the same period.
Employment conditions across the region have stabilized, with continued strength in the trade, transportation, and utilities sectors supporting local logistics demand. Industrial demand in Sacramento continues to be driven primarily by regional distribution activity, tenant optimization strategies, and the market’s strategic position serving Northern California.
NEAR-TERM OUTLOOK
Sacramento’s industrial market is expected to continue stabilizing as vacancy levels off and new construction slows further. Elevated availability is likely to keep competition among landlords high and limit rent growth, but steady leasing activity and positive net absorption should continue to support market fundamentals through the remainder of the year. The market’s strategic position within Northern California’s distribution network continues to position Sacramento well for long-term growth.
Investor activity is expected to remain selective as financing costs continue to shape acquisition decisions, though Sacramento’s relatively affordable pricing, improving capital markets conditions, and established logistics base should continue to draw interest from both private and institutional investors.
Frequently Asked Questions
What is the industrial vacancy rate in Sacramento in Q2 2026?
Sacramento’s direct industrial vacancy rate was 6.5% in Q2 2026, according to Kidder Mathews research. This is up 80 basis points from 5.7% a year earlier, though it held roughly steady compared to 6.6% in the first quarter of 2026. Total availability, which includes sublease and future vacant space, was higher at 10.2%.
What is the total availability rate for Sacramento industrial space in Q2 2026?
Total availability in the Sacramento industrial market reached 10.2% in Q2 2026, up from 9.7% in the first quarter and 8.5% a year earlier, according to Kidder Mathews research. The increase gives tenants more leasing options while creating a more competitive environment for landlords. As the construction pipeline continues to shrink, supply-side pressure is expected to ease in the coming quarters.
What are average asking industrial lease rates in Sacramento?
Average asking industrial lease rates in Sacramento were $0.79 per square foot NNN per month in Q2 2026, down from $0.82 in the first quarter and 2.5% lower than the $0.81 recorded a year earlier, according to Kidder Mathews research. Rates vary significantly by submarket, ranging from $0.59 NNN in Auburn/Newcastle to $1.21 NNN in Folsom/El Dorado. Despite the recent softening, rents remain well above pre-pandemic levels.
How much industrial leasing activity occurred in Sacramento in Q2 2026?
Industrial leasing activity in Sacramento totaled 2,254,077 square feet in Q2 2026, according to Kidder Mathews research. Year-to-date leasing reached 3,825,249 square feet, up 8.5% from 3,517,394 square feet during the same period in 2025. Activity was driven by a handful of large requirements concentrated in the market’s primary distribution corridors.
What is net absorption in the Sacramento industrial market?
Net absorption measures the change in occupied industrial space over a given period, and it was positive in Sacramento during Q2 2026, at 130,029 square feet, according to Kidder Mathews research. Year-to-date net absorption reached 137,118 square feet, more than four times the 30,718 square feet recorded during the first half of 2025. Positive absorption indicates tenants are occupying more space than they are vacating, which supports market stabilization.
Is there new industrial construction underway in Sacramento?
Yes, though no new industrial space was delivered in Sacramento during Q2 2026, according to Kidder Mathews research. Active projects include a 663,390-square-foot Costco warehouse at Metro Air Parkway in the Natomas/Northgate submarket, developed by Buzz Oates and slated for delivery in the fourth quarter of 2027, along with a 180,956-square-foot Buzz Oates project at 10050 Waterman Road in Elk Grove/Laguna expected in the third quarter of 2026. A shrinking construction pipeline is expected to ease supply-side pressure over the coming quarters.
What was the largest industrial sale in Sacramento in Q2 2026?
The largest industrial sale in Sacramento during Q2 2026 was 3575 Business Dr in the Power Inn submarket, an 81,907-square-foot property that sold for $41,000,000, or $500.57 per square foot, according to Kidder Mathews research. Boyd Watterson Global purchased the property from Jackson Properties, Inc. Overall sales volume totaled 1,273,350 square feet for the quarter, down 8.2% year-to-date compared to 2025.
What was the largest industrial lease signed in Sacramento in Q2 2026?
The largest industrial lease signed in Sacramento during Q2 2026 was a 240,000-square-foot transaction at 4700-4940 Lang Ave in the McClellan submarket, according to Kidder Mathews research. Villara leased the space from McClellan Park, LLC in June 2026. Other significant leases included Redwood Beverage Group’s 236,716-square-foot lease at 3525 Carlin Dr in West Sacramento.
Which Sacramento submarket has the lowest industrial vacancy rate?
East Sacramento posted the lowest industrial vacancy rate in Q2 2026 at 0.0%, though the submarket is relatively small at just 517,688 square feet of total inventory, according to Kidder Mathews research. Among larger submarkets, McClellan (3.6%) and Marysville/Yuba City (3.8%) posted the lowest direct vacancy rates. South Sacramento had the highest vacancy rate in the market, at 25.0%.
What is the outlook for the Sacramento industrial market?
Sacramento’s industrial market is expected to continue stabilizing through the remainder of 2026 as vacancy levels off and new construction slows, according to Kidder Mathews research. Elevated availability is likely to keep competition among landlords high and limit rent growth, though steady leasing activity and positive net absorption should support market fundamentals. Sacramento’s strategic position within Northern California’s distribution network is expected to continue supporting long-term demand.
Last updated: 2Q 2026. Data source: CoStar, Kidder Mathews, Bureau of Labor Statistics. Compiled by the Kidder Mathews Research Group.
2Q 2026 Sacramento Industrial Market: Key Data Points
Explore our full Sacramento industrial market review for deeper insights into leasing trends, sale activity, and submarket performance.
- Vacancy Rates Remain Stable: Sacramento’s direct industrial vacancy rate measured 6.5% in Q2 2026, largely unchanged from the previous quarter as the market continues to absorb recently delivered space.
- Leasing Activity Continues to Grow: Industrial leasing totaled 3.8M SF year-to-date, up 8.5% from the same period last year, reflecting steady tenant demand across the region.
- Positive Net Absorption Persists: Net absorption reached 137K SF year-to-date, more than four times the level recorded during the first half of 2025, supporting continued market stabilization.
- Availability Increases as Options Expand: The total availability rate rose to 10.2%, providing tenants with more leasing choices while creating a more competitive environment for landlords.
- Asking Rents Moderate Slightly: Average asking rents declined to $0.79 PSF NNN per month, down 2.4% year-over-year as landlords remain competitive to attract occupancy.
- Limited New Supply Supports Fundamentals: No new industrial deliveries were completed during the quarter, while a shrinking construction pipeline is expected to ease future supply pressures.
Submarket Statistics
| Submarket | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | Total Available Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Leasing Activity (SF) | Average Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| Auburn/Newcastle | 2,794,667 | 6.5% | 6.5% | 8.4% | 34,061 | 13,480 | 28,055 | $0.59 |
| Davis/Woodland | 17,104,984 | 4.0% | 4.8% | 10.9% | -45,017 | 269,699 | 121,188 | $0.61 |
| Downtown | 2,326,636 | 5.1% | 5.1% | 5.6% | -11,326 | -24,546 | 0 | $0.90 |
| East Sacramento | 517,688 | 0.0% | 0.0% | 0.0% | 1,550 | 1,550 | 0 | $1.20 |
| Elk Grove/Laguna | 7,143,933 | 5.2% | 5.2% | 8.9% | -58,861 | -38,302 | 6,868 | $1.03 |
| Folsom/El Dorado | 5,187,771 | 5.4% | 5.6% | 8.1% | 61,348 | 53,286 | 70,484 | $1.21 |
| Marysville/Yuba City | 7,297,422 | 3.8% | 4.7% | 9.7% | -21,860 | 27,415 | 26,533 | $0.74 |
| Mather | 5,400,736 | 10.3% | 10.3% | 13.3% | -97,087 | -159,065 | 21,723 | $0.82 |
| McClellan | 17,494,179 | 3.6% | 4.4% | 6.6% | 137,174 | 19,866 | 294,904 | $0.71 |
| Natomas/Northgate | 23,954,912 | 9.0% | 11.0% | 12.1% | 254,422 | 301,780 | 213,126 | $0.81 |
| NE Sacramento | 6,222,860 | 5.0% | 5.1% | 6.6% | -5,577 | 47,797 | 24,006 | $0.87 |
| Power Inn | 27,202,440 | 4.9% | 5.1% | 9.0% | 53,435 | -54,707 | 321,774 | $0.83 |
| Richards | 4,027,165 | 5.3% | 6.0% | 5.8% | -21,070 | 2,249 | 10,464 | $0.81 |
| Roseville/Rocklin | 19,688,820 | 5.0% | 7.9% | 10.9% | -61,004 | -56,634 | 92,737 | $1.06 |
| South Sacramento | 3,344,847 | 25.0% | 26.3% | 12.1% | 1,477 | -33,827 | 9,520 | $1.02 |
| Sunrise | 13,502,114 | 4.3% | 4.5% | 6.9% | 17,301 | 67,604 | 414,133 | $0.94 |
| West Sacramento | 24,037,675 | 11.0% | 11.5% | 15.6% | -108,937 | -300,527 | 598,562 | $0.79 |
| Sacramento Total | 187,248,849 | 6.5% | 7.4% | 10.2% | 130,029 | 137,118 | 2,254,077 | $0.79 |
| Property Type | Total Inventory (SF) | Direct Vacancy Rate | Total Vacancy Rate | Total Available Rate | 2Q26 Direct Net Absorption (SF) | YTD Direct Net Absorption (SF) | 2Q26 Leasing Activity (SF) | Average Direct Rental Rate (NNN) |
|---|---|---|---|---|---|---|---|---|
| General Industrial | 28,508,861 | 6.8% | 8.5% | 11.0% | 140,604 | -72,505 | 577,727 | $0.77 |
| Warehouse & Distribution | 138,356,830 | 6.3% | 7.0% | 9.6% | 21,484 | 325,224 | 1,504,925 | $0.74 |
| Flex | 19,390,524 | 7.8% | 8.4% | 11.0% | -32,059 | -98,947 | 171,425 | $1.06 |
Data as of 2Q 2026. Source: CoStar, Kidder Mathews, Bureau of Labor Statistics. Prepared by the Kidder Mathews Research Group.
Significant Sale Transactions 2Q 2026
| Property | Submarket | SF | Sale Price | $/SF | Buyer | Seller |
|---|---|---|---|---|---|---|
| 3575 Business Dr | Power Inn | 81,907 | $41,000,000 | $500.57 | Boyd Watterson Global | Jackson Properties, Inc. |
| 550 N Pioneer Ave | Davis/Woodland | 319,800 | $28,500,000 | $89.12 | Cranbrook Group, Inc. | Link Logistics Real Estate |
| 500 Sequoia Pacific Blvd | Richards | 102,000 | $14,000,000 | $137.25 | Telstar Instruments | Vida Anello Living Trust |
| 4300 & 4339 Jetway Ct | McClellan | 107,908 | $10,800,000 | $100.09 | Crosspoint Tyrone Ventures | Steelet Corporation |
| Sunrise Business Center | Sunrise | 59,400 | $7,500,000 | $126.26 | SBC Investors | Oracle Properties Dev., Inc. |
Significant Lease Transactions 2Q 2026
| Property | Submarket | SF | Transaction Date | Landlord | Tenant |
|---|---|---|---|---|---|
| 4700-4940 Lang Ave | McClellan | 240,000 | June 2026 | McClellan Park, LLC | Villara |
| 3525 Carlin Dr | West Sacramento | 236,716 | May 2026 | STAG Industrial, Inc. | Redwood Beverage Group |
| 7180 Badiee Dr | Natomas/Northgate | 182,088 | July 2026 | BGO | Peak Energy |
| 3045 Mulvaney Pl | West Sacramento | 131,587 | June 2026 | West Sac Partners | SJ Distributors, LLC |
| 8301 Belvedere Ave | Power Inn | 116,571 | April 2026 | Dalfen Industrial | L&U Granite |
Significant Under Construction
| Property | Submarket | SF | Owner | Delivery |
|---|---|---|---|---|
| Metro Air Pkwy – Costco Warehouse | Natomas/Northgate | 663,390 | Buzz Oates | 4Q 2027 |
| 10050 Waterman Rd | Elk Grove/Laguna | 180,956 | Buzz Oates | 3Q 2026 |
| 2408 Ak St | McClellan | 150,000 | Prime Data Centers | 3Q 2028 |
Data as of 2Q 2026. Source: CoStar, Kidder Mathews, Bureau of Labor Statistics. Prepared by the Kidder Mathews Research Group.
ContactGARY BARAGONA |
Related ContentYou may also be interested in our other research: all industrial market reports, Sacramento multifamily market report, Sacramento office market report, Sacramento retail market report, Oakland/East Bay industrial market report, Silicon Valley industrial market report, Sacramento office location. |