MARKET DRIVERS
DIRECT VACANCY rates decreased 43.3% year-over-year (YOY) from 6.0% in 2020 to 3.4% in 2021. The total availability rate had a similar drop of 22.2% YOY over the same timeframe to 5.4%.
ASKING LEASE rates for all industrial property types gained 17.0% YOY to $0.69/SF NNN for 2021. Asking lease rates for warehouses and flex properties were at $0.65/SF NNN and $0.94/SF NNN respectively.
DIRECT NET absorption was at 1.5 million SF for 4Q 2021. Direct net absorption for all of 2021 stood at 8.0 million SF.
LEASING ACTIVITY dropped 52.9% YOY from 2.7 million SF in 4Q 2020 to 1.2 million SF in 4Q 2021. Compared to 2020, leasing activity for 2021 dropped 9.6% YOY to 9.5 million SF, nearly double 2019’s leasing activity of 5.5 million SF.
SALES VOLUME leapt 53.0% YOY from 4.6 million SF in 2020 to 7.0 million SF in 2021.
ECONOMIC REVIEW
MANUFACTURING JOBS for the Sacramento – Roseville – Arden-Arcade MSA gained 7.7% YOY to 37,700 jobs. Transportation and warehousing jobs also rose 1.6% YOY to 39,100 jobs.
UNEMPLOYMENT in California stood at 5.4% for November 2021. During this period, the Sacramento – Roseville – Arden Arcade MSA reported a 4.7% unemployment rate.
NEAR-TERM OUTLOOK
THE SACRAMENTO INDUSTRIAL MARKET has largely recovered from COVID-induced slowdowns during 2021. Compared to 2019, sales and leasing activity has roughly doubled. The direct vacancy rate fell 25% from 4.6% in 2019 to 3.4% in 2021. E-commerce and wholesale distribution companies help drive direct net absorption to 8.0 million SF. These factors signal a tightening supply and help drive asking lease rates and sale prices upwards. There are currently 4.1 million SF of industrial properties under construction to help satisfy industrial needs. Falling vacancies and availabilities signal a tightening supply. There are currently 3 million SF of industrial properties under construction to help satisfy industrial needs.
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