As with industrial, office tenants are finding fewer spaces in the Sacramento area.
Commercial real estate observers from such firms as CBRE Sacramento, Colliers International Sacramento and Kidder Mathews weighed in Wednesday on where various sectors are headed at the middle of 2018. Here are some highlights from the presentation they gave at the Hyatt Regency Sacramento downtown.
- Industrial properties are doing well, but absorption is declining because there just isn’t enough space for every company that’s looking, said Todd Sanfilippo, a senior vice president with CBRE. That is prompting some developers, particularly in West Sacramento’s Southport district and McClellan Business Park, to build large buildings on spec, though that’s not helping the region’s bread and butter of smaller, locally owned businesses, he said.
- As with industrial, office tenants are finding fewer spaces, but new construction is far more limited because of costs, said Chris Strain, an executive director with Cushman & Wakefield. Medical and government/government services are the sectors most on the move, he said.
- Most of the retail activity is still centered around discount and food and beverage concepts, though there’s outside interest in downtown and midtown Sacramento locations that wasn’t there even two years ago, said Chris Campbell, an executive vice president with CBRE Sacramento. He said he’d expect strong retail centers to stay strong, while weaker ones are going to get new interest for redevelopment, particularly as housing.
- Investment properties are proving a difficult sell because there’s a gap between sellers and buyers, said Kidder Mathews senior vice president and partner Steve Tyrrell. There’s also concern this economic expansion period is already running longer than average, and if a seller can’t get the price he wants, he’ll just pull a property off the market, Tyrrell said.
- If the economy slows, though, it could provide local benefit because it would bring down costs for construction and infrastructure, said Peter Nixon, a senior vice president specializing in land with CBRE. Land zoned for industrial and multifamily development is very hot, while retail and office are not, he said.
- Though there are fewer multifamily investment properties, multifamily properties overall are still seeing record-low vacancies and rising rents, said Aaron Frederick, a senior vice president with Colliers. While local rent control won’t be on the ballot this year, he said, it represents the biggest future concern for that sector to continue to do well.
For the full story, go to the Sacramento Business Journal.
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