I relaunched my presence on here in June, after a period of quiet. I wanted to write again, post again, and reconnect with this market in a more visible way. It has been about ten weeks. And this week, I want to do something I do not see enough of in commercial real estate: give you an honest midpoint read on what I have actually been seeing.
The Sacramento office market. Here is where things stand.
The National Narrative Is Wrong About Sacramento
If you follow national commercial real estate headlines, you might think office buildings are disappearing. They are not. What’s actually happening is a re-sorting — and Sacramento is sorting differently than most people realize.
Our vacancy rate downtown sits at 9.6%. That makes Sacramento the only major downtown in California with vacancy under 15%. San Francisco is still working through a 30%+ vacancy problem. Los Angeles is dealing with its own structural issues. Sacramento’s office market has remained relatively stable — not because we are immune to change, but because our demand base is different. Government, healthcare, legal services, and professional firms make up the core of Sacramento’s office market. Those sectors have not gone remote the way tech did. They need people in rooms, in front of clients, in courtrooms, at agency meetings.
What Actually Happened After July 1
The state return-to-office mandate — four days a week for most state employees — went into effect July 1. I want to be honest about what I’ve seen: the impact has been real but gradual. Downtown foot traffic has improved. Parking demand has ticked up. Restaurants and coffee shops in the core are noticeably busier on weekdays than they were six months ago. The daytime economy that had been missing is coming back, in parts.
It has not been a light-switch moment. The market does not work that way. But the direction is right, and direction matters in real estate. Buyers and tenants read momentum. When things are moving in a positive direction — even gradually — the tone of conversations changes.
Quality Over Quantity: The Real Trend
Here is what I have been watching closely. Tenants are not simply taking less space. They are taking better space. The best-located, best-maintained office buildings in Sacramento continue to lease. In some cases, demand for quality product has held up well even as overall vacancy numbers stay elevated. That tells you something important: the problem is not that companies do not want offices. The problem is that a lot of the existing inventory is not what companies want anymore.
Older buildings without modern interiors, adequate parking, updated HVAC, or accessible amenities are struggling. Well-located properties that have been updated — or where landlords are willing to invest in tenant improvements — are still moving. The bar has simply risen. Companies may lease slightly less square footage, but they want environments that are worth showing up for.
That is actually a reasonable trade. And it is creating opportunity for tenants who are willing to do the homework.
Investment Capital Is Still Reading Sacramento as a Buy
Ethan Conrad’s acquisitions at 630 K, 801 K, and 770 L Street at around $105 per square foot. The Wells Fargo Center sale at $117 million. These transactions did not happen in a dying market. They happened in a market where experienced investors saw value that the headlines missed.
That is the Sacramento pattern. Long-term players move in when pricing finally makes sense. Then they wait. They improve the asset, re-lease it, and ride the next cycle. It’s not glamorous. It’s disciplined. And it tends to work.
Halftime. Here’s What I Know.
Ten weeks back in. Here is what I have relearned: this market rewards people who show up consistently, know the inventory deeply, and have real relationships on both sides. The Sacramento office market is not easy right now. But it is not broken, either. It is a market that is finding its footing — and the people who understand that are positioning ahead of the next move.
I am glad to be back in it.
When It’s Complicated, Call Bacon.
If you are evaluating the Sacramento office market — leasing, selling, buying, or repositioning — let’s talk. Call (916) 761-1202 or reach out at tom@baconcre.com.
Follow me on YouTube for video takes on Sacramento commercial real estate: @SacramentoBaconCRE