Sacramento Office Market Favoring Tenants

2009-10-14T21:35:30Z

Sacramento's office space market will continue to favor tenants as vacancy rates increase and businesses consolidate existing office space. That combination is allowing prospective tenants to negotiate deals that may not have been possible before the economic downturn.

According to Reid Boggiano of Sacramento Tenant Advisors, companies looking for class B or C office space will be able to get deals and allowances that weren't possible during the economic boom.

"It hasn’t been this much of a tenant’s market in Sacramento for a good many years," said Boggiano. "Right now we are negotiating rent reductions and generous tenant improvement allowances that we wouldn't have imagined only a few years ago."

Even businesses that aren't looking to expand might be able to save money by renegotiating an existing lease. Companies that leased space when rates were at their peak, can cut their costs by up to $0.15- $0.25 per square foot depending on their requirements and landlord's willingness to deal. It is generally cheaper for building owners to keep existing tenants so many landlords will be receptive to negotiating new deals.

Below is a list of major submarkets in Sacramento with asking rates for office space. These prices do not necessarily represent the lowest rate in each market, rather they show the general asking rates for their respective markets and may be higher or lower depending on your company's requirements.

Arden
Starting Rates: $1.20/Sqft/Month NNN
Class A Starting Rates: $1.85/Sqft/Month Full Service

Auburn
Starting Rates: $1.00/Sqft/Month Modified Gross
Class A Starting Rates: $1.83/Sqft/ Month Full Service

Cal Expo - Point West
Starting Rates: $1.20/Sqft/Month NNN
Class A Starting Rates: $1.90/Sqft/ Month Full Service

Carmichael
Starting Rates: $1.20/Sqft/Month Modified Gross
Class A Starting Rates: $1.80/Sqft/ Month Full Service

Davis Office Space
Starting Rates: $1.30/Sqft/Month Modified Gross
Class A Starting Rates: $1.90/Sqft/ Month Full Service

Del Paso Office Space
Starting Rates: $1.25/Sqft/Month Modified Gross
Class A Starting Rates: $1.80/Sqft/ Month Full Service

Downtown
Starting Rates: $1.25/Sqft/Month Modified Gross
Class A Starting Rates: $1.87/Sqft/ Month Full Service

East Sacramento
Starting Rates: $1.20/Sqft/Month Modified Gross
Class A Starting Rates: $1.90/Sqft/ Month Full Service

El Dorado Hills
Starting Rates: $1.10/Sqft/Month NNN
Class A Starting Rates: $1.87/Sqft/ Month Full Service

Elk Grove
Starting Rates: $1.20/Sqft/Month NNN
Class A Starting Rates: $1.90/Sqft/ Month Full Service

Fair Oaks
Starting Rates: $1.15/Sqft/Month NNN
Class A Starting Rates: $1.80/Sqft/ Month Full Service

Fairfield
Starting Rates: $1.35/Sqft/Month Full Service
Class A Starting Rates: $1.90/Sqft/ Month Full Service
Folsom
Starting Rates: $1.30/Sqft/Month Modified Gross
Class A Starting Rates: $1.90/Sqft/ Month Full Service

Fulton
Starting Rates: $1.20/Sqft/Month Modified Gross

Howe
Starting Rates: $1.30/Sqft/Month Modified Gross
Class A Starting low as $1.80/Sqft/ Month Full Service

Laguna
Starting Rates: $1.20/Sqft/Month NNN
Class A Starting Rates: $1.85/Sqft/ Month Full Service

McClellan
Starting Rates: $1.00/Sqft/Month NNN

Midtown
Starting Rates: $1.25/Sqft/Month Modified Gross
Class A Starting Rates: $1.80/Sqft/ Month Full Service

North Natomas
Starting Rates: $1.30/Sqft/Month Modified Gross
Class A Starting Rates: $1.80/Sqft/ Month Full Service

Placerville
Starting Rates: $1.15/Sqft/Month NNN

Rancho Cordova
Starting Rates: $1.15/Sqft/Month NNN
Class A Starting Rates: $1.75 Sqft/ Month Full Service

Rocklin
Starting Rates: $1.30/Sqft/Month Modified Gross
Class A Starting Rates: $1.90/Sqft/ Month Full Service

Roseville
Starting Rates: $1.25/Sqft/Month Modified Gross
Class A Starting Rates: $1.85/Sqft/ Month Full Service

South Natomas
Starting Rates: $1.40/Sqft/Month Modified Gross
Class A Starting Rates: $1.75/Sqft/ Month Full Service

South Sacramento
Starting Rates: $1.10/Sqft/Month NNN

Vacaville
Starting Rates: $1.25/Sqft/Month NNN
Class A Starting Rates: $1.85/Sqft/ Month Full Service

West Sacramento
Starting Rates: $1.10/Sqft/Month NNN
Class A Starting Rates: $1.80/Sqft/ Month Full Service

Woodland
Starting Rates: $1.00/Sqft/Month NNN
Class A Starting Rates: $1.80/Sqft/ Month Full Service

Yuba City
Starting Rates: $1.20/Sqft/Month NNN
Class A Starting Rates: $1.75/Sqft/Month Full Service

Sacramento Office Space Rates Decline

2009-03-30T23:49:53Z

The Sacramento office market experienced a year-over-year decline of up to 13 percent for key submarkets as landlords began lowering prices and offering incentives in order to attract tenants. In addition with businesses downsizing or closing offices altogether, more space has come on the market which has helped to drive down prices even further.

The following section shows the year-over-year declines for the average price of space in key Sacramento submarkets. (The price range factors in specific location and class of space) :

Downtown - 2009 rates are 8 to 11 percent lower

El Dorado Hills - 2009 rates are 7 to 11 percent lower

Elk Grove - 2009 rates are 8 to 11 percent lower

Highway 80 Area - 2009 rates are 6 to 10 percent lower

Roseville/Rocklin - 2009 rates are 10 to 13 percent lower

While none of the major submarkets posted a gain in average price between 2008 and 2009, there is a silver lining for businesses that signed leases at higher rates. Depending on their individual lease situation, they may be able to negotiate for a lower rate if they are willing to renew their lease. However with the current market situation, many Sacramento businesses are apprehensive about making long-term commitments until the economy begins to turn around. Until that happens, prices for office space in Sacramento will likely go even lower.

Data Source: Synergy Real Estate Group