Stability — that's what almost every CRE landlord wants to hear in 2025. Well, you might get your wish if you have to have properties located in Sacramento, California — even as the local economy has shown signs of slowing.
A Colliers report dived into the four major CRE asset classes in the market from office, to retail, while also looking at a couple of alternative sectors as well.
Starting with industrial, Colliers sees construction slowing and tenant demand rebounding, leading to "modest growth" and a return to "normalcy" in 2025. That comes after a mixed 2024 when leasing rose 6.2 percent annually — but the industry suffered its first yearly occupancy decline since 2012.
Recommended For You
The trends were similar for office, as leasing activity in 2024 surged by 5.9 percent with net absorption rising by 24.7 percent — but the 21.5 percent vacancy was near record-breaking levels. But things look for the most part sunny in 2025, as Colliers forecasts availability to "stabilize" and investor confidence to improve in the coming quarters.
Also, the CRE firm sees a stable 2025 for multifamily after the asset class saw "record high-renter demand," with nearly 5,000 units getting absorbed. Plus, sales volume shot up by 50.2 percent from the previous year to $595 million, and construction dipped by 40.6 percent.
Given the fluid situation with the economy on tariffs, jobs, interest rates, and recession odds spiking— retail provides the most uncertainty for Sacramento CRE investors among the major asset classes. As it is, retail sales volume of $613 million in 2024 significantly lagged behind Sacramento's performance in recent years, and vacancy inched up by 10 basis points to 7.7 percent. So there was no forecast provided here.
For alternative asset classes, Colliers lists healthcare as a sector that's currently "stable." That's thanks to the solid performance in 2024, where sales were five-fold higher at $181.4 million, rents inched up by 1.2 percent, and vacancy was steady at 6.6 percent. Meanwhile, life sciences is in a period of slowdown, as "venture capital money has moved to the sidelines," according to Colliers. However, it added that the alternative asset class remains in a strong long-term position.
"Future transformative projects by Fulcrum and Blue Rise Ventures at Capitol Innovation District and BioSpace are slated to capitalize on ag-tech and biotech companies’ recovery," Colliers wrote.
But to generalize, Sacramento's CRE market as a whole appears to be headed toward stabilization in 2025. Colliers noted that overall investment deal flow is increasing heading into this year and the bid-ask spread is narrowing.
That said, the economic headwinds can't be overlooked. Annual job growth in Sacramento was only one percent compared with 2.6 percent in 2023. Also, the unemployment rate spiked to 4.6 percent in December 2024 compared with 3.7 percent in April 2024. So the trends will be something to watch out for in 2025, and the policies coming out of Washington D.C.
"Lingering economic uncertainties will shape Sacramento’s job market and business growth outlook in 2025," Colliers wrote.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
