Sacramento is California’s State Capital and is the 6th largest metro area in California with a population of 2.15 million. The area is comprised of four counties: El Dorado, Placer, Yolo, and Sacramento counties. There are currently 983,600 people employed in Sacramento, bringing the unemployment rate down to 4.5%. Sacramento was recently ranked the #4 hottest real estate market in the nation by Realtor.com. As the Capital of California, Sacramento’s large government sector employment base insulates it from cyclicality caused by economic trends. The State of California is the largest employer in the area followed by Sacramento County, UC Davis Health System, the U.S. Government, and Sutter Health. The Sacramento region saw GDP surge 3.1% in 2017, more than double the national average of 1.5%, bringing the region’s overall economic output to $128 billion. Sacramento is currently the fastest growing large city in California, at 1.4% growth, adding roughly 7,000 people.
The Sacramento industrial market is made up of 173MM SF of inventory, currently 5.8% vacant after recording 1.9MM sf of positive net absorption during Q3 2017, marking the 16th consecutive quarter of positive net absorption
By convention, the East Sacramento submarket is combined with the Downtown/Midtown submarket, characterized by an abundance of retail amenities, proximity to executive and employee housing, and a considerable supply of free surface parking. Expo Center is in close proximity to the region’s fortress mall, Arden Fair, a 1.1 million square foot shopping mall anchored by Nordstrom’s, Macy’s, JC Penney, and Sears and just 10 minutes from Downtown Sacramento. The area also features the newly built solar-powered Golden 1 Center, the Sacramento Kings new NBA arena, which lies just 4 miles from the subject property. The arena is the world’s first LEED-Platinum indoor sports stadium and has attracted development, investment, and economic activity. Employment downtown has grown 38% since construction began in 2014. Since 2015 the nearby area has seen 32 new projects totaling roughly $2 billion in investments.
The industrial market consists of 5.3MM square feet with vacancy of 3.6% as of Q3 2017. The average industrial asking rate is $0.89 PSF NNN, 90% higher than the market-wide average asking rate of $0.47 PSF NNN.
The California Exposition (Cal Expo) is located less than 1 mile from the subject property. The Cal Expo site covers over 350 acres of developed land and hosts an array of community, trade, and business events, including the California State Fair, State Fair Gala, Sacramento County Fair, International Sportsman Expo, Western States Horse Expo, and a number of other RV, auto, special collectible trade shows. The one-mile dirt racetrack at Cal Expo hosts live thoroughbred racing during the annual State Fair and live harness racing, in addition to special events like the Sacramento Mile Auto-race. Disney donated their iconic “California” letters from their Disney’s California Adventure theme park, which now sit at the entrance to Cal Expo. Cal Expo supports several hotels which sit in between it and the subject property, including TownePlace Suites by Marriott, Fairfield Inn by Marriott, and Courtyard by Marriott.