One thing experts agree on is that significant job growth is needed for the Sacramento region’s real estate market to continue improving.
“Job creation will drive real estate moving forward for the next 24 to 36 months, said Robert Burris, senior vice president of the Sacramento Area Commerce and Trade Organization.
Burris and a group of leading brokers and agents will gather next month in a first-of-its-kind forum to talk about the market’s future.
Organized by the Sacramento Association of Realtors and a host of brokerages, the meeting at McClellan Conference Center on Oct. 17 is unique because it is a nonprofit event and because it will bring commercial and residential real estate brokers, who rarely interact, together in one room.
“If anybody does anything with real estate in Sacramento, this is the place to be. These are the people to listen to,” said event chairman Anthony Scotch, a commercial broker and vice president with Century 21 in Citrus Heights. “I don’t recall anything like this in 40 years.”
Scotch said he and others thought the time was right, with changing market conditions, for the different sectors to interact.
The Sacramento Bee is the official media sponsor of the event, called the Sacramento Real Estate Connect 2014 Regional Economic Review & Outlook.
Among the speakers will be Pat Shea, president of Lyon Real Estate in Sacramento.
Shea was an early predictor of the residential rebound of the past year. After plummeting in the housing crash, home prices shot up by double- digit percentages at a time of ultra-low inventory, heavy investor activity and growing demand from traditional homebuyers.
Shea anticipates the coming year will see a housing market that achieves some degree of stability. “We’re going to see a steady climb of inventory and more stable appreciation in the 5 to 10 percent range,” he said.
He also said he expects sales to remain solid despite interest rates that are rising after hitting historic lows earlier this year.
“Affordability will still be strong, and the desire for home ownership is ingrained in us,” Shea said.
The key to maintaining the market’s momentum is job growth, he said. “If we see more job opportunity, I think we can see a very consistent appreciation in house prices in Sacramento,” Shea said.
Chains making deals
Joining Shea will be a dozen specialists in office, retail, industrial and investment properties.
In the retail market, commercial broker Scott Reynolds said the rate of vacancies in shopping centers and storefronts following the recession was the worst he’s seen in three decades, but the upturn in housing prices is a good indicator that retail’s fortunes are picking up.
“Retail follows residential and consumer spending,” Reynolds said.
Shopping centers in some of the region’s most affluent markets, such as Folsom and Roseville, are doing better as national chains come to the area seeking favorable rents, he said. “There are chain retailers that have weathered the storm and are saying ‘now’s our chance to come in and make deals.’”
High vacancy rates for office and industrial space won’t drop much until more businesses move to the Sacramento region, helping to soak up the excess inventory, brokers said. Burris, with SACTO, said the group’s mission is to market the region to potential employers. It is now working on recruiting European crop sciences companies to the area, he said. Last year’s opening in Davis of a 150-employee factory by Japanese toolmaker Mori Seiki Co. is a prime example of the kind of economic development the region needs for solid, long-term job growth, Burris said.
Bay Area companies seeking to expand but faced with skyrocketing rents and sales prices at home will eventually arrive, seeking office space within driving distance of their headquarters, he said. So will companies that have a strong reason to be near Sacramento, including food and agricultural enterprises.
But Sacramento’s one-time strength, that it was relatively inexpensive, doesn’t necessarily seal deals anymore, Burris said. Companies just looking for a cheap place to do business now leap past Sacramento to Nevada or Texas.
“We’ve had to work smarter in the last few years,” Burris said. “Making the play strictly by cost doesn’t work anymore.”
Call The Bee’s Hudson Sangree, (916) 321-1191.