After four consecutive quarters of small declines, the office building vacancy rate in the Sacramento region closed out this year’s first quarter at 21.46 percent, virtually unchanged from the fourth quarter of 2013, according to the commercial brokerage firm of Cornish & Carey Commercial Newmark Knight Frank.
The latest quarterly report noted that while leasing activity was fairly brisk, most regional tenants are still not expanding their offices when leases expire.
“Companies have learned during the Great Recession to do more with less,” said John Frisch, regional managing director of Cornish & Carey. “Most companies that we deal with in the market are not adding staff at the same rate following a business downturn. The new model in corporate America is to reduce expenses, and the third or fourth largest expense on most company budgets is office space.”
Cornish & Carey said office rents in the Sacramento region remain flat, although quoted rents are considerably lower than they were 20 years ago, after inflation is factored in.
The report said sale prices for office properties edged upward during the first quarter as a large supply of bank-owned repos and short sales cleared the pipeline. Most sales were traditional two-party transactions.
Cornish & Carey expects the office vacancy rate to remain above 20 percent throughout the year unless employers increase hiring considerably over the next six months. The vacancy rate peaked at an all-time high of nearly 24 percent in 2012.
Call The Bee’s Mark Glover, (916) 321-1184.