How will Sacramento’s economy be in 2025? Experts take stock of forecast
In 2025, Sacramento’s economy will likely enjoy a stable labor market, growth in the health care sector and some stabilization in the office real estate market, a group of regional experts said Wednesday.
Their predictions were made at an event hosted by the Sacramento Business Review and the Sacramento Business Journal, as the Review released its annual economic outlook.
Long-term questions remain about how Sacramento could grow its labor market more substantially, the panelists said. And they noted some looming uncertainties that could sway the economy this year. The new administration, for instance, may cut federal health care spending or tangle international trade with tariffs. Artificial intelligence could yield the region wins in the tech industry, or cause disruption. The housing market remains challenging, and mortgage rates may remain higher than some would prefer.
But the panel pointed to several signs for optimism.
There are no signs pointing to major, upcoming swings in the labor market. Joe Niehaus, senior vice president at Jefferies, said he expects Sacramento will enjoy a steady labor market in 2025, and employees, generally, are staying in their jobs longer.
The health care sector will continue to hire and to build out more capacity for outpatient care, said Shelley Schorer, chief financial officer of CommonSpirit Health’s California Division. As of last week, she said, the health system had nearly 1,000 open positions, and its needs will grow as the population ages, and health systems expand outpatient care.
The office market here is beginning to see longer leases that more closely resemble the types of deals companies signed before the pandemic, a sign that employers have a better sense of what to expect, said Will Austin, director of market analytics for CoStar in Sacramento.
Leases are returning to five-year terms, he said, rather than two to three-year “see-what-we’re-going-to-do” leases that became the norm during the pandemic.
Schorer said the ambitious expansions touted by health systems here are beginning to come to fruition. CommonSpirit expects a 90,000-square-foot outpatient building to open in 2027, and is working on ambulatory and acute care sites in Elk Grove, and a medical office building in Folsom.
Sutter Health also has a steady lineup of expansion projects planned across northern California.
“Sacramento is CommonSpirit’s largest revenue market, and it’s our biggest growth market,” Schorer said. “So we will not be slowing down.”
