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2022 Q3 Sacramento Industrial Market Report

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Supply Outpaces Demand as Rents and Prices Rise to Record Heights

Sacramento’s industrial market is seeing steady activity despite rising interest rates, rampant inflation, supply chain disruption, and increasing recessionary concerns. Developers remain active throughout the region, especially in Metro Air Park and West Sacramento, and are building additional inventory to address tenant demand. Though leasing activity is slowing from last year’s record pace, demand is still durable and will likely be adequate to absorb the new supply coming online. After rising for two straight quarters, vacancy is set to fall next quarter as new supply is occupied. Retailers and logistics companies remain active in the market as industrial tenants look to shore up their supply chain networks and address deteriorating transportation issues. Though the market is not going to match the record growth from last year, there is strong tenant demand and a growing development pipeline, signaling a positive outlook in the year ahead. Sales volume has started to soften as interest rates rise, but sale prices are still rising, and cap rates are compressing. Sale price growth is likely to moderate in the next six months and there will be upward pressure on cap rates due to higher borrowing costs.  

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2022 Q3 Sacramento Industrial Market Report

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Bob Shanahan

Research Manager

Sacramento

Bob entered commercial real estate at the start of 2015 at Colliers in Seattle/Bellevue and has more than seven years of commercial real estate research experience. A writer by nature, Bob is always trying to tell the story behind the numbers and go above and beyond to add value to his brokerage partners. Forever teachable and eternally curious, Bob strives to always be learning more while staying on the leading edge of market trends and remaining abreast of all pertinent real estate transactions and developments. Passionate about real estate and urban planning, Bob is dedicated to taking Colliers to the next level by providing market-leading thought leadership and trends analysis for his internal and external clients.. Bob is a natural-born storyteller, always digging into the statistics with unmatched nuance to craft a forward-looking narrative and outlook across the many sectors of commercial real estate he tracks.  

With extensive experience in office, industrial, multifamily, and retail research, and a developing competency in capital markets, life science, and healthcare/medical office, Bob assists brokers in the leasing and selling of property, providing best in class research support. He regulary provides market presentations for internal brokerage teams and external organizations. Bob focused primarily on the office and industrial markets in the Seattle/Puget Sound region from 2015-2017. From fall 2017 to early 2018, Bob was the office market research analyst at JLL in Sacramento with an emphasis on Downtown landlord-rep related research. 

Since May 2018, Bob has been back at Colliers in his hometown of Sacramento. Since mid-2018, Bob bas accelerated his career in the support of 40 brokers across the Capital City region. In late  2020, Bob was tasked with overseeing the Reno market while managing a new Research Analyst, and has taken on an increasing leadership role in the Northwest region, including leading the regional multifamily market report comprised of 10 markets from Northern California and Northern Nevada to Oregon and Washington. Bob has invested in his leadership development, recently completing the two year Management Development Program at Colliers in partnership with Harvard Business School and completing the year long Leadership Sacramento Class of 2021 through the Sacramento Metro Chamber Foundation.  

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