Summary

The commercial real estate markets in San Jose and Sacramento have seen mixed results in Q1 2024. In San Jose, the retail sector has seen a slight increase in vacancy rates and a decrease in market rental rates, while the office sector showed a minor improvement in vacancy rates but a decrease in rental rates. The industrial sector experienced higher vacancy rates and a slight drop in rental rates. Meanwhile, Sacramento’s market showed slight increases in vacancy rates across all sectors, with rental rates largely holding steady or increasing slightly. Notably, the sale prices per square foot showed minor adjustments in both regions, reflecting nuanced market dynamics.

Regional Market Information – San Jose

Retail

• The vacancy rate increased slightly from 4.2% in Q4 2023 to 4.5% in Q1 2024.
• The average asking rental rates decreased from $3.32/sf/m in Q4 2023 to $3.29/sf/m in Q1 2024.
• Capitalization rates remained at 5.3% from Q4 2023 to Q1 2024.
• The average sale price per square foot decreased from $512 in Q4 2023 to $504 in Q1 2024.

Office

• The vacancy rate decreased nominally from 15.5% in Q4 2023 to 15.4% in Q1 2024.
• The average asking rental rate decreased from $4.84/sf/m in Q4 2023 to $4.76/sf/m in Q1 2024.
• Capitalization rates saw a very slight increase from 6.14% in Q4 2023 to 6.4% in Q1 2024.
• The average sales price per square foot decreased from $547/sf in Q4 2023 to $540/sf in Q1 2024.

Industrial

• Vacancy rates saw an increase from 6.8% Q4 2023 to 7.2% in Q1 2024.
• The average asking rental rate saw an insignificant decrease from $2.15/sf/m in Q4 2023 to $2.14/sf/m in Q1 2024.
• Capitalization rates didn’t see a noteworthy change from 5.97% in Q4 2023 to 6.1% in Q1 2024.
• The average sales price per square foot decreased from $384 in Q4 2023 to $379 in Q1 2024.

Regional Market Information – Sacramento

Retail

• The vacancy rate increased nominally from 5.8% in Q4 2023 to 5.9% in Q1 2024.
• The average asking rental rates decreased from $1.97/sf/m in Q4 2023 to $1.95/sf/m in Q1 2024.
• Capitalization rates changed only slightly from 6.3% in Q4 2023 to 6.4% in Q1 2024.
• The average sale price per square foot saw a slight increase from $247 in Q4 2023 to $248 in Q1 2024.

Office

• The vacancy rate increased from 10.92% in Q4 2023 to 11.28% in Q1 2024.
• The average asking rental rate remained the same at $2.26/sf/m throughout Q4 2023 and Q1 2024.
• Capitalization rates saw a slight increase from 8.93% in Q4 2023 to 9.03% in Q1 2024.
• The average sales price per square foot decreased from $191/sf in Q4 2023 to $188/sf in Q1 2024.

Industrial

• Vacancy rates increased from 5.5% Q4 2023 to 5.9% in Q1 2024.
• The average asking rental rate increase from $.94/sf/m in Q4 2023 to $.96/sf/m Q1 2024.
• Capitalization rates saw an insignificant increase change from 7.26% in Q4 2023 to 7.28% in Q1 2024.
• The average sales price per square foot increased from $149/sf in Q4 2023 to $151/sf in Q1 2024.

Stay tuned for more updates as we continue to monitor these markets throughout the year!

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