2022 Year End Northern California Industrial Market Report

by | 21 March 2023

Year-End 2022 Report & 2023 Forecast | March 2023 Special Report

This report will highlight industrial market trends through year-end 2022 along with a 2023 outlook across six Northern California industrial markets – Sacramento, Oakland, Stockton, Solano & Napa Counties, Pleasanton, and North I-680/Hwy 4 Corridor, which consists of the nine counties of Alameda, Contra Costa, Sacramento, Yolo, El Dorado, Placer, San Joaquin, Solano, and Napa. There is a combined 549.4 million square feet of existing inventory across these six markets.

The Northern California industrial region is comprised of six distinct markets in this report. Sacramento is an emerging big-box market which has seen an unprecedented wave of new speculative development in recent years. Oakland is an established market near the Port of Oakland, the ninth busiest port in the country. Stockton/Central Valley has seen a record wave of new development over the last decade due to its lower cost of land and fewer land constraints. Solano & Napa Counties are smaller but expanding markets along the I-80 Corridor, while North I-680/Hwy 4 Corridor and Pleasanton/Tri-Valley are two smaller markets in the eastern portions of Contra Costa and Alameda counties. In addition to the Port of Oakland, logistics drivers include Stockton’s BNSF and UP Intermodal Facilities, and the Sacramento Airport. The region’s central location on the West Coast, with major north/south and east/west freeways, provide robust transportation capabilities for e-commerce, third-party logistics, food and beverage, and retail occupiers.

The region’s market fundamentals are on solid footing as we enter 2023. Overall, the regional vacancy rate ended 2022 at 4.0 percent, a 40 basis point drop year-over-year. Resilient tenant demand helped push regional net absorption above 12.0 MSF throughout 2022, however, Q4 2022’s absorption total of 874k SF was the lowest figure going back to Q2 2020. New regional supply of 10.7 MSF in 2022 moderated slightly from the 11.8 MSF delivered in 2021, however, there is more than 15.4 MSF slated for completion regionally in 2023. While elevated industrial construction activity poses some risk for 2023 and economic uncertainty lingers, the outlook for the year ahead is still optimistic for the industrial sector.

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