Sacramento’s Rent Growth Slows, Job Market Still Shines
Sacramento's multifamily market continues to gain investor interest, especially for its value-add opportunities, while development maintains its pace, according to a recent report from Yardi Matrix.
After a long stint as the poster child for the spillover effect driving up rates in smaller metros, Sacramento yielded its position as multifamily rent growth leader to Orlando earlier in the year. However, rents are still growing at an above-average rate: 4.0 percent year-over-year as of May, which is double the U.S. figure. With inventory expansion slated to stay limited in the near future and occupancy of stabilized properties well above the 94.9 percent national rate, Sacramento is poised to remain a strong and stable multifamily market going forward.
Sacramento employment growth continued to shine in 2018: The expansion rate was 2.5 percent year-over-year as of March, bettering the national average by 80 basis points. As the state capital of California, Sacramento has traditionally been anchored by its state government jobs, but surges in a number of other sectors have significantly diversified the metro’s economy. Health services improved at a quick rate, with large-scale projects such as Kaiser Permanente’s Railyards medical center paving the way for sustained improvement.
The city’s multifamily market continued to gain investor interest, especially for its value-add opportunities. Development is likely to stay along the lines established during the cycle’s recent years, further fostering rent growth.