Sacramento Industrial Real Estate: Capital Region Warehouse Trends and Opportunities

Graeme Coyle serves as senior vice president and Sacramento market officer for Link Logistics, overseeing approximately 10 million square feet of warehouses, distribution centers and logistics facilities across California's capital region. With deep expertise in the Sacramento industrial real estate market, Graeme helps food and beverage companies, third-party logistics providers, construction firms and automotive distributors navigate the region's evolving warehouse landscape. His focus includes Link Logistics’ strategic Natomas portfolio near Sacramento International Airport, where proximity to I-5 and I-80 creates exceptional distribution advantages for Northern California operations. In this Q&A, Graeme examines Sacramento's steady market fundamentals, submarket dynamics and what makes the capital region an increasingly competitive alternative to Bay Area and Central Valley locations.

What's driving demand for industrial real estate in Sacramento right now?

Graeme: Sacramento is really its own regional market with five counties (Sacramento, Placer, El Dorado, Yolo and Sutter) and about 2.5 million people. We don't typically distribute to the Bay Area—most Bay Area distribution happens closer to that population base. We're just far enough removed that Sacramento functions as its own distinct market. The growth we see is driven by Sacramento's own expansion. We've been experiencing consistent annual population growth, and as Sacramento grows so does demand for warehouse space. The biggest demand drivers are food and beverage, third-party logistics, automotive and construction. Those industries really shape our market.

Are there specific warehouse submarkets within Sacramento that cater to different industries or businesses?

Graeme: Most third-party logistics providers focus on accessibility to I-5 and I-80 for north-south and east-west distribution. West Sacramento and the Natomas area near the airport are probably our best distribution submarkets—that's where you're seeing most of the newer construction.

The most traditional and biggest submarket is South Sacramento, or what we call the Power Inn area. Over the last 50 years, most industrial product was concentrated in South Sacramento and parts of West Sacramento. But the newer growth is really moving to Natomas, where we've seen the most new construction near the airport.

What emerging trends should businesses know about in Sacramento's industrial real estate market?

Graeme: Right now, businesses are trying to capitalize on current market conditions. Rents have flattened out, there's no significant new supply coming online and fundamentals are relatively strong—overall vacancy is around 5-6%. We think this is an opportune time for businesses to lock in rates before they start escalating again.

With limited new warehouse development and continued absorption, rents are going to increase in the near term. We're also seeing more sublease space hit the market over the last year, which is another recent trend. But generally speaking, fundamentals remain strong in Sacramento.

How does Link Logistics support companies looking for warehouse space in Sacramento?

Graeme: Link Logistics has a diverse mix of warehouse properties in Sacramento, but more than anything, our portfolio is geographically advantageous with prime infill locations. Our industrial properties in the Natomas area are extremely well-located right along Interstate 80 near I-5—we have several million square feet out there. That gives us a significant presence in one of Sacramento's best locations for rapid distribution.

We're also very proactive when space becomes available. When a customer moves out of a space, we act fast to make improvements and get it into move-in-ready condition. Our goal is to start construction within a week of a customer vacating. Because Sacramento is a smaller-tenant market—our average customer here occupies just over 20,000 square feet—we can typically turn spaces around in about a month.

What types of warehouse buildings are available in Sacramento?

Graeme: Link Logistics offers good, functional buildings across the spectrum—older, well-located functional buildings plus newer, state-of-the-art industrial facilities with ESFR sprinkler systems and taller clear heights. We have a good mix of product types to meet different needs and budget requirements. Sacramento also has a strong labor pool, which is increasingly important. If you look at competing areas like the Central Valley, their labor pool has tightened significantly because of all the Amazon-type users and e-commerce growth. Sacramento offers better labor availability relative to the Bay Area, as well.

What makes Sacramento attractive for distribution companies?

Graeme: The continued population growth here is driven by affordability. Sacramento's median home price is under $500,000, which is a major advantage compared to the Bay Area. We also offer great quality of life—we’re close to Lake Tahoe, we're outside the earthquake zone, and overall affordability makes Sacramento increasingly attractive for both businesses and their employees.

Explore available warehouse space for rent in Sacramento to learn more about industrial real estate opportunities in the region.