Government to Cause Office Space Glut in Downtown Sacramento

This is good news and bad news.  Because government now has so many employees working from home, we do not need the office space.  But, if government ends the leases and puts those facilities back on the open market, the value of property goes down and the cost of rent goes down, forcing investors to dump their properties.

Barry Broome, CEO of the Greater Sacramento Economic Council, said the likely shift is a challenge, but also represents an opportunity.

“It’s down to quality,” he said. “If they dump three, four, five million square feet in the market, they’re going to crush the market.”

So apartment renters are not having to pay rent, killing the apartment market.  Commercial property people do not have to pay rent, killing this market.  Government ends massive leases, further killing that market.  Any wonder Newsom has put California into a generation of Depression?  Best to sell now and flee because all value is lost.

Government to Cause Office Space Glut in Downtown Sacramento

Scott Lay, The Nooner, 11/17/20   

STATE OFFICE SPACE GLUT: In the Sac Business Journal, Ben van der Meer looks at what could be a glut of office space (subscriber article) as state government consolidates with perhaps a majority of employees working from home permanently.

In a post-Covid-19 world, telework becoming more common has the potential to dramatically change the Sacramento region’s office environment.

And no entity may end up effecting more change than the single biggest lessor of space: the state of California, which leases more than 9 million square feet in Sacramento County alone.

Barry Broome, CEO of the Greater Sacramento Economic Council, said the likely shift is a challenge, but also represents an opportunity.

“It’s down to quality,” he said. “If they dump three, four, five million square feet in the market, they’re going to crush the market.”

But done strategically, he said, the state could leave good space that companies would gladly snap up. In an area like Downtown Sacramento, that could help create a more dynamic business environment, he said.

I’ve written about it in this space before, but there are three single-level properties near me that are vacant after the Department of Fish and Wildlife and Department of Water Resources left. They’ve been on the market for awhile with no takers. Perhaps the most troubling are the state leases in buildings on Capital Mall, where several agencies are located.

Of course, I’m most concerned about the small businesses that are most impacted in downtown Sac and many cities around California with a shift to mostly work from home. The changes to society in how we work, eat, and otherwise live made in 2020 will last far longer than the SARS-CoV2-19 virus and a major realignment is forthcoming.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. If you do not learn from History you are doomed to repeat failures.

    They ignore what happened in L.A. A glut of condos and offices that depressed the market for years. Developers and owners went bankrupt, and it wasn’t even close to the cv-19 depression.

    But then again you have Marxists in power who have promised everything to everyone and told them the “rich” are the ones that will pay. Yea Right.

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