Earlier this month, the annual Bisnow Sacramento State of the Market event brought together industry leaders to discuss the future of the city. Among the esteemed panelists was David McCullough, Principal at McCullough, who shared valuable insights and perspectives on the opportunities and challenges facing the region.

David McCullough with Robert Lindley, Studio t- Sq Architects

The panel, moderated by Mark Bellows of CliftonLarsonAllen, featured prominent figures such as Ethan Conrad of Ethan Conrad Properties, Tim Shaedler of Panattoni Development, and Troels Adrian of the Greater Sacramento Economic Council. Together, they engaged in a thought-provoking discussion that shed light on the current state of the market and highlighted key trends and innovations in Sacramento.

When asked to describe the state of the market, the panelists provided an overview of various sectors. First mentioning that the office market is experiencing a downturn, with prices declining by 15% over the past six months. However, the retail sector remains robust and healthy. David emphasized the presence of growth and momentum across all industries, expressing excitement about the increased construction activity. Panelists also pointed out that the Sacramento market, especially on the industrial side, is exceptionally healthy, showcasing its resilience in the face of ever-changing demands.
Regarding trends and innovations in the past 6-12 months, the panel discussion highlighted three key aspects. Firstly, the market has undergone a shift towards high value-added projects, fueled by substantial international investments. Secondly, there has been a surprising demand for laboratory-like spaces, indicating a growing need for specialized environments. Finally, the prediction is that once the market settles, there will be a significant push for more construction in the industrial sector.
Turning to commercial office space, the panel acknowledged that while Class A properties are healthier, Class B and C properties face challenges. However, David viewed the ongoing evolution and "creative destruction" in the industry as exciting. Creative office space developers have thrived and found success.
When asked about their vision for the next 12-18 months, concerns were addressed about high interest rates and the difficulties in obtaining loans. Despite these factors, David remained optimistic, stating that there is still capital flowing through nontraditional sources. He emphasized the natural shift that occurs when interest rates rise and reassured the audience that the current economic downturn would likely come to an end by 2024. David expressed enthusiasm for the market's potential, highlighting the unfilled niches that present opportunities for growth. Sacramento, he emphasized, stands out due to its educated labor force, affordability compared to San Francisco, and its ability to attract significant investment dollars. The panelists also praised the talent pool in California, particularly in Northern and Southern regions, asserting that talent remains in the state and will continue to fuel growth.

The Bisnow Sacramento State of the Market event offered valuable insights into the city's future. The panel provided expert perspectives on the market's current state, trends, and upcoming opportunities. Despite challenges such as the office market downturn, David's positive outlook and belief in the region's potential were evident. As Sacramento continues to "level up" and draw on its educated labor force, it is poised for success in the years to come.

Future of Sacramento: Insights from Bisnow's State of the Market Panel