In the world of commercial real estate investing, verified data and insights go a long way to help investors make more informed and successful business decisions. Bakersfield, Fresno, and the Central Valley have historically proven reliable markets for industrial properties, with a steady growth across other asset classes that attracts both investors and brokers to the region. Crexi bridges the gap between the two groups and connects commercial real estate parties to the best opportunities in the Central Valley.
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Over two million monthly visitors harness Crexi and use the search tool to find Central Valley properties that precisely match their investment interests. Thousands of commercial real estate brokers, too, employ Crexi’s sales and leasing tools to transact the entire CRE process digitally.
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The State of Commercial Real Estate in the Central Valley
California’s Central Valley is a large and varied region located in the central portion of the state. It is home to many major cities, including Sacramento, Bakersfield, Fresno, and Stockton. These cities offer residents access to a variety of job opportunities, and the region also has a robust agricultural industry that serves as an economic engine for the state.
The Central Valley’s proximity to the affluent Bay Area gives it convenient access to more than 6.7 million people within a 50-mile radius. Within 250 miles, the market reaches 17.7 million people, with nearly 25% in the 18-to-34 age demographic. This strong labor pool helps create favorable economic conditions for businesses setting up shop in the Central Valley and help spur job growth throughout this region of California.
Living in the Central Valley is attractive on many levels, boasting everything from vibrant culture scenes to abundant outdoor activities. Quality of life is also excellent in this region due to its mild climate, ample resources, and excellent infrastructure connecting different parts of this vast area together.
Central Valley Regional Breakdown
Although the state’s population is falling, inland areas like California’s Central Valley are showing strong population growth. The Valley population centers around Sacramento, Fresno, Bakersfield, Stockton, and Modesto. Here’s a look at the recent statistics from the United States Census Bureau and Census Reporter for each region:
Sacramento (County)
- Population: 1,588,921
- Growth (2021 vs 2010): 12.0%
- Median age: 37.2
- Number of households: 571,949
- Per capita income: $37,259
Fresno (County)
- Population: 1,013,581
- Growth (2020 vs 2010): 8.9%
- Median age: 33.1
- Number of households: 322,646
- Per capita income: $28,766
Bakersfield (Kern County)
- Population: 917,673
- Growth (2020 vs 2010): 9.3%
- Median age: 32.5
- Number of households: 282,963
- Per capita income: $25,500
Stockton (San Joaquin County)
- Population: 789,410
- Growth (2020 vs 2010): 15.2%
- Median age: 35
- Number of households: 247,760
- Per capita income: $32,102
Modesto (Stanislaus County)
- Population: 552,999
- Growth (2020 vs 2010): 7.5%
- Median age: 34.7
- Number of households: 174,209
- Per capita income: $30,721
Central Valley Job Market
Throughout the Central Valley, employment opportunities have increased by an impressive 2% between October 2019 and today – largely due to low-wage jobs growing at 5%, while high-wage sector positions were reduced by 1%. Low-wage sectors (such as trade, transportation & utilities, and leisure/hospitality) in the region account for 33% of jobs, while middle-wage sectors like construction, manufacturing, and health/ educational services make up 52%. Here are recent Central Valley employment statistics from the U.S. Bureau of Labor Statistics (November 2022), St. Louis Federal Reserve, and Data USA:
Sacramento (County)
- GDP: $160.5 billion
- Increase in GDP (2021 vs 2011): 60%
- Employed population: 715,240
- Job growth (1-year): 1.57%
- Median household income: $70,684
- Income growth (1-year): 5.26%
- Unemployment: 3.7%
Fresno (County)
- GDP: $50 billion
- Increase in GDP (2021 vs 2011): 47%
- Employed population: 218,708
- Job growth (1-year): -0.03%
- Median household income: $53,368
- Income growth (1-year): 5.82%
- Unemployment: 6.6%
Bakersfield (Kern County)
- GDP: $52.2 billion
- Increase in GDP (2021 vs 2011): 18.6%
- Employed population: 346,787
- Job growth (1-year): 0.97%
- Median household income: $54,851
- Income growth (1-year): 2.81%
- Unemployment: 6.8%
Stockton (San Joaquin County)
- GDP: $36.8 billion
- Increase in GDP (2021 vs 2011): 67.3%
- Employed population: 319,808
- Job growth (1-year): 2.13%
- Median household income: $68,628
- Income growth (1-year): 6.51%
- Unemployment: 5.5%
Modesto (Stanislaus County)
- GDP: $26.5 billion
- Increase in GDP (2021 vs 2011): 53.2%
- Employed population: 231,043
- Job growth (1-year): 1.26%
- Median household income: $62,873
- Income growth (1-year): 3.57%
- Unemployment: 5.5%
Central Valley Industrial Market
The South Central Valley industrial market comprises Merced, Madera, Fresno, Visalia, Hanford, and Bakersfield. According to the Q3 2022 report from CBRE, asking rents reached a record high with tenants seeking larger spaces and increased investor and developer activity from both local and national players:
- Total industrial inventory: 159,575,538 SF
- Average lease rate: $0.66/SF per month NNN
- Vacancy rate: 3.3%
- Absorption: 1,980,352 SF (through Q3 2022)
- Key lease transactions by tenant: Smucker’s 1,228,104 SF, Russell Sigler 54,900 SF
- New construction: 2.3 million SF under construction
- Key sales transactions: $47.4 million for 1.1 million SF in Delano, $30 million for 223,840 SF in Fresno, $10.3 million for 157,500 SF in Madera
- Largest industrial submarkets: Fresno, Bakersfield, Merced, Madera
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Central Valley Office Market
The Central Valley is touted by Site Selection magazine as an affordable option, compared to San Francisco and the Bay Area. Factors cited in the report include a much shorter commute and a better quality of life, helping to increase the demand for Central Valley office space. The most recent report from CBRE reveals the office market is remaining stable, with asking lease rates increasing slightly and vacancy remaining in a healthy range:
- Total office inventory: 9,578,747 SF
- Overall average asking rents: $1.68/SF per month, full service gross
- Vacancy rate: 6.6%
- Absorption: -28,722 SF in 2022
- Key leases by tenant: NuCore Building Systems 26,000 SF, Concentra 7,680 SF, Interact Media Group 5,184 SF
- New construction: Grant Medical Center expected to break ground in the Tracy submarket this year
- Notable sale transactions: 1810 S Fresno Avenue in Stockton for $5.7 million, 1510 W Kettleman Lane in Lodi for $2.0 million
- Largest office submarkets: Modesto, Downton Stockton, North Central and North West Stockton, Lodi
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Central Valley Retail Market
The Central Valley is home to some of the fastest-growing counties in the state, including Kern County (Bakersfield), Fresno County, and Sacramento County. Each of these three regions have seen population increases of 10% or more since 2010. The most recent reports from Kidder Mathews and Capital Rivers show just how strong the demand for Sacramento retail space is:
- Total retail inventory: 110,259,037 SF
- Average asking rent: $1.47/SF per month, NNN with annual rent growth of 2.1%
- Vacancy rate: 5.5%
- Absorption: 665,000 over the past 12 months
- Top lease transactions: LA Fitness 35,000 SF, KPOT 8,000 SF, Roseville Soccer 7,000 SF
- New construction: 547,279 SF under construction with 314,000 SF delivered year to date
- Investment sales trends: Average sales price $187.26/SF in Q4 2022 with cap rates at 5.1% vs 6.3% the same period last year
- Top sales transactions: Broadstone Plaza in Folsom $53.3 million, Florin Towne Centre in Sacramento $11.2 million, Apple Farm Place in El Dorado $6.7 million
- Median household income: $84,421, about 20% higher than the amount in the US
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Central Valley Multifamily Market
The Central Valley multifamily market is among the most competitive in the state, according to RentCafe. Developers are struggling to keep up with demand. A winning combination of robust demand and low supply is catching the eye of real estate investors. Ove r400 Central Valley multifamily properties changed hands over the past two years alone. Here are the most recent Sacramento multifamily market statistics from Colliers:
- Total housing units: 943,601
- Renter occupied: 38%
- Multifamily inventory: 217,028 units
- Effective asking rent: $1,977
- Rent growth: 5.7% year over year
- Vacancy rate: 4.1%
- New construction: 531 units delivered in Q3 2022 with 4,561 under construction
- Investment sales trends: $1.6 billion in sales year to date, nearly 46% higher than the first three quarters of 2021
- Average sales price: $259,490/unit, over 26% higher than the same period last year, with average cap rate of 4.4%
- Per capita income: $40,890
- Median age: 38.2, with 40% of the population between the ages of 20 and 49
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