Sacramento Is Primed To Draw Millennials And The Businesses That Hire Them From The Bay Area
Only 90 miles away from the San Francisco Bay Area, Sacramento has something important that the Bay Area does not, namely a cost of living that is not astronomical. Avison Young Managing Director Tom Aguer, in the company's Sacramento office, said that simple economics is going to be a magnet drawing talent from the Bay Area to Sacramento. What is a trickle now will be a serious migration soon.
Bisnow: Do you expect a larger migration from the Bay Area to Sacramento in the near future?
Aguer: Yes. There's a crisis in San Francisco in terms of how much space costs, both office and residential. So far that's spurred a significant movement to Oakland, which has tightened up the markets in that city. Sacramento is the next logical place.
Everything's already in place to draw businesses and workers from the Bay Area. Sacramento has less expensive housing, a good labor force and a high quality of life. We've got location, too. We're near the Bay Area, but also the wine country and Lake Tahoe.
Bisnow: But there has not been a mass movement yet?
Aguer: No. There have been smaller movements before, especially during the growth of tech in the area in the 1990s and after the dot-com bubble. It surprises me that we haven't seen a larger influx of companies and workers this cycle yet, but it will happen. We're starting to see the first indications of interest.
Bisnow: How can you be sure?
Aguer: Mainly it's that the cost of housing here is half of what it is in the Bay Area. You can sell a modest home in the Bay Area and get a palace here.
Sacramento's already attracting some millennials. In our office, we have two millennials that moved from elsewhere — one from the Bay Area, one from LA. There will be more.
Bisnow: Will people be willing to leave the Bay Area? It is popular for a reason.
Aguer: The vibe is fantastic in San Francisco, but four people living in a 1K SF apartment's going to get old after a few years. At some point, millennials will want to buy homes, and mostly they can't do that in the Bay Area.
They're going to come here, and businesses will follow them. Over the next five years, I believe we're going to see a lot of movement from the Bay Area.
Another factor is that 100,000 workers a day commute from Sacramento to the Bay Area. That's a long drive. Some of them will start looking for jobs here instead. They already have.
Bisnow: Even without a mass influx, is Sacramento booming?
Aguer: I wouldn't call it a boom. Sacramento has seen a steady recovery from the recession. The market doesn't spike up and down like the Bay Area. We see more steady growth.
Downtown is seeing a resurgence, like a lot of cities Sacramento's size. The development of the Golden 1 Center was pivotal in new growth in Sacramento's [central business district]. Other development has gotten underway because of it, such as the Kimpton Sawyer and Kaiser's redevelopment of a building into medical office. There's also been new residential and retail development.
People now want to live in Downtown and Midtown. It's been energized. That will help attract people from the Bay Area, too.
Find out more about Sacramento's growth prospects at the first-ever Sacramento State of the Market event on Sept. 27 at the Sheraton Grand Hotel.