The Case for Boring: Why Sacramento Beats the Headline Markets

Most IOS deals that make headlines close in Texas or Florida.

Sacramento never makes the list.

Last week I was visiting new potential acquisitions in Sacramento and it reminded me all the reasons we love the market and markets like these.

It is not a headline market. It does not have the deal volume, the broker buzz, or the institutional attention that comes with being a coastal gateway city. It is the state capital. It has a Costco. It has a Denny’s. It is, by most accounts, a little boring.

That is exactly why we are there.

Here is what boring actually looks like in IOS fundamentals:

1. Infill supply constraints without infill pricing. Sacramento has the same zoning friction as Los Angeles. It does not have LA rents yet. That gap is where value lives.

2. Demand drivers that do not need a headline. State government fleets. Utility crews. Contractors servicing infrastructure projects.

3. A market that institutional capital has not repriced. When everyone is watching the same markets, the overlooked ones offer better entry points, better cap rates, and more room to grow into value.

We are not looking for the most exciting market. We are looking for the most durable one.

Sacramento is boring. Boring underwrites well.

We recently closed on a industrial outdoor storage site in Sacramento’s Richards Blvd corridor – less than a mile from the 244-acre Railyards redevelopment. We paid $21 per land square foot. Comparable sites in the submarket have traded for $45+.

Submarket vacancy is 2.9%. Neighboring tenants include FedEx, Cresco Equipment Rentals, and several major construction supply companies – exactly the demand drivers nobody writes newsletters about.

The zoning (River District Special Planning District) accommodates nonconforming uses, which is a gift in IOS. That spread between LA-style friction and non-LA pricing is what we underwrote, and it is only there because Sacramento is boring.

We’re putting capital to work in exactly these kinds of overlooked markets. Please reach out – happy to talk through what we’re chasing.