Peter Wijsman
Vice President, Executive of the City of San Francisco and Vicinity
Arcadius
The AEC industry expects upward trends to continue in Sacramento, at least for the foreseeable future. Total construction starts are expected to reach $8.9 billion this year before falling slightly in 2025, according to Dodge Data & Analytics. The biggest drop is expected with non-residential construction, especially the healthcare sector.
Still, the industry mood for the region remains optimistic, says Wijsman.
“Investments in Sacramento can be seen in population growth and the associated increase in housing stock, investments by government and academic institutions in new innovation and technology centers, and ultimately, airport expansion Sacramento International,” he explains.
The devastating wildfires that swept through California in 2020 gave Arcadis the opportunity to use cutting-edge technology to help organize the cleanup.
Photo courtesy of Arcadis
This follows Dodge’s statistics suggesting that starts for the residential and non-building categories are expected to continue on an upward trend, with total starts in these sectors exceeding $3.5 billion and s ‘close to 2,000 million dollars, respectively.
The key elements driving the excitement fall into two categories, Wijsman says: investments in the Sacramento region and major state infrastructure investments decided in Sacramento and built in the Central Valley.
He lists a number of examples for the latter: California’s high-speed rail, the proposed Sites repository, the Delta Transportation Project, and wildfire mitigation efforts. The latest of which Arcadis has accumulated significant experience having been contracted by the California Department of Recycling and Resource Recovery (CalRecycle) to manage two major fire restoration projects.
The projects, one in Northern California and the other in five Southern California counties, were in response to the 2020 wildfires that swept the state and prompted a state of emergency. The effort required deploying arborists to assess more than 100,000 fire-damaged trees and then work with licensed timber operators to track each tree removed from its plot of origin to its installation end use.
To manage the massive undertaking, Arcadis used FEMA-compliant automated waste management system software that synced with a geographic information system to update real-time online dashboards and state-of-the-art GPS tracking devices to confirm compliance with transport routes.
“The increase in the housing stock will generate investment in infrastructure upgrades, public buildings and other services.”
—Peter Wijsman, vice president, municipal executive, Arcadis
Wijsman says he follows three main trends in the Sacramento market: population growth, energy transition and diversification of economic activity.
As for population growth, while Dodge’s statistics suggest sluggish growth in the short term, the long term looks brighter. The state mandate to increase the housing stock by 10% by 2030, coupled with the region’s relative affordability, promises a healthy demographic boost.
“The increase in the housing stock will lead to investment in infrastructure upgrades, public buildings and other services,” says Wijsman.
As for the energy transition, the state effort to move away from fossil fuels promises a boom in associated technologies.
“Vehicle and fleet electrification, grid upgrades and the development of alternative energy sources will continue to drive significant investment over the next 10-15 years and beyond,” he notes.
Finally, the diversification of economic activity in the region includes large investments in research and corporate facilities for the technology sector due to the presence of strong academic institutions in the area and proximity to the Bay Area.
“Investments in this sector create a lot of ancillary business opportunities,” he says.
Wijsman notes that the number of major projects underway is an example of Sacramento’s diversified market and the convergence of several important sectors in the region: government, healthcare, education, agriculture and professional services industries.
“It will continue to be strong with an increased focus on technology and advanced manufacturing. Sacramento is set apart from the rest of the Central Valley by its relative proximity to the Bay Area [and] the many functions of the state and federal government that it has,” he says.
These advantages should help as the AEC industry grapples with broader challenges. But the dangers remain. A biannual study by Arcadis notes that a drop could be caused by factors such as a change in affordability and an increase in inflation.
“Sacramento is far from immune to the macro trends affecting the construction industry, such as the high cost of time, labor and materials that dominate escalating capital project costs,” he notes.
