Vacancy Rate for Commercial Space Drops During ’94

This has been a turnaround year for Ventura County business, as vacancy rates of industrial parks and office buildings have dropped to pre-recession lows and foreclosures have leveled off for the first time since 1990, analysts reported Monday.

The Northridge earthquake, which prompted some Los Angeles County businesses to head north, along with the continued lure of the county’s quality of living led to significant boosts in business activity this year, the analysts said.

Even without the earthquake, industrial, commercial and retail activity surpassed levels last seen in 1987.

“This has been a superb year,” said William Kiefer of Grubb & Ellis Co., the Oxnard-based firm that prepared the year-end report. “We’ve really seen a tremendous boost all the way around.”

The amount of vacant office space, a strong indicator of business growth, showed a decline from 24% in 1993 to 16.4% for 1994. Similarly, vacant industrial space dropped from 12.5% in 1993 to 7.7% this year, and retail vacancies declined from 9.3% to 7.9% over the year.

Even more startling, retail business consultant Bruce Boring Sr. said, is the drastic increase in mega-stores, such as Target and Wal-Mart, expected to occur over the next two years.

“We’re talking about a 20% increase in the market,” Boring said. “We’ve got a lineup of large retail tenants that want to come into the county.”

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In addition to the large retail chains, the county has seen an influx in factory outlet malls, with one new mall in Oxnard and another under construction in Camarillo.

The malls--traditionally situated away from urban areas--are apparently experimenting with stores in larger communities, Boring said.

News of the arrival of large retailers and factory outlets may be positive, but Boring said the mega-stores come at a price.

“There are only so many people in the county, and the people make only so much money,” he said. “So the arrival of these stores will probably come at the expense of the smaller tenants.”

Already, the county has seen indications that smaller, independent retail stores are suffering. Shopping centers with super stores as anchors had a vacancy rate of only 6%, while centers without a major anchor store posted a 15% vacancy rate.

Cities such as Thousand Oaks and Oxnard, which are working on plans to rebuild aging downtown areas, will have to come up with new attractions to draw shoppers, Boring said.

He said this would mean drawing restaurants and entertainment to downtown areas, much as Thousand Oaks has started to do with the new Civic Arts Plaza.

If cities fail to bring attractions to their downtowns, Boring said the outcome could be disastrous.

“Cities are going to have to do something, otherwise they’re going to end up with downtown areas that look like Beirut,” he said.

As for office and industrial space, Grubb & Ellis analysts said Monday they expect to see low vacancies eventually lead to higher rents and to an increase in construction.

But new facilities might be a year or two down the road because construction loans remain limited, analyst Kiefer said. Cities can expect to see developers begin lining up with office projects sometime in 1995, he said.

Adding to the positive economic news, analysts announced that foreclosures leveled off this year for the first time since 1991.

Although mortgage lenders foreclosed on 1,681 residential and commercial properties in the county--a record high--the rate of increase was minimal, according to TRW REDI Property Data.

“Against a backdrop of (an) improving economy and real estate market conditions in California, foreclosures have stabilized,” market analyst Nima Nattagh said.

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From 1993 to 1994, the annual increase of foreclosures was just 2.8%, contrasted with year-to-year increases of 172% in 1991, 79.8% in 1992 and 55.4% in 1993. About 85% of the foreclosures typically involve residential property.

In 1990, lenders foreclosed on 215 properties countywide, contrasted with 585 in 1991, 1,052 in 1992 and 1,635 in 1993. This year’s figure is based on foreclosures during the first 10 months of 1994.

Times correspondent Greg Rippee contributed to this story.

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Business Vacancy Rates

Ventura County vacancy rates for commercial, industrial and retail businesses showed a dramatic decline from the first quarter of 1993 and the fourth quarter of 1994.

The vacancy rate is the percentage of available space that goes unrented or unsold.

INDUSTRIAL RETAIL OFFICE SPACE SPACE SPACE 1993 1st quarter: 24.2% 12.5% 9.3% 2nd quarter: 22.7% 12.5% 9.5% 3rd quarter: 22.6% 12.7% 9.4% 4th quarter: 21.0% 12.3% 9.4% 1994 1st quarter: 17.9% 9.7% 9.8% 2nd quarter: 17.4% 8.9% 8.2% 3rd quarter: 16.6% 7.9% 8.2% 4th quarter: 16.4% 7.7% 7.9%

Source: Grubb & Ellis Co.