Commercial Real Estate Rebounds
Ventura County’s once-glacial commercial real estate market is starting to thaw and creating a market boom not seen locally for nearly 20 years, a major real estate firm said Wednesday.
In its midyear review and forecast, CB Commercial Real Estate Group reported that the county’s commercial market is ready to explode.
“These are the most exciting and active times that we’ve had in years,” said Bob Boyer, an industrial market specialist at CB Commercial. “We’re doing a lot of landmark activity with bread-and-butter sales on existing space, and there’s a lot of activity with development because there simply isn’t enough space available.”
In the past three months, according to Boyer, CB Commercial Real Estate Group’s local offices have arranged leases for nearly 1 million square feet of commercial space to both expanding businesses within the county and companies relocating to the area.
According to the company, an array of economic factors is stoking the county’s economic fire, such as available financing, a healthy state economy, government flexibility, and relatively stable interest and inflation rates.
“All the essential elements for a totally vital market are finally aligned,” said Jerry Pelton, managing officer of CB’s office in Ventura. “It’s really something we haven’t seen in a long time and it’s going to be good for the county.”
CB’s survey of the Ventura County market indicates that industrial, office and retail vacancies have dipped to a four-year low, fueling a surge in new commercial developments such as the Westlake Promenade and Northgate shopping centers in Thousand Oaks and the new 10-screen movie theater in downtown Ventura.
There are also plans underway for an 11-acre, 141,000-square-foot business center to be built along the western border of Thousand Oaks near the Conejo Grade.
From April 1 through June 30, industrial vacancies dropped from 8.2% in the first quarter to 8%. Retail space remained at 6.5%, while countywide, available office space vacancies dropped from 14.9% to 14.5%.
The declining amount of available commercial space has also given banks the signal they need to pour cash into projects to build new commercial complexes or renovate existing ones.
“It’s a lot more active here than it has been,” said Jim Bruder, a commercial loan officer at Los Robles Bank. “We’ve been seeing a lot of good healthy companies either coming into the county or expanding.”
To better compete in the commercial lending market, Bruder said the bank has increased its lending limit from about $1 million to $1.5 million. In the past six months, it has lent money on four projects, a figure unthinkable two years ago, he said.
Although the market has been extremely unforgiving in past years, Rick Caruso, developer of Westlake Promenade, agrees that it is beginning to show a marked improvement.
“Several years ago, it was a much tougher market,” he said. “Primarily, it was the financing that was so hard because banks had this perception that the Southern California real estate market was unfavorable, but that’s changed.”
Caruso said financial institutions across the country are bullish on Southern California these days because of the state’s economic rebound after near financial collapse during the recession of the early 1990s and endless rounds of defense cuts.
But analysts question whether growth in the county’s commercial real estate market is sustainable, or if it is just a temporary spike that will quickly subside.
Joe Bonnano, an analyst with UC Santa Barbara’s Economic Forecast Project, said the county is poised to maintain the trend.
“Like all markets, this one’s cyclical. But right now, there aren’t any indicators that I can see that say it’s going to end,” he said.
“Commercial real estate is a capital-intensive business, and if interest rates and inflation stay down, we could see this lasting.”
