Commercial Realty Market Called Strong
After years of near-stagnant activity, Ventura County’s commercial real estate market is continuing an upward climb and is expected to remain healthy for the foreseeable future, a major real estate firm said Wednesday.
Although industrial and office space vacancy rates inched up slightly in the past three months, CB Commercial Real Estate Group reported in its third-quarter review and forecast that the county’s commercial market--bolstered by both below-market prices and a burgeoning state economy--is strong and poised to make significant gains in the next year.
“By all indications, conditions could not be better right now,” said Jerry Pelton, managing officer of CB’s Ventura office. “Right now, supply cannot keep up with demand and that’s exciting.”
From July 1 to Sept. 30, vacancies at industrial buildings edged up slightly from 8% to 9%--an improvement from a high of 11.4% in the fourth quarter of 1994. Available retail space also increased marginally from 6.5% to 6.7% during the last quarter, while office space vacancy rates dropped from 14.5% to 13.2%.
Despite additional industrial and retail space being available, Reed Henkelman, vice president of CB’s retail market division, cautioned about reading too much into the numbers.
For the past several years, retail construction has, on average, increased the amount of retail space by about 10% annually, he said, and such marginal increases in vacancy rates shouldn’t be considered a sign of a market cooling.
“Knowing that, when you look at those numbers, it’s a very attractive retail environment for shopping center owners,” he said.
In all sectors of the commercial market, office space availability posted the largest drop and has had the most significant activity as Wall Street-backed real estate investment trusts, or REITS, have begun paying big money to swallow up large office tracts from Ventura to Thousand Oaks.
As an example, CB Commercial officials pointed to July’s purchase of the 108,000-square-foot office building at 1000 Town Center Drive in Oxnard by Arden Realty for a reported $14.1 million and Kilroy Realty’s purchase of the 20-acre Unisys campus in Camarillo for $24 million.
“The real activity hasn’t been so much in the vacancy trends, but in the sale of office buildings, which is being driven by these REITS,” said Chuck Enger, a CB Commercial vice president. “A couple of years ago, Wall Street wouldn’t touch the Southern California economy, so this is definitely a positive sign.”
As a result of renewed interest in Southern California real estate, Enger said he expects office space rents, which are presently not an accurate reflection of the area’s demand and value, will increase in the coming months.
Rents range from a low of $4 per square foot in Oxnard to as much $14 per square foot in the Westlake section of Thousand Oaks, according to Enger.
The current demand for commercial space in the county has also given banks the sign they need to pour cash into projects to build new commercial complexes or renovate and expand existing ones.
“We’re seeing a lot of activity right now, a lot more than we have in the past,” said Jim Bruder, a commercial loan officer at Los Robles Bank in Westlake Village. “And there’s more of a mix right now between office, industrial and retail businesses that are coming in for loans.”
Despite the fact that the county’s commercial market has shown consistent improvement since the fourth quarter of 1995, some analysts question whether the county has enough economic steam to sustain such an attractive real estate environment.
“The county is poised to keep moving ahead at a steady pace and there’s nothing that I can see that’s going to interrupt that,” Mark Schniepp, chief of the UC Santa Barbara Economic Forecast Project, said during a recent meeting with area business leaders. “I think we’re going to be seeing more of this steady kind of growth.”
