Economists See a Good Year Ahead for County

After marking one of its most successful years in a decade, the Ventura County economy stands ready to march into 1999 with the same gusto it had in 1998, analysts said.

It may begin to slow later in the year, however, as crises in the Asian and South American markets begin to ripple through the nation’s economy.

“The beginning of the year looks very good. . . . The [county] economy will be moving with the same momentum it had in 1998,” said economist Mark Schniepp, director of the UC Santa Barbara Economic Forecast Project. “But I wouldn’t be surprised if we see some cooling, maybe by midyear.”

After suffering through a recession that stretched into the early 1990s and a crippling collapse of the housing market, the Ventura County economy has rebounded dramatically.

In November, the local unemployment rate hovered at 5.8% with a flurry of job creation in such stable and well-paying sectors as retail trade, construction, government and services.

In addition, last year’s residential real estate market was at its highest point since the massive construction boom in the late 1980s, with sales and median home prices increasing 25.6% and 8.8% respectively over 1997.

The commercial real estate market also soared last year as Los Angeles-area businesses increasingly relocated to Ventura County and local ones expanded.

According to a year-end report compiled by local real estate firm CB/Richard Ellis, office vacancy rates dropped from 18.3% in the Oxnard Plain to 12.3%. In the Conejo Valley, vacancy rates decreased by more than 5%, from 12% at the end of 1997 to 6.7%, and in Camarillo, vacancies were cut in half.

“It was really a milestone year,” said Michael Slater, senior vice president of CB Commercial. “The kind of activity we had going on was almost unusual. . . . Everything was in demand.”

In addition, 70% of the growth in the commercial real estate sector was due to expansion of local firms.

Other high points for the county’s economic picture included increased growth at the Port of Hueneme, which cleared more than 1 million tons of cargo in 1998.

The port also opened a new shipping terminal that will increase its handling capacity and, officials hope, attract additional clients.

Though it had spent the better part of 1998 fighting to retain patent and distribution rights for one of its most successful drugs, Amgen Inc. of Thousand Oaks has cleared many legal hurdles and appears ready to surge ahead in the coming year.

Still, as countries such as Brazil, Indonesia and Japan continue to struggle with severe economic and political crises, some experts warn that the economy will begin to lose some of its luster.

“Overall, the [nation’s] economy is still quite strong, but there are some dubious signs,” Schniepp said. “All year we’ve been looking at what’s going on in the world, but for the most part, we’ve been shielded. . . . I think that in 1999 we’re going to start seeing some effects.”

Specifically, he said, the county’s labor market, which has increased substantially over the past year, will begin to slow.

Whether that cooling means layoffs or hiring freezes is unclear, Schniepp said.

“It depends on how severe the effects are,” he said. “So far the country has weathered this really well, so the effects may not be as great as some say they will be.”

Steve Kinney, president of the Greater Oxnard Economic Development Corp., predicted that the slowing would translate into decreased job creation, not layoffs.

“The good news in all this is that the past year was so good that even if the economy does slow, it’s still going to be strong,” he said. “Overall, it just won’t be growing like it has in the past.”

Analysts expect that as the overseas financial travails begin washing up on the United States, local industries such as durable goods manufacturing, multimedia development and high-technology production may suffer.

But they agree that the county’s diverse mix of business, ranging from software development to shipping to agriculture, will keep the local economy buoyant even through the hardest times.

With rates now hovering in the 10% range for a 30-year, fixed-rate mortgage, the county’s housing market should remain strong through this year, but may not keep pace with the superheated course it took in 1998.

Although the California Assn. of Realtors predicts there will be a 4% drop statewide in sales over the course of this year, experts said the local market will remain strong.

According to area real estate associations, inventories remain low throughout the county, with demand increasing. That, they said, should keep prices and the market stable.

“There’s nothing out there I can see that’s going to change the market that much,” John Karevoll, an analyst with Acxiom/DataQuick, said recently. “Something big will have to happen before any major change.”

Similarly, the commercial real estate market should continue to post robust gains through the year, due to the current premium on space.

However, Slater said that because of the amount of space that will become available in 1999, vacancy rate declines won’t be as dramatic as the year before.

“If I had to look into my crystal ball, I’d say it’s going to be a strong year,” he said. “There’s still plenty of demand.”