Buttressed by low interest rates, soaring business confidence and continued economic growth, Ventura County's commercial real estate market is sizzling, with vacancy rates dropping significantly from a year ago, real estate analysts said Thursday.
In its midyear review and forecast, CB Richard Ellis reported that despite a recent spike in development, leasing activity was brisk through the first half of the year for all types of commercial properties.
"Overall, this is a real healthy picture," said Jerry Pelton, managing director for the firm's Ventura office. "There is a lot of good, solid activity in the market right now."
Office space continues to be the tightest category of commercial real estate, with vacancy rates hovering around 8%, down from 14% a year ago.
In the east county cities of Simi Valley and Thousand Oaks, the vacancy rate was 6.4%, down from about 12% last year.
Available office space in the western county also declined, dropping from about 16% last year to 11% at the end of June.
Another indicator of the heated market is how quickly office space is leased or sold. The county has a total of almost 10 million square feet of office space, up from about 9 million a year ago and 6 million three years ago.
Since January more than 216,000 square feet have been leased or purchased in the east county, nearly double the amount absorbed by this time last year.
The movement is a bit slower in the west county, with 70,900 square feet absorbed compared to the 84,000 square feet leased last year.
"This is a record gross absorption rate," said CB Richard Ellis Vice President Chuck Engel. "What's significant is that we're seeing the [office space] base go up and vacancies go down, which says there is a lot of activity in that market right now."
The county's retail real estate market was the most active through the first half of this year, with more than 650,000 square feet taken off the market. That drove vacancies down 2% from a year ago to 5.7% despite the addition of more than 700,000 square feet of extra space.
Vacancies in the east county dropped from 5.6% last year to 4.6%.
In the west county, retail vacancies over the past year have dropped 3% to 6.9%.
"This says a lot about the economy," said vice president and retail specialist Reed Henkelman. "Consumer spending is out of sight and people are really confident now about opening new stores. . . .That's what's been driving this."
Most of the activity in the retail market, he added, stemmed from so-called "big box" retailers such as Wal-Mart, which recently opened a store in Simi Valley, and Home Depot, which opened outlets in Simi Valley and Newbury Park.
Industrial real estate vacancies have climbed almost 3% over the year to 9.7%--the highest level since the early 1990s--but analysts warned not to read too much into the jump.
Bob Boyer, vice president in charge of industrial properties, said the increase is largely due to a number of new developments that have recently opened and should begin to fill over the next five months.
Over the past year more than 2.5 million square feet of industrial space has been built, most of it in Oxnard and Camarillo. Overall in the west county, the vacancy rate jumped more than 3% over the past year to 8%.
"On the surface there might be some reason for concern, but looking at absorption rates we find we're setting a good pace," he said. "The market is still pretty healthy."
Over the next three months, analysts expect the commercial real estate market to maintain its current activity with vacancy and absorption rates holding steady.
Retail real estate activity is again expected to post the most significant gains. The office market will continue to tighten and available industrial space will continue to be snapped up, analysts predict.
"All the indicators say there is going to be a good market and a good all-around economy," Engel said.