Home, Office Scarcity Due to Continue

Ventura County’s hot residential and commercial real estate markets have created a scarcity of homes and office space and, barring any major economic tumult, that should remain true through the turn of the century, analysts said Thursday.

At a quarterly real estate conference sponsored by Chicago Title Co. and the UC Santa Barbara Economic Forecast Project, analysts detailed the high-octane dynamics that are fueling today’s market and predicted more of the same, saying that the county’s economic momentum is so strong that real estate should remain buoyant through 2001.

“There are so many factors playing into Ventura County’s economic strength right now,” said Mark Schniepp, forecast director. “The economy is very strong, surprisingly strong, and that’s going to keep the market hot right through the next year or so.”

At the end of a remarkably robust 1998, economists predicted that the local economy would begin to cool with less job and income creation, more modest home prices and greater availability of commercial real estate space.

However, that has yet to happen.

The momentum with which the county ended the year has actually picked up through the first quarter of 1999.

Unemployment remains at a near-historic low of 4.1%, residential real estate continues to move off the market nearly as fast as it comes on and consumer spending is frenetic.

In fact, the pace being set in real estate sales, median home prices and job growth is well ahead of last year’s figures, leaving the county poised to end the year on its highest economic note in history, Schniepp said.

In addition, investment in commercial, retail and industrial development continues to be strong, with $180 million expected to be spent on a number of projects spread throughout the county. That compares with a total of $200 million spent last year.

Over the next five years, analysts expect about $175 million a year to be funneled into commercial development.

That is good news, Schniepp said, because there is such a dearth of commercial real estate in the county.

Office vacancy rates are low, averaging about 9% in the county. East county communities have the tightest markets with some, like the Conejo Valley, having rates at or below 6%. Rates around 12% are considered healthy.

“There has been an unbelievable rate of shrinkage in the market for office space,” Schniepp said. “What’s coming online is badly needed and we need more of it.”

Currently, about 21 commercial projects are either under construction or slated to begin, which will add another 1.8 million square feet of space to the county by the end of the year.

The market for industrial space, however, has begun to loosen. There is now greater availability in some communities, such as Oxnard and Port Hueneme.

Predictions for the county’s residential real estate market, where sales have increased more than 6% during the first quarter compared to the same period a year ago, were equally good.

Schniepp said the area’s continued economic expansion will sustain demand for housing well into the next century.

That could lead to increasing median home prices because little development is planned over the next few years.

About 3,000 homes will be built this year, with slightly lower numbers predicted for 2000 and subsequent years. And few believe that that will satisfy demand.

“Ventura County is one of the areas that’s leading Southern California’s economic growth,” Schniepp said. “Demand is going to increase and so are the prices.”