Ventura County’s Economy Is Showing Strength
So far, so good.
Ventura County’s economy has remained healthy as a business downturn batters a nation headed toward recession.
Several benchmarks of prosperity are still strong locally--jobs, housing sales and construction of new homes, offices and business parks.
Even industries jolted by the nation’s economic downturn and the Sept. 11 attacks are rebounding: Hotels are filling back up, and many stores are back to the sales levels of last year.
“We don’t see Ventura County as in a recession now or in the near future,” said Bill Watkins, director of the Economic Forecast Project at UC Santa Barbara. “Its growth is declining compared with the spectacular rates of the last few years but is still not weak.”
Watkins’ group projects Ventura County’s rate of economic growth this year at 7.1%, with a decline to 3.4% next year. That compares to highs of 14.2% in 1999 and 9.4% in 2000.
That 3.4% increase is still above the average annual growth rate of about 3.1% for the nation, he said.
Yet, despite a balanced and resilient local economy, led by Amgen, Watkins said there are signs the recession has begun to trickle down to Ventura County.
Vacancy rates are moving up in industrial parks and office buildings, and more retail shops are empty. Developers are jittery, and some say they are taking a wait-and-see attitude before investing in new houses and businesses. There is also a mild softening of business along the vaunted Ventura Freeway high-tech corridor. And Kinko’s, the copying giant, is moving its headquarters from Ventura to Texas, taking hundreds of jobs with it.
“The market is in a holding pattern,” said Jerry Pelton, managing director of the CB Richard Ellis commercial brokerage firm. “Everybody is waiting to see if the other shoe is going to fall. When you go through a traumatic situation, the last thing people want is to make long-term decisions.”
Manufacturers, in particular, are under pressure. “They respond much more rapidly to downturns,” Pelton said. “They’re the ones sitting there watching inventory in their warehouses grow.”
Industrial real estate broker Fred Ferro said business has slowed at his Oxnard company, NAI Capital Commercial.
“We’ve seen a slowdown in phone inquiries and leases,” Ferro said. “And in many cases, people who aren’t directly affected are using this to procrastinate.”
Ferro sees some weakness in business parks in Camarillo and the Conejo Valley, as high-tech firms have slowed production or canceled planned expansions.
Indeed, after the high-tech boom of the last few years, analysts say Camarillo’s economic growth rate of 23% in 1998 dipped to 3.9% in 2000. Among Camarillo employers, eLabor, Power-One, Vitesse Semiconductor and Xircom are cutting payrolls.
But Camarillo is not alone. Lots of commercial space is available at both ends of the county. Industrial vacancy rates increased from 6.4% at midyear to 8.1% at the end of September. Office vacancies were up from 11.3% to 12% for the same period.
“The market is still in relatively good condition,” Pelton said. “But it’s starting to reflect the recession. Because of the amount of sublease space available, it’s coming on the market at pretty competitive prices.”
Even in Ventura County’s booming housing market, where a shortage fuels steady sales and rising prices, there are signs of slowing, as well as greater caution among builders. An industry analyst found that Ventura County new-home sales--about 20% of the market--have dropped sharply in the third quarter, although overall sales remained high.
“We’ve been cautious since Sept. 11, because you have this combination of effects from the terrorism and the projected downturn,” said John Franklin, regional manager for Shea Homes, which builds in six local cities. “Right now we don’t know the magnitude of that--a soft one quarter, or two quarters or three quarters.”
High-Priced Homes Taking Longer to Sell
Home builders are closely monitoring sales activity, always ready to pull back on construction if the market drops. “We know we’re going to have some softening, so you keep your finger on the pulse of sales activity week to week,” Franklin said.
Elaine Pettersen, president of the Ventura County Coastal Assn. of Realtors, said she’s seen an increasing hesitancy by home sellers and buyers to commit to long-term decisions. Houses, especially higher-priced ones, are staying on the market longer, she said.
“What we’re seeing is people cocooning,” Pettersen said. “They’re just going to fix up their homes, stay close to home and do some nesting. They are concerned about their jobs and are trying to be a little more cautious.”
That doesn’t mean the Ventura County economy isn’t strong and capable of moving past this blip of slower activity, Pettersen said. “The reality of it is we are in such a job-rich economy with this biotech and biomedical corridor that we’re not just a Kinko’s-only county.”
Ventura County is job rich, but housing poor, agreed John Stanek, president of the Building Industry Assn.’s regional group. That’s why he thinks builders will steadily increase the stock of new homes in the months to come.
“Most of my counterparts are pretty comfortable with the marketplace and still moving forward with projects,” Stanek said.
“The basics are very simple: Ventura County is a great place to live; it has a great climate; it has pretty constant job growth; and people don’t mind commuting back to L.A. or Santa Barbara to live here.”
Indeed, in October, local home sales reached the highest level for the month since 1988, and the price of a typical home was $29,000 higher than a year earlier, the largest 12-month gain in more than a decade, DataQuick Information Systems reported.
Amgen Expected to Add Jobs
Analysts now predict that 2001 will be the biggest year for sales and price increases since the 1980s boom.
And in recent days, a second key economic indicator, the unemployment rate, showed the county’s continued strength as joblessness fell from 5.2% in September to 4.8% in October, well below that of the state and nation.
Last week, Thousand Oaks-based Amgen, the world’s largest biotechnology company, projected a 20% increase in earnings per share for 2002. Analysts expect Amgen, already the county’s largest private employer with 5,500 workers, to add hundreds of jobs.
The best barometers of economic vitality, however, may be retail sales. Business was off after Sept. 11 but rebounded in October and is steadily improving in November, managers said.
In Thousand Oaks, Becky Bresson, general manager at The Oaks, said sales at the shopping center are about 2% ahead of last year’s November pace, after being down following the World Trade Center attacks.
“Certain stores are up 40% over last year, like home accessories and furnishings. And health-and-beauty supplies continue to be quite strong,” Bresson said.
On Ventura’s Main Street, Denise Sindelar, who owns a women’s clothing store, said there’s been a turnaround after six slow weeks. “The last two weeks have been very good,” she said.
At Ventura’s Pacific View Mall, sales were up even in September, spokeswoman Alice Love said. “Shopping is sort of an everyday activity for most people, and we think everybody is just getting back to their daily routines,” she said.
And at Camarillo’s Premium Outlet mall, customer traffic is back to pre-Sept. 11 levels, a spokeswoman said.
Even the county’s hotels are rebounding, according to industry consultant PFK Consulting of Los Angeles. Occupancy was down 11.5% countywide in September, but preliminary numbers are much better for October, analyst James Stockdale said.
“Ventura County’s been weathering the storm a little better than most,” he said, “because a lot of the travel that comes in is regional and drives in from Los Angeles, instead of flying.”
Economic analyst Mark Schniepp said that Ventura County is riding out this year’s bad news in fine style. It’s true that commercial vacancy rates are creeping upward, but industrial and office construction was also up 52% for the first nine months of the year, he said.
“After two years of hyper-growth, we’d expect some corrections, but we’re not seeing any kind of wholesale adjustment,” Schniepp said. “That shows the strength of Ventura County. I look at all the counties in the state, and Ventura County is one of the strongest.”
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Ventura County Economic Indicators
Business Vacancy Rates
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3rd quarter 2nd quarter 3rd quarter 2000 2001 2001 INDUSTRIAL SPACE West county 7.5% 6.5% 8.2% East county 13.3% 6.2% 8.1% Countywide 9.7% 6.4% 8.1% OFFICE SPACE West county 12.2% 11.8% 12.2% East county 10.7% 11.0% 11.8% Countywide 11.3% 11.3% 12.0% RETAIL SPACE West county 5.2% 7.3% 9.8% East county 4.8% 3.9% 5.0% Countywide 5.0% 5.6% 7.4%
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Source: CB Richard Ellis
Residential Building Permits
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Single-family Multifamily Total housing Year units units units 1988 3,675 1,479 5,154 1989 3,347 1,679 5,026 1990 1,360 1,252 2,612 1991 1,047 1,147 2,194 1992 1,166 554 1,720 1993 1,166 206 1,372 1994 1,649 815 2,464 1995 1,954 212 2,166 1996 2,130 223 2,353 1997 2,071 245 2,316 1998 2,811 371 3,182 1999 3,662 780 4,442 2000 2,995 976 3,971 2001 * 2,477 285 2,762
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* Totals through first nine months of 2001
Source: Construction Industry Research Board
