Office Market At a Glance
Inventory:
11 million square feet
Buildings Surveyed:
287
Net Absorption:
78,231 square feet
Owner-user and investment transactions dominated the first-quarter deal flow in Ventura County with four sales recorded, including two by existing tenants.
Tenants with deep pockets were buying to protect themselves from expected market-wide rent increases, as four of the county’s six submarkets saw vacancy rates tighten. And investors were picking up properties to get a foothold in the market despite new projects coming online.
“There has been a significant increase in construction activity over the past 12 months, particularly in Conejo Valley, where over half a million square feet is under construction,” said John DeGrinis, senior vice president, Colliers International’s Encino office.
Opus West is developing a $35 million office park in Camarillo’s Heritage Zone. The 127,050-square-foot project features a two-story office building and 13 one-story office condominium buildings. The development will break ground next month and come online in early 2008. Other office projects are under way in Agoura Hills, Thousand Oaks and Westlake Village.
The new projects will come with “premium average asking rental rates to offset extremely high construction costs,” DeGrinis noted. This will open the door for other owners to jack up their prices, too.
While these projects drove investment activity, lease activity was low. “The climate is fair, not great,” said Michael Slater, senior vice president of CB Richard Ellis Group Inc.’s Camarillo office “The leasing trend is slowing down it seems and the vacancy rate went higher after the first quarter.”
The countywide vacancy rate was 9.4 percent in the first quarter, compared with 7.7 percent at year-end and 9.1 percent a year ago. The small Simi Valley/Moorpark submarket experienced the sharpest increase in vacancy, rising to 42.3 percent from 19.4 in the previous quarter as it gave back 132,000 square feet of space. (First Data Corp. put 140,000 square feet on the market for sublease.)
The glut in the Simi area was offset by a tightening of every other county submarket, with the exception of Camarillo, according to CB Richard Ellis Group.
Going forward, Slater expects leasing to slow further, as tenants sit tight until new projects begin pre-leasing.
Margot Carmichael Lester
MAIN EVENTS
-Palms Medical Plaza purchased the 31,400-square-foot office building at 1901 Outlet Center Drive in Oxnard from Horizon LLC for $7.87 million. The buyer is a tenant in the building and exercised a purchase option.
-Instrument Control Services purchased 6,043 square feet of office space at 6085 King Drive in Ventura from Northwood Properties. Terms of the deal were not available.
-Newport Beach-based Voit Development Co. acquired the 342,400-square-foot building at 1465-1475 Lawrence Dr. and the 122,673-square-foot building at 1445-1455 Lawrence Dr. in Thousand Oaks. Terms were not disclosed. The seller, Santa Monica-based Palisades Associates, paid $34 million for the two-building property in 2005.
-Farmers Insurance sold its 271,000-square-foot office complex in Simi Valley to New York-based REIT Capital Lease Funding, for $42 million. The insurer will lease back the space in a 10-year deal at undisclosed terms.
-Journal and book publisher Sage Publications leased 77,000 square feet of office/industrial space at 2590 Conejo Spectrum Road in Thousand Oaks. Terms of the five-year deal were not reported.
-Storage solution provider Nexsan Technologies took 6,000 square feet at the Hillside Corporate Center (555 St. Charles Dr.) in Thousand Oaks in a five-year deal at undisclosed terms.
-In Westlake Village, Yoga Works took 14,000 square feet of office/health club space in a 10-year deal for unreported terms.
