Uncertainty is the name of the game in Ventura County as the fallout from the mortgage crisis and fear of a recession cast a pall from the coast to the Simi hills.
“Countrywide has 6,000 employees in Simi Valley and Thousand Oaks, and it’s yet to be determined how many employees are going to be laid off,” said Craig Kish, a broker with Jones Lang LaSalle. “You know that’s having a psychological effect on landlords and tenants. Everyone’s waiting for that shoe to drop.”
For now, the market is holding fairly steady. Landlords were asking $2.56 per square foot for Class A space in the second quarter, just down from $2.57 in the opening quarter, according to CB Richard Ellis Group Inc. Despite the dip in pricing, vacancies are on the rise, hitting 14.4 percent, up from 12.1 percent in the first quarter and 10.6 percent a year ago.
“Landlords are still somewhat bullish, but the market is beginning to decline from a rents perspective,” said Kish, who expects some landlords to begin dealing as lease expirations approach. “Smart tenants will capitalize on the soft economy despite when their leases expire.”
With new space slated to come on line in the coming quarters, keeping existing tenants is paramount. “Landlords will start getting anxious,” he predicted. “At some point, they’ll start doing whatever they can to keep tenants.”
Economic issues also are affecting investment deals. The few transactions that occurred may be the last for a while. The commercial lending market is still feeling the effects of the credit crunch and likely will for some time to come. At the same time, there is the looming recession.
“With economic indicators not yet turning the corner, business owners will continue to be careful and postpone major real estate decisions until the economy picks up,” said Richard Bright, managing director, CB Richard Ellis.
Office Market At a Glance
Inventory: 12.3 million square feet
Under Construction: 909,000 square feet
Class A Asking Rents: $2.56
MAIN EVENTS
– Chicago-based First Industrial Realty Trust Inc. spent $26.7 million to acquire two 100 percent-leased buildings from the Wood Family Trust: a 96,000-square-foot flex building at 1011 Rancho Conejo Blvd. and the 109,492-square-foot Conejo Corporate Center office building at 2300 Corporate Center Drive in Newbury Park.
– The Port Hueneme Oxnard Harbor District bought a 50,960-square-foot industrial property at 5901 Edison Drive in Oxnard from Borla Performance Industries for $5.75 million. The 5-acre parcel contains two buildings with 6,200 square feet of office space and 13 drive-in bays.
– The Arbors reached 100-percent occupancy with a 12,000-square-foot lease by AGFA, a producer-distributor of analogue and digital imaging systems, and IT solutions. Terms were not disclosed. The 275,000-square-foot master-planned office campus, purchased by the Sares-Regis Group in 2006, has four Class A office buildings on 18 acres in Thousand Oaks.
– Deckers Outdoor Corp., a shoemaker and marketer, inked a five-year lease for 423,106 square feet at 3175 Mission Oaks Blvd. in Camarillo. The firm also renewed its lease for 300,000 square feet for three years at 3001 Mission Oaks Blvd. The deal almost doubles the company’s operations in the county, which includes a Ventura distribution facility at 4880 Colt St..
– Construction began on the Patriot Commerce Center, a 20-acre, 306,000-square-foot office and industrial project near the Ronald Reagan (118) Freeway and Highway 23. M.W. Ossola & Associates Inc. of Calabasas is financing the development with $60 million in construction and mezzanine financing from Pacific National Bank and Hillwood. The project will come on line in the fourth quarter.
