Draw of New Buildings Fails to Stem Tide of Vacancy Increases
By DAVID GREENBERG
Staff Reporter
With the economy improving but still sluggish, and prospective tenants in a post-holiday season lull, Ventura County’s office market was relatively slow during the first quarter.
The vacancy rate rose to 10.7 percent, from 10.5 percent in the previous three months, as 127,179 square feet more were put back on the market than was absorbed, according to data compiled by CB Richard Ellis. In the year-ago first quarter, vacancies were 13.8 percent.
A large portion of the sales and leasing activity stemmed from new and relocating tenants gravitating toward space constructed on speculation with contemporary designs, higher ceilings, new elevators and polished natural stone floors. Landlords of buildings 10 to 20 years old had difficulty attracting tenants.
Brokers said they expect lease rate reductions of 5 percent to 15 percent to help attract tenants to 1 million square feet of office space that’s now on the market and lower the vacancy rate in the coming months. For now, though, it’s future product that has tenants’ attention.
Silagi Development and Management has pre-sold 25 of 40 individual medical units in its Regency Medical Condominiums complex at 1000 Newbury Road in Thousand Oaks, which isn’t slated for completion until the end of the year. The units range from 1,000 to 2,500 square feet.
Meanwhile, Thousand Oaks-based Silagi sold 50 percent of the space in its 65,000-square-foot Camarillo Springs LLC office/condo complex at 803, 807, 811, 815 Camarillo Springs Road and 5999 Ridgeview Road in Camarillo for $6.8 million.
“From the sales (standpoint) the market is as strong as it can be, said Moshe Silagi, owner of Silagi Development. “There is too much money chasing real estate and not enough inventory. From the leasing side, it’s a lot better than it was a year ago.”
East County tenants paid lease rates of $2.25 to $2.45 per square foot with the concessions such as one to three months free rent on a five-year lease and modest tenant improvements.
In the western portion of Ventura County, where vacancy rates held firm at 9.7 percent, tenants paid $1.60 to $1.95 per square foot with two months’ free rent at most and smaller tenant improvement allowances, said Bill Kiefer, branch manager at NAI-Capital Commercial.
M & M; Development committed $25 million to a 70,000-square-foot retail and office center at the southwest corner of Campus Drive and Collins Street to serve the growing residential community surrounding Moorpark College.
Campus Plaza, which is being marketed by Westcord Commercial Real Estate Services, is already 28 percent pre-leased even though it won’t even break ground until later this spring, with tenants moving in this November.
PEGH Investments LLC and its property manager, Triliad Development Inc., have not had as much success with the 110,707-square-foot building at 3500 Willow Lane in Thousand Oaks that PEGH bought from Teradyne Inc. for an undisclosed amount last September.
“We had a lot of people looking at it,” said Bob Flink, a senior vice president and principal at Lee & Associates, which represents the landlord. “We have not made a transaction as of yet.”
In the industrial and retail markets, Oxnard showed some signs of activity.
Leading Industry Inc., which makes plastic packaging materials for Trader Joe’s and other food sellers, signed seven- and eight-year leases on two buildings totaling 195,277 square feet of built-to-suit Oxnard space for $8.7 million last month. (The user has an option to buy the buildings at the end of 13th month of each lease.)
Leading Industry will relocated from 900 Del Norte Blvd. in Oxnard for its new facilities at 1200 Pacific Ave. and 1300 Voyage Ave. next March.
As is true with industrial and office space, retail rates are less expensive in West County, but Silagi Development wants to get $1.50 to $1.80 per square foot at what is now the Oxnard Factory Outlet.
Silagi Development paid an undisclosed sum in early March for the 150,000-square-foot discount center at 2000 Factory Outlet Drive in Oxnard, with plans to invest $2.5 million to transform the deteriorating plaza into an upscale community shopping center called the Palms.
The decade-old complex is two-thirds vacant, with month-to-month tenants selling T-shirts, kitchen accessories and other items paying 10 to 80 cents per square foot.
Silagi wants to attract upscale customers moving into the growing community south of the Ventura Freeway in Oxnard.
“I hope this is going to be a destination type of center for people throughout Ventura County,” Silagi said.
Major Events:
-Silagi Development and Management pre-sold 25 medical office units totaling 1,000 to 2,500 square feet each at 1000 Newbury Road in Thousand Oaks for $9 million.
-Leading Industry Inc. paid $8.7 million to lease 195,277 square feet at 1200 Pacific Ave. and 1300 Voyage Ave. in Oxnard.
-Silagi Development and Management generated $6.8 million on the sales of 33,000 square feet of office space on Camarillo Springs and Ridgeway roads in Camarillo.
-M & M; Development pre-leased 20,000 square feet for an undisclosed sum at the corner of Campus Drive and Collins Street in Moorpark.
