There’s relief on the horizon, but for now companies looking for office space in Ventura County are going to have to search a little longer.

Vacancies dropped to 8.3 percent in the second quarter from 9.1 percent in the first quarter. That in turn pushed average asking rates up for Class A space to as high as $3.05 in the second quarter from $2.25 per square foot in the first quarter, according to figures from CB Richard Ellis Group Inc.

And though there is 501,000 square feet of commercial space under construction in East Ventura County and the Conejo Valley, and another 123,000 in Western Ventura County, vacancies could dip further in the near term.

“Vacancy should continue to go down, due to the fact that most of the new product under construction won’t be available until mid-2007,” said Michael Slater, senior vice president with CB Richard Ellis.

That creates a challenge for firms looking for footprints of 20,000 square feet or larger, noted Michael Foxworthy Sr., executive vice president with GVA Daum.

“They are finding it very difficult to locate Class A contiguous space in Ventura County,” Foxworthy Sr. Said. “Selection continues to be very limited and will continue to be until the delivery of the Arbors (in Thousand Oaks) near end of 2006 and Westlake Park Place in fall 2007.”

Software maker Intuit Inc., looking to establish a Ventura County beachhead, is feeling that pain.

“They’re out in the market looking for 150,000 square feet, and there are only maybe two or three alternatives that will work for them,” explained John DeGrinis, senior vice president of Colliers International. “There are just not a lot of opportunities for a bigger user.”

Making deals


Still, some tenants are finding the space they need. Countrywide Financial Corp., one the nation’s largest mortgage lenders, leased the entire Westlake Landmark project at 30870 and 30930 Russell Ranch Road in Thousand Oaks. Terms were not disclosed, but the deal is estimated to be for 10 years at $46 million. The building will be online in the fall. The Calabasas-based firm also took 75,000 square feet of office space at the 21st Century headquarters building at 6303 Owensmouth Ave. in Woodland Hills.

Two deals closed in Westlake Village. Footwear purveyor Walking Co. expanded into 15,400 square feet at 2475 Townsgate Road for $2.45 per square foot. Law firm Musick Peeler & Garrett has established a new 11,000-square-foot office at 2801 Townsgate Road. Terms were not disclosed.

In Simi Valley, Johnson Controls, the automotive systems and facility management and control manufacturer, leased 33,000 square feet at 4100 Guardian St. for $8.5 million.

These deals improved the county’s overall absorption to 279,653 square feet in the second quarter after the market gave back 45,090 square feet in the first quarter.

There is currently about a half-a-million square feet of new construction under way around the county.

Some of the largest projects include the Arbors, two 68,000-square-foot, Class A office buildings along the 101 Technology Corridor in Thousand Oaks; Meridian Office Park, a four-building, 18,700-square-foot project in Oxnard; and Conejo Spectrum, the combination renovation/new construction project in Thousand Oaks that will add about 1 million square feet of office and industrial space.

New projects


These new projects will likely push asking rates up further as developers struggle to cover the rapidly rising cost of construction. Land values also are on the rise as the amount of available ground shrinks.

“A worldwide shortage in construction materials and increase in gas prices have driven up construction prices,” Foxworthy explained. “Gas prices have had the greatest impact on the price of asphalt, which has increased by more than 38 percent in the last year.”

With this in mind, Foxworthy said, “Corporate users are best advised to sign long-term deals to stave off the impact of rate increases in the years ahead.”

Brokers predict these projects will quench only a small amount of tenants’ thirst for space, and office properties still in the planning stages may be slow to develop.

“By time you acquire the land, go through entitlements and build your building, you could be looking at two years out or more,” DiGrinis said.

“With rapidly increasing construction costs and land prices, it’s difficult to say if a project will pencil for sure, given that rents will now have to be up 10 percent to 15 percent,” he said. “That’s caused a pause in the boom.”