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Friday, Oct 7, 2022

Market Continues to Tighten as Owner/Users Snap Up Property

Vacancy rates in Ventura County’s office and industrial markets continued to shrink in the third quarter as low interest rates kept sales activity strong while little new product entered the market.

The trend was underscored by the pre-sale of half the 40 units in a Thousand Oaks medical complex that won’t even be ready for occupancy until December.

With net absorption climbing to 125,408 square feet, up from 65,457 in the April-June quarter, office vacancies dropped to 9.3 percent, compared with 10.5 percent for the same period, according to CB Richard Ellis Inc.

Diminished stock of available space helped push third-quarter industrial net absorption to under 900,000 square feet, from 1 million in the previous three months. Vacancy rates, too, fell to 10 percent from 10.6 percent in the previous period.

It marks the first time in a year that vacancy rates have been at 10 percent or lower in both sectors, giving an upper hand to landlords who had spent the last two years doling out major concessions to attract tenants.

“We’re going to continue to see the vacancies drop and the rates increase,” said Sam Monempour, a senior associate in the office sector at Grubb & Ellis Co. “Landlords are already starting to raise rates because there is less vacancy on the market and there is higher demand.”

Silagi Development and Management’s Regency Medical Plaza at 1000 Newbury Road in Thousand Oaks is 80 percent pre-sold, with 20 of the 40 offices taken off the market during the last quarter. Aggregate sales eclipsed $9 million.

The units range from 1,000 to 2,500 square feet and sold for between $315,000 and $775,000 to general practitioners, dentists, pharmacists, urgent care providers and pediatricians. The developer expects the final sales tally to exceed $19 million.

“Most of these doctors are all people who have been renting space,” said Tony Principe, senior vice president at Westcord Commercial Real Estate Services Inc., which brokered the deals for Silagi.

On the industrial side, EDO Corp. made the largest splash when it signed a 10-year lease in September on a 111,703-square-foot free-standing building at 3500 Willow Lane in Thousand Oaks for more than $11 million.

The New York-based defense electronics company is in the process of vacating the two buildings it occupied in Thousand Oaks and Simi Valley totaling about 43,000 and 40,000 square feet respectively.

PEGH Investments LLC bought the research and development facility, which includes 66,000 square feet of office space, from Teradyne Inc. last year, after the Boston-based defense electronics company consolidated its regional operations in Agoura.

The deal is not only a sign of revitalization in the real estate market, but a boost to the area’s defense industry.

In the all-important East County, leasing rates for the office sector the bread and butter of the county’s real estate industry climbed to $2.50 per square foot for full-service Class-A space, up 15 cents from the previous three months. West County rates remained flat at $1.65 to $1.90 per square foot.

As recently as a year ago, landlords were offering concessions of up to six months free rent and a 15 percent discount on leasing rates of at least five years. Last quarter, they generally offered one or two months free rent and not much else on a minimum five-year lease.

With interest rates still at historically low levels, buying a building or office condo remained an attractive proposition if a willing seller could be found. Those who don’t have a lot of product in their portfolios are becoming increasingly unwilling to part with what they have.

The city of Camarillo invested $6.3 million in what was considered the last prime parcel of commercial property in the city. It is seeking a developer for a project on the 8.5-acre site at Ventura Boulevard and Las Posas Road, fronting the Ventura (101) Freeway and adjacent to the Camarillo Airport, as a hotel and conference center.


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