Ventura/23″/dt1st/mark2nd
By TOM GRAY
Contributing Reporter
If economic trouble is on the way from either Asia or Wall Street, it hasn’t yet dampened Ventura County’s commercial real estate market.
Retail vacancy rates, which had been edging upward since the second quarter of 1997, fell from 7.7 percent to 6.2 percent, putting them at their lowest level since the fourth quarter of 1996, according to CB Richard Ellis. Office vacancies also took a sharp drop, from 13.8 percent to 11.5 percent.
Only the industrial market showed signs of weakening. Vacancy rates rose for industrial properties to 8 percent in the third quarter from 7 percent in the previous three months. Nonetheless, pointing to the rising prices being paid for new buildings, brokers said demand for industrial space remains strong.
Prices were picking up for Burke Real Estate Group’s 145,000-square-foot Grande Vista Business Park north of the Ventura (101) Freeway at Wendy Drive in Newbury Park. Bob Pettit, the broker representing Burke, said 16 of the 22 units in this “industrial promenade” for technology firms and other high-end businesses were in escrow early in October.
Twenty units had been in escrow three months before, and two deals (covering four units in all) fell through. But that hasn’t kept prices from rising. Pettit said space was going for between $85 and $88 a square foot when the property first went on sale 18 months ago. Now, he said, the six remaining units are on the market at $99.50.
That’s partially because land itself is getting more expensive. Pettit says a commercial parcel just across the freeway from Grande Vista was bought earlier this year for $6 a foot, and is now back on the market at $8.50. Pettit sees a scarcity factor at work in industrial space. “Demand could be slackening, but you wouldn’t know it here because there’s just nothing available,” he said.
Melinda Walsh, a marketing associate at Daum, says the cost of raw land is lower in Ventura County than in Valencia or the San Fernando Valley, two areas just across the L.A. County line. But it’s rising fast in Camarillo doubling from $4 to $8 a square foot in the past two years and the supply is “extremely tight” in the Conejo Valley.
Among the Ventura County deals that closed in the third quarter, the biggest were on the industrial side.
One was the long-awaited sale by Northrop Grumman Corp. of its shuttered 566,000-square-foot plant complex on just over 100 acres in Newbury Park. Brokers said the property, which had been on the market since the early ’90s, was bought by Los Angeles-based Investment Development Services for an undisclosed sum.
Meanwhile, in Oxnard, CB Richard Ellis completed lease agreements for the 515,000-square-foot former Nabisco building at 1500 E. Third St.
The building was bought last December by Harry Ross Industries and Brown Jordan International. Over the past seven months, three tenants have signed leases: Casual Living Worldwide, Technicolor and Harbor Freight Tools. Casual Living Worldwide, which makes patio furniture, relocated from another Oxnard site and occupies 195,000 square feet. Technicolor occupies 90,000 square feet, and Harbor Freight Tools has leased the rest of the space, 230,000 square feet, for distribution operations.
CB Richard Ellis brokers said the Harbor Freight Tools and Casual Living Worldwide leases were the two largest industrial leases signed in Ventura County in the past five years.
In the office sector, demand continues to outpace the supply of new space on the market. A CB Richard Ellis report shows that gross absorption of office space (the amount of space occupied less the amount vacated) spiked to 333,242 square feet from 208,747 the quarter before. Chuck Engel, a vice president at the firm, said this level is the highest it has been “in years.”
A Daum report on third-quarter activity in the county noted that occupancy rates were running from 93 percent to 100 percent in most class-A and B+ buildings, with the remainder of the market ranging from 60 percent to 85 percent.
Engel said the largest office transaction of the quarter was the sale (for an undisclosed amount) of the Sares Business Center on Solar Drive in Oxnard. The property, consisting of three two-story office buildings totaling 121,000 square feet, was bought by Arden Realty from a partnership of Sares Regis Group and AEW, a pension fund adviser.
Also in Oxnard, Engel said, construction started on a 40,000-square-foot office building, owned by Sares Regis, that will have First American Title Insurance as its prime tenant.
In retail, robust economic activity is filling vacant space and in some cases pushing up rents, said Bill Hagelis, vice president for retail properties at Capital Commercial Real Estate in Oxnard. He said rents have “pretty much stabilized” at the power centers those retail properties anchored by big-name, category-killer stores like Home Depot and Wal-Mart but “smaller tenant space is going up (in price) as the economy has improved.”
Do brokers see any signs of an economic slowdown? None at this point, says Hagelis, though he hears talk of “some tightening on the financing side” that might crimp future construction.
Daum’s Melinda Walsh senses some caution in sales in the industrial market. Businesses are leaning more toward leasing right now, she said, which means they’re acting a little less sure of the future. “With overseas markets the way they are, I think there’s a little more uncertainty than there was before,” she said.
Major Events
? Northrop Grumman Corp. sold its 566,000-square-foot plant complex in Newbury Park to Investment Development Services for an undisclosed sum.
? Casual Living Worldwide, Technicolor and Harbor Freight Tools completed lease agreements to fill the 515,000-square-foot former Nabisco building at 1500 E. Third St. in Oxnard.
?The 121,000-square-foot Sares Business Center on Solar Drive in Oxnard was sold for an undisclosed amount to Arden Realty by a partnership of Sares Regis Group and AEW.
? Construction started on a 40,000-square-foot office building owned by Sares Regis in Oxnard whose primary tenant will be First American Title Insurance.
