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7/06/23
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This 2nd quarter 2023 update provided by real estate services firm Kidder Mathews
MARKET HIGHLIGHTS
• Direct vacancies rose to 2.7%, steady quarter-over-quarter.
• Direct asking lease rates increased to $1.23/sf NNN from $1.02/sf NNN this time
last year.
• The average sales price was $251.37/sf.
Market Drivers
Direct net absorption in 2Q 2023 was positive 11.2k sf, after the region’s two consecutive quarters of negative net absorption. Direct vacancy rates remained steady quarter-over-quarter at 2.7% -- 130 bps higher than the direct vacancy rate reported this time last year. Despite the uptick in vacancy, it remains low compared to pre-pandemic figures of 3.8% in 2019.
Sublease vacancy in Ventura County was a low 0.5%-- 20 bps higher than the previous quarter.
The Moorpark/Simi Valley and Thousand Oaks submarkets are reporting total vacancy rates of 5.6% and 8.3% respectively. Both submarkets have had a significant increase in vacancy since the start of 2022, most notably Moorpark/ Simi Valley’s jump from the 1.2% reported in 1Q 2022. Of the 701.9k sf of new industrial space delivered since the start of 2022 in these submarkets, roughly 46% of the space remains vacant.
Average rental rates continue to rise to an all-time high of $1.23/sf NNN, a 20.3% increase year-over-year.
Leasing activity totaled 1.13 msf in the second quarter, an 86.2% increase year-over-year. Year-to-date leasing activity totals 1.56 msf.
Currently, Ventura County has 659.8k sf of industrial space under construction with year-to-date deliveries totaling 382.3k sf. No properties were delivered in the second quarter.
Economic Review
In May Ventura County’s unemployment rate decreased slightly to 3.7%, down from the 4.2% reported in January. The region’s unemployment rate topped out at 14.3% at the height of the COVID-19 pandemic layoffs.
The trade, transportation, and utilities sector remains strong throughout Ventura County reporting over 56,000 jobs in May.
SOAR (Save Open Space & Agricultural Resources) will continue to hinder new development and keep prices high.
Near Term Outlook
Industrial demand will remain high, due to desirability of doing business in Ventura County, maintaining a low direct vacancy rate of 2.7%.
Recession concerns and rising construction costs will hinder new developments.
Industrial sale volume fell 83.6% year-over-year throughout the County, following the nationwide trend of investment sales activity decreasing. Quarter-over-quarter sales activity more than doubled from 69.6k sf to 175.6k sf.
Source: Kidder Mathews Research, CoStar, United States Bureau of Labor Statistics
Report prepared by Kidder Mathews Director of Research Gary Baragona
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