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4/09/24
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Market Highlights
• Direct vacancies rose to 3.4%.
• Direct asking lease rates remained steady YOY at $1.25/sf nnn.
• Industrial properties under 50k sf accounted for over 66% of 1Q24 leasing activity.
Market Drivers
• Ventura County’s Industrial market is experiencing its third consecutive quarter of negative direct net absorption, totaling negative 73 sf in 1Q24.
• Vacancy and availability rates continue an upward trend, only two years removed from the 1.4% direct vacancy rate in early 2022. Currently direct vacancy sits at 3.4%, which has increased quarter-over-quarter (QOQ) and year-over-year (YOY).
• Only the Moorpark/Simi Valley and Thousand Oaks submarkets had negative net absorption this quarter. The positive absorption in the surrounding submarkets was not enough to pull the region out of the red. The Central Ventura submarket led the region in absorption with positive 94k sf.
• Sublease vacancy throughout the market remained a low 0.5%, only 20 basis points (bps) higher YOY and unchanged QOQ.
• Between 1Q20 and 1Q23, average rental rates grew rapidly by $0.48/sf to $1.25/sf NNN. Rental rates look like they have settled and have remained relatively flat throughout 2023. Currently, average direct asking rental rates are $1.25/sf, up 2.5% QOQ.
• Leasing activity totaled 449.2k sf in the first quarter, a 4.7% increase year-over-year. Leasing activity throughout 2023 totaled 2.4 msf, only slightly lower than the 5-year average of 2.8 msf.
• Looming recession concerns led to limited sales volume throughout 2023, totaling 1.3 msf. This quarter, sales volume totaled 687k sf, a 516% increase YOY. The uptick in sales volume may indicate that there is a growing sentiment of a more positive economic outlook from investors.
Economic Review
• In January, the Oxnard-Thousand Oaks-Ventura MSA reported an unemployment rate of 5.2%, an increase from the 4.5% reported in October of last year. The 5.2% unemployment rate is the highest the region has seen since October of 2021.
• The Port of Hueneme received a $2 mil federal grant in late 2023 for planning activity for an auto parking structure that will be used to transfer automobiles off the port. Currently, the Port of Hueneme is the 6th largest port specializing in the logistics of automobiles within the United States.
• CERF’s 2024 VC economic forecast reported that Ventura County has the third most expensive cost of living of all counties in California due to a 3,500+ unit housing shortage as a main factor.
Near Term Outlook
• Demand for smaller-sized industrial requirements, specifically for buildings under 50k sf, continues to generate steady demand. These properties accounted for 297k sf of leasing activity, or roughly 66% of the quarter’s total leasing activity.
• Leasing activity continues to trail more recent previous annual averages, primarily due to lack of inventory with direct vacancy rates remaining at a low 3.5%. Currently, there are over 600k sf of industrial properties under construction. More industrial space is in the pipeline with 101 Logistics Center, a 750k sf fully entitled proposed industrial complex that is expected to break ground in early 2025.
The information in this report was composed by the Kidder Mathews Research Group and provided by . Kidder Mathews Director of Research Gary Baragona
Data sources: CoStar, United States Bureau of Labor Statistics, Port of Hueneme, CERF
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