Market Drivers
Since mid-2022, nearly every quarter has recorded negative net absorption. Direct net absorption for the first quarter stayed on trend, posting at -53K SF.
Vacancy and availability rates continued to increase in Q1 2025, both reflecting an increase of 70 basis points (bps) year-over-year (YOY) posting at 3.9% and 6.1% respectively. Although both rates have been on the rise over the past couple years, they are both still low from a historical perspective and when compared to most other major industrial markets along the West Coast.
Although 2024 saw some larger deals towards the end of the year, leasing activity in Q1 2025 experienced a 35% decrease YOY to 399K SF. Small-bay properties under 50K SF are continuing to see much of the demand in contrast to the scarcity in large occupiers seeking space in the market.
Average rental rates in the Ventura industrial market jumped in Q1 2025 to a record high of $1.28 PSF NNN, a 2.4% increase YOY from $1.25 PSF NNN in Q1 2024. Although the start of the year hit a new historical high, annual rent growth trend throughout the county have slowed in the past year.
Sales activity started off slow at the start of the year with 250K SF in sales volume in Q1. With the current state of unpredictable market conditions and economic insecurity looming in the new year, investors are staying cautious and await clearer signals before committing to significant transactions.
Economic Review
In February, the Oxnard-Thousand Oaks- Ventura MSA reported a preliminary unemployment rate of 4.7%, unchanged when compared to the same time last year and down 30 bps from the month prior in January that posted at 5.0%.
Ventura county is home to The Port of Hueneme, the only commercial deep-water port between Los Angeles and San Francisco, which is ranked amongst the top ten Ports in the US for auto imports and fresh produce. As such, the port is in a wait-and-see approach with the uncertainty of potential tariffs being implemented for certain countries and industries.
NEAR-TERM OUTLOOK
A cooling of the market is expected to continue into 2025, with rent growth remaining below historical norms in the near-term. While the Feds have hinted at cutting interest rates sometime in the coming quarters, it could take time for confidence among occupiers and investors to fully rebound and for rent growth to regain traction. Although the market has experienced recent subdued demand, it has remained relatively stable.
Inflation and other economic uncertainties over the past year have forced tenants to carefully evaluate expansions and, in some cases, reduce space as their requirements change. Additionally, there have been several proposed policies such as tariffs, reduced corporate taxes, and deregulation. These policies have yet to be implemented, making it difficult to predict the future direction of the market. Once decisions are made about which policies will be enacted, there will be greater clarity regarding their impact on the market, enabling decision makers to respond accordingly.
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