Market Drivers
Ventura County posted its fourth consecutive quarter of negative direct net absorption of 41K SF throughout 2Q24. Additional movement in the sublease market resulted in total net absorption to be positive 11.2K SF.
Vacancy rates remained steady quarter-over-quarter (QOQ) at 3.4% but increased by 70 basis points (bps) year-over-year (YOY). Availability rates fell QOQ by 60 bps but also experienced an uptick YOY of 90 bps. While vacancy rates remain relatively low when compared to other industrial markets, Ventura County is only two years removed from an extremely low vacancy rate of 1.6% reported in mid-2022.
The Oxnard/Pt Hueneme submarket led the region in direct absorption with positive 30K SF while the Moorpark/Simi Valley submarket experienced the most leasing activity totaling 240K SF.
Sublease vacancy throughout the market remained at a low 0.4%, 10 bps lower both QOQ and YOY.
Following the rapid growth of industrial rental rates between 1Q20 and 1Q23, that growth has begun to stall. Throughout 2023 rental rates remained relatively flat, and 2024 is following suit. Average asking lease rates fell both YOY and QOQ to $1.19/SF NNN.
Leasing activity totaled 546K SF throughout 2Q24, a 53.5% decrease from 2Q23’s 1.2M SF of leasing activity. Despite the decrease, leasing activity gained QOQ.
Economic uncertainty coupled with a high interest rate environment continues to limit sales activity. Sales volume throughout 2024 totals 1.6M SF, already surpassing the entirety of 2023’s 1.3M SF. On a dollar basis, 2Q24’s sales volume only totals 51% of the region’s 5-year quarterly average.
Economic Review
In April, the Oxnard-Thousand Oaks-Ventura MSA reported an unemployment rate of 4.2%, a 100 bps decrease from the 5.2% reported in January.
The trade, transportation, and utilities sectors remain strong, reporting 56,300 total jobs in April. Total nonfarm throughout the region grew 1.2% YOY to 317,400 jobs.
Near Term Outlook
Industrial buildings under 50K SF continue to generate steady demand, accounting for nearly 61% of the quarter’s total leasing activity. Direct vacancy is 2.8% for industrial properties in this size range, 130-bps lower than properties over 50K SF.
The Port of Hueneme and Ventura’s proximity to major Southern California markets will continue to attract industrial tenants to the region. Due to limited inventory of new and existing industrial space, leasing activity is expected to remain lower than the peaks seen in 2021.
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