Market Drivers
Direct net absorption for 4Q 2024 ended at -53K SF, the tenth consecutive quarter of negative net absorption for the Ventura industrial market, with the exception of 2Q 2023 which was positive. The Ventura submarket impacted the negative absorption the most posting a negative absorption of 117K SF in the fourth quarter. On an annual basis, the Oxnard/Pt Hueneme submarket posted a negative net absorption of 461K SF, which accounted for the majority of the year-end negative net absorption of 760K SF.
Direct vacancy rates increased by 50 basis points (bps) year-over-year (YOY) to 4.3% and total availabilities gained 70 bps YOY. Sublease vacancy in Ventura County remained steady YOY and QOQ at a low 0.5%.
Although 4Q 2023 reflected negative net absorption with a continued rise in vacancies, leasing activity jumped over 75% QOQ from 434K SF to 767K SF in the 4th quarter. Additionally, it is up 3.5% when comparing annual year-end activity which ended at 2.5M SF. Following the rapid growth of industrial rental rates in the past 3 years at the start of the pandemic, the average rental rates throughout the county have since moderated. After hitting an all-time high of $1.22 PSF NNN in 2023, 2024 experienced a slight decline over the year, posting at $1.18 PSF NNN in 4Q 2024.
On the heels of a record-low sales volume for 2023, the Ventura industrial market saw a bounce back in investment activity in 2024, doubling the sales volume from last year and ending the 2024 with 2.78M SF in sold industrial product. Although national investors have typically driven investment volume over the years, local investors have also been active in the market, and average sales price per square foot posted at $198 PSF for 4Q 2024.
Economic Review
In October, the Oxnard-Thousand Oaks- Ventura MSA reported a preliminary unemployment rate of 4.9%, a 10 bps increase from the 4.8% reported in the same time last year.
The trade, transportation, and utilities sector continued to see growth, gaining 1.6% YOY. Total nonfarm employment throughout the region grew 2% YOY to 323.5 jobs.
NEAR-TERM OUTLOOK
Industrial buildings under 50K SF continue to generate steady demand and landlords for these small-bay spaces have offered fewer concessions as opposed to the larger spaces, where landlords have been opting to provide more free rent. This trend will continue into the new year, as the lack of available and suitable inventory, coupled with economic concerns, has suppressed leasing activity among larger requirements.
The current environment of decreased demand is expected to continue into 2025, with rent growth remaining below the historical average during this period. A recovery in rent growth will likely depend on the gradual stabilization of confidence among large occupiers.
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