Ventura County Industrial Market Report

3rd Quarter 2022

Posted In — Market Research | Market Report

Market Drivers

Direct net absorption in the third quarter reported negative 215,750 SF, this is the first time this region reported negative net absorption since Q3 2020 (This means that more industrial space was vacated and put on the market than was leased). Despite the negative net absorption, 2022’s year-to-date direct net absorption is positive 1.8 million SF. Although vacancy rates rose by 40 basis points (bps) quarter-over-quarter to 2%, that figure is still quite low when compared to 2020 and early 2021. Even before the pandemic, the Ventura County Industrial market reported direct vacancy rates between 2.1% and 4.7% over the last 5 years.

Sublease vacancy in Ventura County was a low 0.1%, 10 bps lower than the previous quarter.

Rental rates concluded the quarter at an all-time high of $1.04/SF on a triple net basis, a 2.37% increase year-over-year.

Leasing activity decreased by 28.6% year-over-year to 354,142 SF for the quarter. This is likely due to a combination of higher rents and the low vacancy rate.

Currently Ventura County has 562,967 SF of industrial space under construction and year-to-date deliveries that total 2,394,879 SF. Several projects are expected to be delivered in early 4Q 2022 such as the Tapo Canyon Commerce Center (3 buildings totaling 279,792 SF) and 1489 Lawrence Dr (83,570 SF). The largest delivery of 2022 was the Amazon Fulfillment Center in Oxnard which totaled 1.5 million SF.

Economic Review

Ventura County continues to benefit from the influx of biotechnology companies.

Port Hueneme continues to alleviate supply chain issues.

SOAR (Save Open Space & Agricultural Resources) keeps most agricultural zones from being developed.

Near Term Outlook

Industrial vacancy is expected to remain low, due to the demand for space by local and regional business owners.

CAP rates will increase, and investment pricing will decrease as interest rates continue to climb.

Developers will be tempted to pursue speculative construction redevelopment prospects as they continue to see the pressure of pent-up demand diminishing industrial space and bidding up pricing.

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