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Ventura County Industrial Market Report

4th Quarter 2023

Posted In — Market Research | Market Report

Market Drivers

Direct net absorption in 4Q 2023 was negative 77,817 SF, following the previous quarter’s
negative net absorption of 260,125 SF. Direct vacancy grew slightly quarter-over-quarter to
3.2% — 100 basis points (bps) higher than the direct vacancy rate reported this time last year.
Majority of the region’s negative net absorption is attributed to the Central Ventura submarket,
totaling negative 179,405 SF on the quarter and negative 258,517 SF throughout the year.
The submarket has experienced a significant uptick in direct vacancy of 190 bps since the
start of 2023. Despite the dramatic increase in vacancy and negative net absorption, the
submarket’s average direct NNN asking rate has remained relatively unchanged at $1.01/sf
in the same time period.
Sublease vacancy in Ventura County was a low 0.5%– 10 bps higher than the previous quarter
and 30 bps higher than the same time last year.
Average rental rates remain firm and currently sit at $1.22/SF NNN, a 2.7% increase year-overyear.
Quarter-over-quarter direct asking rates grew on average by $0.09/sf NNN.
Leasing activity totaled 399,319 SF in the fourth quarter, a 65.1% decrease year-over-year.
Year-to-date leasing activity totals 2,364,700 SF, a slight decrease from 2022’s 2,785,134 SF.
Currently, Ventura County has just over 1.2 million SF of industrial space under construction
with year-to-date deliveries totaling 432,322 SF all of which is in the Moorpark/Simi
Valley submarket.
Due to looming recession concerns and inflation, 2023 industrial sales volume (SF) fell for the
second consecutive year to 1,280,738 SF, a significant drop in volume from the 3,678,130 SF
trading hands in 2022. The average price per square foot only fell slightly from the year prior
from $228.80/sf to $222.40/sf. Average cap rates increased by 80 bps year-over-year to 6%.

Economic Review

In October, the Oxnard-Thousand Oaks-Ventura MSA reported an unemployment rate of 4.5%, an increase from the 3.6% reported in October of last year. The increase in unemployment for the region may be the labor market normalizing, as the region’s pre-pandemic 5-year unemployment average is 4.6%.
In mid-2023, Port Hueneme was awarded $79.8 million for its PACED (Port Action, Climate, and Environment Development) project. The project is expected to generate new employment opportunities, strengthen the regions supply chain, and improve air and water quality.

Near Term Outlook

Industrial demand throughout Ventura County remains high, maintaining a relatively low direct vacancy rate of 3.2%. The region will continue to be highly desirable for those seeking industrial space due to its proximity to the port and major industrial centers like Los Angeles.

Demand for industrial space, in particular spaces over 100,000 SF, is expected to remain strong. 101 Logistics Center, Oxnard is a 750,000 SF fully entitled proposed industrial complex that is expected to break ground in 2024. Sales activity continues to be limited, as pricing continues to remain volatile. Amidst climbing interest rates and recession concerns, buyers and sellers have not yet found a middle ground on pricing. For example, this quarter 609 Science Dr sold for $178.52/sf and the next largest sale of the quarter, 2560 Calcite Cir traded hands at $351.85/sf. If interest rates begin to settle, activity is expected to accelerate in the second half of 2024.

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