"Commercial Real Estate Rebounding in Ventura County Experts Say"

"Ventura County’s commercial real estate and overall economy did better in  2012 than the year before and 2013 will be even better, although not till the  second half.

That was the news from real estate brokers and economists at the Commercial  Real Estate Symposium and 2013 Economic Forecast, held Friday in Westlake  Village by commercial real estate firm CBRE.

“You won’t hear the words ‘cautious’ or ‘optimism’ out of me,” economist Mark  Schniepp, director of the California Economic Forecast Project, told the  audience of brokers, bankers and economic development officials. “I think they  are both better already.”

Overall, presenters echoed Schniepp’s positive but reserved tone as they  highlighted the past year’s news in retail, office and industrial markets and  factors that place some growth in 2013 but most in 2014 and 2015.

Retail is “no longer in a free fall,” said CBRE Senior Vice President David  Rush.

Retail sales continue to lag but they’ve been “trolling along the bottom” in  the past 18 months and are starting finally to bounce upward, Rush said.

Vacancies have opened the doors for discount retailers in the area, such as 

  Wal-Mart, Dollar Stores  and Burlington Coat Factory, Rush said.

“Those people — five years ago you never would have imagined them in Ventura  County,” Rush said. We should expect to see more of them, he added.

In his 2013 forecast, “groceries are going to be the story,” Rush said.

He noted that The Fresh Market, a 20,000-square-foot store similar to Whole  Foods, will be coming into the county with two to three stores.

Rental rates for retail space were also up for the county in 2012’s fourth  quarter at $2.23 per square foot compared to $2.21 per square foot a year ago.  In the second quarter of 2010, rates sunk to $2.11 per square foot, according to  Rush’s data.

Office space continues to have high vacancy rates, which rose in the fourth  quarter.

Vacancies grew to 24.3 percent for properties of 10,000 square feet or more,  the highest since peaking at 25 percent in early 2011, according to CBRE Senior  Vice President Tom Dwyer.

The rates fluctuate throughout the county, with Camarillo the highest at 38.6  percent and Westlake Village at the lowest at 15.5 percent.

Signs advertising available space for lease or sale are hard to miss on most  streets with offices around the county.

The situation is largely due to the exodus of significant businesses, Dwyer  said.

Rents didn’t grow at all in the Conejo Valley, he said, and dropped 6.6  percent and 0.5 percent respectively in west Ventura County and the Simi  Valley/Moorpark areas.

“I’m 15 percent off my peak,” Dwyer said.

However, for 2013, he expects rents to rise for new and prime location  properties because of limited supply and to drop for older properties because of  lower demand.

In the industrial sales sector, rental rates have turned around and are on  the rise in the east county, said CBRE Senior Vice President Paul Farry. Prices  will stabilize in 2013 and then improve this year, he said, but with little new  construction as agriculture restrictions continue to limit available land.

When CBRE Senior Vice President Mark Perry asked audience members if any had  sold office space in the Conejo Valley recently, no one raised their hands.

The private client office sales market is stagnant with few sales, hesitant  buyers waiting for the market to hit bottom and few available assets, Perry  said.

But it is also “bifurcated” with a “voracious appetite” for the new,  prime-location buildings and little demand for older buildings.

His forecast for 2013 was for a buyer’s market with increased activity from  opportunistic purchasers and more available space in 2014.

Schniepp highlighted factors that suggest actual economic growth but not  until the year’s second half.

Car and home sales are up while the slowdown in exports and the worst of the  European recession “may be over,” Schniepp said. Demand is up for mobile  electronic devices and consumer confidence is “very, very high.” Plus, the stock  market has been reaching highs and global growth looks positive, he added.

Schniepp said small businesses haven’t been hiring, largely because of fears  of the consequences of the so-called fiscal cliff issue. However he said, he  thinks they will move past that fear by midyear.

In Ventura County, growth has been in jobs that don’t require W-2 forms, such  as independent contractors, Schniepp said. Companies are also squeezing as much  as possible out of employees, he added.

“Firms’ profits are at an all-time high and they will have to start hiring,  and the same for small businesses,” Schniepp said.

Sam Alison, who handles retail real estate investments for CBRE, told the  audience that 2013 is an opportunity to make money with low interest rates,  available capital, rent growth and a trend of tenants who are expanding.

Sespe Consulting Inc. in Ventura, which was promoting its services at  Friday’s symposium, is seeing signs of a recovery.

Projects that were on hold are back on track, said Sandy Smith, a land use  consultant for Sespe, while a trend is joint development between municipalities  and private developers.

 Ventura County Star

http://www.vcstar.com/news/2013/feb/01/commercial-real-estate-rebounding-in-county-say/

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