Landlords tout area as obvious alternative to L.A.

Diverse regional markets provide plethora of options

Ventura County landlords, who discounted office and industrial rents as oil companies and defense contractors moved out in the past three years, hope to refill their buildings with businesses whose owners want out of what they view as the unacceptable urban violence and high real estate prices of Los Angeles.

Commercial real estate brokers say Ventura County cities have seen the worst of the downturn and predict occupancy rates will rise by the end of the year. As the economic recovery starts, Ventura County cities are trying to lure businesses and shore up their economic base.

"Ventura County is a tough market. It's on the fringe of the Los Angeles market but doesn't have research-oriented universities (that spawn or attract businesses) or an airport like Los Angeles or Orange counties," said Westlake Village-based appraiser Mike Teobaldi. Though based in Los Angeles County, he appraises many Ventura County properties.

"Ventura County has some good schools, but they don't attract research and development companies" the way some research-oriented University of California operations do, Teobaldi said.

Even so, he said, Ventura County has affordable housing and is improving transportation with more freeways and a light rail service that will ease the commute from Los Angeles.

Ventura County developers and brokers instead pitch the region's affordability to business owners and their workers. Industrial building sites in most Ventura County sell for $10 per square foot compared to $35 per square foot in Burbank, said Bob Rosenthal. He is an industrial broker in the Woodland Hills office of Told Real Estate Corp., a commercial real estate brokerage.

Low Ventura County land prices are due partially to declining occupancy. Vacancies at industrial multi-tenant buildings -- office parks developed on speculation for lease to a variety of tenants -- throughout Ventura County climbed from 12 percent at the end of 1990 to 17 percent at the end of 1991. Brokers say it could go as high as 19 percent by the end of 1992.

New office construction has all but stopped. Countywide, only 44,964 square feet of new industrial and research space is expected to be completed by the end of 1992, according to research conducted by the Oxnard office of Grubb & Ellis Co. Commercial Real Estate Services.

That's good news for tenants because industrial lease rates -- already as low as 22 cents per square foot per month with most leasing for 45 to 55 cents per square foot -- should drop further, according to Grubb & Ellis data. A savings of 5 cents per square foot per month lowers the rent for a 15,000-square-foot tenant (the typical lease in today's market, according to Ventura County brokers) by $9,000 a year.

Ventura County's office occupancy situation is even worse. The vacancy rate edged down only slightly in the first quarter, from 25.9 percent to 25.8 percent, as users leased 25,324 square feet of offices more than were vacated, according to Grubb & Ellis.

"The (Ventura County) cities could be friendlier. They need to work with the businesses instead of keeping the high (development) impact fees that drive prospective tenants to other areas," said Jerry Steinke. He is an industrial broker with CB Commercial Real Estate Services in its city of Ventura office. "The recession is keeping buildings empty."

Each Ventura County submarket has its own peculiarities.

Oxnard is the largest submarket. As in Ventura to the north, most Oxnard industrial and office structures skirt the Ventura Freeway.

The city of Ventura developed its industrial base before Oxnard and lured many users but the five-year drought so taxed Ventura's water supply that it wouldn't issue new water meters, thus halting development. That's when commercial development took off in Oxnard.

"Oxnard has the population base and a dependable water supply (unlike Ventura) from the Metropolitan Water District. But we didn't start developing industrial space until the mid-1980s," said Richard Maggio, director of Oxnard's community development agency.

And biotech and insurance companies interested in coastal Ventura County aren't moving in fast enough to fill space emptied during three years of consolidation by Oxnard oil and defense businesses. For instance, a 112,000-square-foot office structure bought by Standard Oil of California has never been occupied because the company decided to consolidate in the late 1980s, shortly after it bought the structure.

Tenants absorbed only 862 square feet of office space along the Ventura County coast (including Oxnard, Camarillo and Ventura) in first quarter 1992. Vacant are 810,555 of Oxnard's 3.09 million square feet of offices, down 7,995 square feet in the period, according to Grubb & Ellis.

Oxnard industrial building owners collectively had a net absorption of 17,798 square feet in first quarter 1992, according to Grubb & Ellis. Since January, the T Shirt Warehouse leased 39,312 square feet of warehouse space in the McGrath Business Campus at the intersection of Lockwood Street and Rose Avenue in Oxnard, said CB's Steinke.

Stoneware Unlimited, a company that builds ceramic planters and water coolers, leased 42,000 square feet of Oxnard manufacturing space in the first quarter on Jupiter Court off Del Norte Boulevard. Western Saw moved into 25,000 square feet of space in Oxnard, Steinke said.

Developers have slowly leased up office and industrial buildings in the 1,600-acre Northeast Industrial Assessment District, said Doug Kubiske, a broker with Daum Commercial and Industrial Real Estate. The park is on the ocean side of the Ventura Freeway between Rose and Del Norte avenues. He said low lease rates, low land prices and increased activity at the Port Hueneme, at Oxnard's southern edge, helped bring in tenants.

"Port Hueneme just received port-of-entry status. From now on, shippers don't have to wait for a port inspector from Worldport Los Angeles to inspect cargo," Kubiske said.

Sweden's AB Volvo and Germany's BMW are building distribution facilities. Kubiske expects other trade-oriented companies will follow.

Washington state-based Terminal Freezers has a 10-acre frozen meat storage and shipping facility in Oxnard and is buying another 23 acres for expansion, he said.

Leases completed recently in Oxnard by Daum include: PCS Enriched Learning Center, 15,540 square feet; Gold's Gym, 15,540 square feet; Weebee Shirts Corp., expanded from 5,500 to 12,125 square feet; and Body Tech Ltd., a start-up company automobile remanufacturer, 15,160 square feet of industrial space.

Association of Retarded Citizens Industries has leased 13,380 square feet of space for a packaging and distribution center. The mentally handicapped workers package and distribute goods at the facility for a variety of clients, Kubiske said.

Oxnard's retail center development is moving much faster. Los Angeles-based Roth Bart Development Co. is seeking approval for a 523,702-square-foot retail development on 60 acres at the northwest corner of the Ventura Freeway and Rose Avenue, said Richard Maggio. He is the director of Oxnard's community development agency.

If approved, the project will be anchored by Wal-Mart Stores Inc., Maggio said. Wal-Mart wants to build a Sam's Club, a warehouse shopping outlet that will compete directly with Price Co.'s nearby Price Club.

The new Wal-Mart center also would compete with the two-year-old Esplanade retail center next to the Price Club on the east side of the Ventura Freeway, Maggio said. Home Base, a do-it-yourself home improvement and building materials center, is one of the Esplanade anchors.

Development all but stopped in the city of Ventura, just north of Oxnard, when city officials quit issuing new water meters during the lengthy drought. Now the drought is officially over, meters once again are available. Two months ago, Ventura lifted its moratorium.

Looking at the whole city, Ventura's office building owners collectively had a 9,363-square-foot vacancy increase in the first three months of 1992, according to Grubb & Ellis. However, the Ventura moratorium gave brokers a chance to lease excess industrial space.

Grubb & Ellis's first-quarter study shows Ventura industrial building owners leased 47,525 square feet of space more than was vacated and empty space at the end of March had dropped to 700,709 square feet, 12.2 percent of Ventura's 5.75 million square feet of industrial space.

Camarillo, south of Oxnard, was the only Ventura County coastal city that leased more office space (18,220 square feet) than was vacated in the first quarter. By contrast, industrial tenants in Camarillo vacated 6,804 square feet of space more than they leased in the period, according to Grubb & Ellis data.

Camarillo industrial activity is soaring on the basis of a single project: Technicolor Inc. is moving out of 225,000 square feet in Newbury Park into 483,000 square feet of buildings it bought in Camarillo, said Oxnard-based Grubb & Ellis industrial specialist Rick Heath.

Newbury Park, south of Oxnard in the Conejo Valley and annexed by the City of Thousand Oaks, had 592,852 square feet of industrial space vacant at the end of March, 10.4 percent of its total, according to Grubb & Ellis. Newbury Park office building owners collectively had a net loss of 9,088 square feet of tenants in first quarter 1992.

Conejo Valley office building owners didn't fare as well in first quarter 1992. Vacancy in the 2.87-million-square-foot office market stayed constant at 24.4 percent, absorbing just 2,917 square feet in the first quarter, according to Grubb & Ellis.

Thousand Oaks absorbed 7,735 square feet of office space in the same period, according to the Grubb & Ellis data.

Moorpark, between Oxnard and Simi Valley, also has had setbacks. Beverly Hills-based Litton Industries Inc. is moving 575 Aero Products division employees out of its 143,000-square-foot building to Woodland Hills and is trying to sell its Moorpark facility.

Simi Valley-based Micom Communications Corp. Inc. vacated its 83,000-square-foot Moorpark building three years ago and consolidated operations in its 200,000-square-foot Simi Valley facility. Micom spokesman Rick Borden said the facility was sold eight months ago.

Grubb & Ellis research shows Moorpark industrial building owners leased 77,547 square feet more than was vacated, the best performance of any of the industrial multi-tenant submarkets covered in its first-quarter scan of Ventura. Grubb & Ellis industrial broker Rick Heath said most of the absorption came from smaller businesses (less than 10,000 square feet) moving to Moorpark.

Office building owners in Moorpark and Simi Valley weren't as fortunate. Grubb & Ellis statistics show multi-tenant office building owners there enjoyed a net absorption of 14,365 square feet of space in the first quarter of 1992. Still, some 33 percent of the 355,133 square feet of multi-tenant office space in Moorpark/Simi Valley was empty at the end of the quarter.

Thousand Oaks industrial building owners reported a net absorption of 66,571 square feet in the first quarter. Also, Amgen Inc., a bio-genetics company, has bought 20 buildings in town in the last six months.

As a result, many multi-tenant industrial buildings are no longer available and brokers expect the vacancy rate to further decline when second-quarter figures are tallied in July.