Uncertainty persists over when Ventura County will resume growth.

The office and industrial markets of Ventura County chugged along slowly but steadily in the second quarter, continuing more than two years of nominal activity. The dearth of leasing and sales deals continues to be accompanied by a virtual absence of commercial construction activity, and brokers said they are unsure when the market will grow again.

In the office market, CB Commercial Real Estate Group Inc. reported that the overall vacancy rate for the county increased to 16.7 percent during the second quarter from 16 percent at the end of the first quarter, but it was still 1.2 percentage points below the 17.9 percent vacancy rate of a year ago.

Both CB Commercial and Grubb & Ellis Co. said the year-over-year improvement in the vacancy rate, along with higher rental rates and fewer concessions suggest a stronger market in the long ran. "With lower vacancy rates, Ventura County property owners are seeing a strengthening of their lease rates and a lessening of concessions across the board," said Bruce Arden, district manager for Grubb & Ellis.

Although the overall office vacancy rate rose slightly during the quarter, Cathy Condon, office leasing specialist for CB Commercial, pointed out there was a marked difference between the performance of the western portion of the county and the eastern portion during the quarter.

The office vacancy rate rose to 18.3 percent, up from 16.1 percent a quarter earlier, in the western portion of the county, but dropped to 14.9 percent, down from 15.9 percent a quarter earlier, in the eastern portion, she said.

Base relief

In the western part of Ventura County, reduced demand for office space reflected "uncertainty over possible base closures," Condon said. She was referring to Point Mugu Naval Base, which had been considered for closure but which is now supposedly to remain in operation.

According to Steve Doll, an office specialist with Grubb & Ellis, Ventura County is "in much better overall shape than two years ago," despite its relatively flat performance in the second quarter.

"Office leasing rates are continuing to edge up and concessions diminish, as vacancy rates in office buildings continue to decline," Doll said. He added that large blocks of space are becoming more difficult to find, especially in the western part of the county. "Large employers are finding their office space options diminishing," he said.

Although the two speculative office projects now under construction are small buildings of 20,000 and 18,000 square feet, both in Thousand Oaks - they are the first speculative office construction in Ventura County in more than a year.

Industrial stability

In the Ventura County industrial market, the vacancy rate rose to 9.8 percent in the second quarter, up from 9.6 percent three months before but still considerably below the 12.1 percent vacancy of a year earlier, CB Commercial reported.

Paul Farry, a senior associate with CB Commercial, said activity has remained stable, although there was this slight increase in the industrial vacancy rate during the second quarter. The more important year-to-year trend in vacancy shows a considerable strengthening, Farry pointed out.

"Lease rates in general are strengthening, with concessions lessening as well. Although raw land and property values are holding steady and have yet to increase, the rising lease rates and reductions in concessions are a sure sign that soon will change," said Heath of Grubb & Ellis.

According to a report by CB Commercial, the slight rise in the industrial vacancy rate during the second quarter broke a "positive trend that has continued for the past two years," during which time the industrial vacancy rate declined steadily each quarter.

The report said a migration of tenants to newer facilities from older, less-functional buildings is a major factor in the market. "Most of the existing buildings over 100,000 square feet are functionally obsolete," the report stated. "These buildings currently make up 30 percent of the overall available inventory."

Retail heat

In the retail sector, the hottest spot in Ventura County is the Thousand Oaks/Westlake Village area, according to Bruce Boring, a retail senior marketing consultant at Grubb & Ellis. Among the projects in progress are a shopping center to be anchored by a Barnes & Noble bookstore at Thousand Oaks Boulevard and Moorpark Road. Boring said the center is already fully leased, although construction only began recently.

In general, in the eastern part of the county, where Thousand Oaks and Westlake Village are located, "Rents are high enough ... to justify the cost of tearing down the buildings just to get at the land," Boring said. "Typically this type of development is too expensive in Ventura County and is usually seen in denser metropolitan areas, like the San Fernando Valley and Los Angeles."

CB Commercial's quarterly report also described the retail sector as steady but with growing demand from "numerous large tenants," such as Price/Costco, Mervyn's Department Store and Best Buy Electronics, which are "awaiting approval of proposed developments."

One of the biggest potential projects in the area, according to the CB Commercial report, is "renewed interest in the proposed Simi Valley Regional Mall." Forest City Development is currently working with the City of Simi Valley to conduct an economic feasibility study for the project, the report said.

In Ventura, owners of the Buenaventura Mall announced during the second quarter that they are planning a major renovation and expansion of that 825,000-square-foot mall. Robinsons-May plans to open a new 165,000-square-foot store in the fall of 1997, in the space currently occupied by JC Penney: JC Penney plans to construct a new 125,000-square-foot department store, slated to open in the spring of 1997; and Sears, Roebuck & Co. plans to open a new 184,000-square-foot store and detached auto center in the fall of 1997.