Lease Rate Trending Up for Adaptable Buildings

In what is described as a significant change in commercial and industrial real estate in Ventura County, an increasing number of the county’s office users are buying or leasing so-called industrial flex buildings--which can be adapted as either an industrial or an office building--according to Grubb & Ellis Commercial Real Estate Services.

“For office users, they are a trade-off between the prestige of full-service buildings and the considerable savings offered by flex buildings,” said Dirk D. Kittredge, research director at Grubb & Ellis’ office in Oxnard.

In the first nine months of this year, Ventura County businesses moved into more than 400,000 square feet of space in flex buildings, Kittredge said.

“The trend is a direct result of the recession and the desire of companies to cut their expenses so they can stay in business.”

In addition to offering lower leasing rates, flex buildings have come down significantly in sales price, offering opportunities for investors, Kittredge said.

Kittredge cited the expanded market for flex buildings as a major reason for reduced industrial vacancies in the county. In the third quarter, the vacancy rate for these types of buildings in the county fell to 15% from 16.1% in the second quarter and 17.4% in the third quarter of 1991.

Countywide, the vacancy rate among shopping centers with at least 10,000 square feet was 9.4% in the third quarter. This compared with 9.1% in the second quarter and 9.4% in the third quarter of 1991. The reading excludes Agoura Hills.

Meanwhile office building vacancies ranged from 22.4% in the Conejo Valley to 35.8% in the Simi Valley-Moorpark market. Among shopping centers, the highest vacancy rate was 13.5% in the area north of Ventura and the lowest was 7.6% in the Conejo Valley.