Steady Market Activity Marks Start Of 2017

The San Fernando Valley and Ventura County office market began 2017 with positive market activity as net absorption recorded 77,100 SF and vacancy declined by 20 basis points. Rents ended the year with a 3.0% year-over-year increase, a welcome change for landlords from the previous 2 years of essentially flat rate movement. With no new construction seen in the future, the market will remain supply-constrained and absorption is expected to remain positive. Given these market conditions, the San Fernando Valley and Ventura County office market trends are expected to move in a slow, positive growth rate.

Key Takeaways:

  • The San Fernando Valley and Ventura County office market began 2017 with positive net absorption recording at 77,100 square feet (SF).

  • The office market vacancy rate continued to descend incrementally by 20 basis points to 14.4%.

  • Rental rates increased at a quarterly average of 0.4%. First quarter overall rental rates recorded at $2.27 per square foot (PSF) full service gross (FSG).

  • No new projects were delivered in the first quarter, and no new projects are currently under construction.

  • The overall economy continued to see solid growth in first quarter. Los Angeles County non-farm employment grew by 70,800 jobs year-over-year, resulting in a growth rate of 1.6%.

Outlook:

Vacancy in the San Fernando Valley & Ventura County office market should remain on the current path of stable decrease through the first half of 2017 due to lack of new construction and forecasted employment growth. As vacancy continues to remain stable and trend downward, both absorption and leasing activity are expected to remain positive through early 2017. As vacancy rates remain stable and continue to trend downward, asking rental rates will push higher. Given the current market conditions, owners are expected to remain bullish with pricing.