Bill Robe
Vice President
TOLD Corporation, Camarillo CA
(805) 388-4757 Ext. 225 or e-mail: brobe@west.net

Limited Residential Real Estate vs. Commercial Real Estate

In article after article, the message we see is that Ventura County’s housing market is experiencing a downturn. Contrary to popular opinion, the local commercial real estate market is strong and shows no signs of following housing’s downturn. In fact, commercial real estate is on an upward swing, making it a good value locally and a smart purchase for small and large businesses.

National trends, which are consistent with what we’re seeing in Ventura County, show commercial building occupancy is growing, with rents up more than 4 percent in the past year. Contrast this with the housing market, where the National Association of Realtors has projected that existing home sales will fall 2.9 percent this year and new home sales are expected to fall 18 percent.

Commercial real estate is all about supply and demand and there is currently a pent up demand for industrial condominiums and more people are taking advantage of it, according to Paul Farry, senior vice president of CB Richard Ellis.

In the county, commercial real estate was strong in 2006, with office and industrial vacancy rates at 7.7 and 6.8 percent, respectively, according to the University of California, Santa Barbara Economic Forecast Project (February 2007). These vacancy rates represent the lowest availability in nearly 15 years, and this year’s rates are expected to be similar, continues the report.

Camarillo’s office vacancy rates, for example, were 8.2 percent, down from a high of 12.1 percent four years earlier.

Ventura County’s healthy economy continues to increase demand while environmental growth restrictions limit construction of new projects. The result is lower vacancy rates and higher rents.

To protect themselves, small businesses are turning away from rental or lease situations. Farry finds that commercial sales have begun to increase and pick up momentum in the recent years.

Locally, small businesses are taking advantage of this market momentum by purchasing office or industrial condominiums. An up-and-coming trend in commercial real estate, condos enable business owners to own their own headquarters, create an additional business asset and build equity in the process. As one of the first builders of office and industrial condos in Ventura County, TOLD Corporation addressed small business owners’ desires for owner-occupied properties tailored to their size and budget.

From a financial planning perspective, real estate is an asset that investors should have in their portfolios over the long term because it is a counterweight to inflation. Also, because real estate is a leveraged investment, nominal appreciation can still yield a 20 to 30 percent annual return for owner-occupied properties.

The bottom line is that business owners can feel confident in their business decisions if they choose to buy their own headquarters.

Article was reprinted with permission by the Camarillo Acorn.