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Ventura County Shows Strength

Economy: Analysts say the area is poised for more growth, but managers are moving with caution.

November 25, 2001|DARYL KELLEY | TIMES STAFF WRITER

So far, so good.

Ventura County's economy has remained healthy as a business downturn batters a nation headed toward recession.

Several benchmarks of prosperity are still strong locally--jobs, housing sales and construction of new homes, offices and business parks.

Even industries jolted by the nation's economic downturn and the Sept. 11 attacks are rebounding: Hotels are filling back up, and many stores are back to the sales levels of last year.

"We don't see Ventura County as in a recession now or in the near future," said Bill Watkins, director of the Economic Forecast Project at UC Santa Barbara. "Its growth is declining compared with the spectacular rates of the last few years but is still not weak."

Watkins' group projects Ventura County's rate of economic growth this year at 7.1%, with a decline to 3.4% next year. That compares to highs of 14.2% in 1999 and 9.4% in 2000.

That 3.4% increase is still above the average annual growth rate of about 3.1% for the nation, he said.

Yet, despite a balanced and resilient local economy, led by Amgen, Watkins said there are signs the recession has begun to trickle down to Ventura County.

Vacancy rates are moving up in industrial parks and office buildings, and more retail shops are empty. Developers are jittery, and some say they are taking a wait-and-see attitude before investing in new houses and businesses. There is also a mild softening of business along the vaunted Ventura Freeway high-tech corridor. And Kinko's, the copying giant, is moving its headquarters from Ventura to Texas, taking hundreds of jobs with it.

"The market is in a holding pattern," said Jerry Pelton, managing director of the CB Richard Ellis commercial brokerage firm. "Everybody is waiting to see if the other shoe is going to fall. When you go through a traumatic situation, the last thing people want is to make long-term decisions."

Manufacturers, in particular, are under pressure. "They respond much more rapidly to downturns," Pelton said.

Industrial real estate broker Fred Ferro said business has slowed at his Oxnard company, NAI Capital Commercial.

"We've seen a slowdown in phone inquiries and leases," Ferro said. "And in many cases, people who aren't directly affected are using this to procrastinate."

Ferro sees some weakness in business parks in Camarillo and the Conejo Valley, as high-tech firms have slowed production or canceled planned expansions.

Indeed, after the high-tech boom of the last few years, analysts say Camarillo's economic growth rate of 23% in 1998 dipped to 3.9% in 2000. Among Camarillo employers, eLabor, Power-One, Vitesse Semiconductor and Xircom are cutting payrolls.

But Camarillo is not alone. Lots of commercial space is available at both ends of the county. Industrial vacancy rates increased from 6.4% at midyear to 8.1% at the end of September. Office vacancies were up from 11.3% to 12% for the same period.

"The market is still in relatively good condition," Pelton said. "But it's starting to reflect the recession. Because of the amount of sublease space available, it's coming on the market at pretty competitive prices."

Even in Ventura County's booming housing market, where a shortage fuels steady sales and rising prices, there are signs of slowing, as well as greater caution among builders. An industry analyst found that Ventura County new-home sales--about 20% of the market--have dropped sharply in the third quarter, although overall sales remained high.

"We've been cautious since Sept. 11, because you have this combination of effects from the terrorism and the projected downturn," said John Franklin, regional manager for Shea Homes, which builds in six local cities. "Right now we don't know the magnitude of that--a soft one quarter, or two quarters or three quarters."

Home builders are closely monitoring sales activity, always ready to pull back on construction if the market drops. "We know we're going to have some softening, so you keep your finger on the pulse of sales activity week to week," Franklin said.

Elaine Pettersen, president of the Ventura County Coastal Assn. of Realtors, said she's seen an increasing hesitancy by home sellers and buyers to commit to long-term decisions. Houses, especially higher-priced ones, are staying on the market longer, she said.

"What we're seeing is people cocooning," Pettersen said. "They're just going to fix up their homes, stay close to home and do some nesting. They are concerned about their jobs and are trying to be a little more cautious."

That doesn't mean the Ventura County economy isn't strong and capable of moving past this blip of slower activity, Pettersen said. "The reality of it is we are in such a job-rich economy with this biotech and biomedical corridor that we're not just a Kinko's-only county."

Ventura County is job rich, but housing poor, agreed John Stanek, president of the Building Industry Assn.'s regional group. That's why he thinks builders will steadily increase the stock of new homes in the months to come.

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