Fourth Quarter 2024
Ventura County Office Market Sees Consecutive Quarter Rise in Occupancy Levels
Subleasing opportunities and rent adjustments signal a turning point for Ventura County’s office market.
This shift toward smaller, more manageable properties is expected to continue as preferences among owner/users and investors evolve in response to economic conditions.
MARKET OVERVIEW
The Ventura County office market’s recovery continues, though challenges remain in increasing occupancy levels. Sublessors and landlords, responding to weak demand and elevated vacancy rates, have adjusted asking rents—a strategy yielding positive results. In 2024, vacant office inventory decreased by 122,787 square feet compared to 2023, suggesting the market may have reached a trough in this cycle, with occupancy rising for the second consecutive quarter.
Year over year, vacant direct office space decreased by approximately 0.6%, while sublease space dropped by 26.6%, signaling gradual progress toward pre-pandemic occupancy levels. Sublease asking rents fell sharply by 11.4% from last year, while direct space rents held steady, rising only $0.02 to $2.47 per square foot on a full-service gross basis.
Vacancy rates trended downward in the second half of 2024, with the overall rate decreasing 70 basis points from Q1 to 11.4%. This marks a shift in the trajectory of vacant office space, driven by evolving dynamics in remote work and space utilization strategies. However, leasing activity remains sluggish, with year-to-date leasing volume down 27.1% compared to the same period last year and falling 47.2% quarter over quarter.
Since Q4 2020, when the market was grappling with the fallout of pandemic-driven disruptions, direct vacant office space has decreased by 10.5%. While vacant sublease space remains 82.6% above Q4 2020 levels, it has declined for four consecutive quarters to approximately 400,000 square feet, as tenants take advantage of sublease opportunities offered by motivated sublessors with competitive terms.
TRENDS TO WATCH
Tenants seeking value will find opportunities in buildings with vacant sublease space. As we move into 2025, the pace of subleasing in Ventura County remains active, with tenants subleasing 10,904 square feet in the fourth quarter of 2024, bringing the year-to-date total to 64,480 square feet—a 45.0% increase compared to the same period in 2023. However, the pace at which tenants offload excess square footage through subleasing is expected to slow in the coming months.
While the region still has a significant amount of available sublease space, the inventory is shrinking, with a 23.7% decrease quarter-over-quarter and a 34.0% decline year-over-year. This trend is especially noticeable in the West submarket, where available sublease space dropped to just 15,549 square feet in Q4—a 72.4% decrease compared to the same time last year.
Looking ahead, sublease activity will continue to present opportunities for tenants to optimize costs. With the average asking rent for sublease space in Ventura County at $2.18 per square foot—11.7% ($0.29) lower than direct space—tenants will be in a strong position to secure favorable deals in the next quarters. As landlords offering direct space remain cautious and limit discounts to mitigate losses, competitive pressures from sublessors are likely to drive further rent reductions or concessions.
On the sales side, 2024 ended with a continued shift in market trends. Square footage sold year-to-date was down 17.5% compared to 2023, totaling about 600,000 square feet. The average building size sold saw a dramatic 73.5% decrease, dropping from 22,234 square feet in Q4 2023 to just 5,890 square feet this quarter. Sales volume also declined by 19.6%, closing the year at nearly $111 million.
This shift toward smaller, more manageable properties is expected to continue as preferences among owner/users and investors evolve in response to economic conditions. The decline in both sales volume and average building size points to a market in transition, where investors are likely to hold out for more favorable conditions while refining their acquisition strategies. These trends signal a period of adjustment, with both investors and tenants adapting to the changing market landscape in the year ahead.
