First Quarter 2025
Ventura County Retail Market Enters 2025 with Uneven Momentum
Leasing activity rebounded, but the prevalence of smaller deals and a rise in sublease space reflected shifting strategies among tenants and landlords navigating a high-cost environment.
Slowing rent growth may put downward pressure on sale prices as investors adjust to shifting market dynamics.
MARKET OVERVIEW
The Ventura County retail market delivered mixed results at the start of 2025 as the Federal Reserve held interest rates steady, maintaining high borrowing costs for investors, retailers, and consumers in its continued effort to curb inflation. In Q1 2025, the vacancy rate rose to 6.1%—up 50 basis points from the previous quarter and 60 basis points year over year. Leasing activity totaled 201,086 square feet, up 48.8% quarter over quarter and 71.8% year over year, driven primarily by lease renewals. Despite this uptick, inflation, elevated interest rates, and recession concerns continued to dampen expansion plans.
A wave of high-profile bankruptcies further challenged the market. National chains—including JoAnn Fabrics, Walgreens, Macy’s, and Party City—either closed locations or scaled back operations amid shifting consumer behavior and relentless competition from e-commerce. These retailers have struggled with declining revenues, rising labor costs, and ongoing supply chain disruptions. The impact has been especially pronounced for quick-service and fast-casual operators, where persistent inflation and escalating food costs have forced menu prices up and curbed consumer spending. Renewed tariff threats added further pressure, raising cost concerns and weakening consumer purchasing power.
Occupancy remained 762,675 square feet below Q1 2020 levels. Total vacant retail space stood at 2.6 million square feet, with inflation and intensified competition continuing to limit foot traffic and spending at physical stores. Landlords responded by offering more concessions, while average asking rents held steady—rising just $0.02 quarter over quarter and $0.01 year over year to $2.18 per square foot triple net.
Some investors reacted to the economic uncertainty by reentering the market, pushing retail sales volume up 31.0% year over year. However, sales still dropped 42.9% from the prior quarter, totaling 551,285 square feet—a sign of ongoing caution as the market continues to grapple with post-pandemic volatility.
Burdened by elevated operational costs, consumer uncertainty, and persistent cost-of-living pressures, the Ventura County retail market faced a turbulent start to 2025.
TRENDS TO WATCH
Landlords and sublessors are expected to continue adjusting rents to improve cash flow and reduce vacancies—especially as vacant sublease retail space rose 10.0% quarter over quarter, outpacing the 6.2% increase in direct space. The sharper rise in sublease inventory reflects how businesses are reevaluating space needs under continued economic pressure. As tenants downsize or shutter underperforming locations, they are offloading excess space faster than landlords are delivering new vacancies to market.
Motivated to reduce carrying costs, sublessors are offering flexible terms and competitive pricing to attract tenants. This uptick in sublease activity introduced a wave of small-unit listings, driving average asking rents for sublease space down 5.0% quarter over quarter and 3.7% year over year to $2.86 per square foot, triple net.
Despite the decline, sublease rents remain higher on average than direct space—by $0.68 per square foot—due to the smaller unit sizes typical of sublease offerings. In a cost-conscious and competitive market, this pricing dynamic may challenge tenants prioritizing affordability over flexibility.
Alongside this shift, the average deal size fell to $2,073,188—down sharply from both the previous quarter and a year ago—reflecting a market increasingly focused on smaller, lower-risk assets. With the Federal Reserve holding interest rates steady, transaction volume is expected to remain constrained in the near term. These trends underscore the impact of elevated borrowing costs and increasingly selective investor behavior, which continue to limit deal flow. The average sale price per square foot dropped 20.9% quarter over quarter to $293, though it still marked a 6.3% increase from Q1 2024.
In a standout Q1 2025 transaction, Blackstone Real Estate Partners X L.P. acquired all outstanding common shares of Retail Opportunity Investments Corp. (ROIC) for $17.50 per share—an all-cash deal valued at approximately $4 billion, including assumed debt. The portfolio included 419 properties across the West Coast, with approximately 484,311 square feet located in Ventura County. Local assets included North Ranch Shopping Center in Westlake Village, Moorpark Town Center, Park Oaks Shopping Center in Thousand Oaks, Seabridge Marketplace in Oxnard, and Park Oaks Shopping Center in Ventura.
This strategic acquisition underscores Blackstone’s continued focus on high-growth, income-generating real estate. ROIC’s grocery-anchored centers have proven resilient through economic cycles, aligning with Blackstone’s strategy of targeting stable, necessity-based retail assets that offer long-term cash flow.
As investors recalibrate strategies to navigate higher borrowing costs and capitalize on rental demand, the retail market continues to evolve. In Ventura County, performance will hinge on broader economic forces and capital market conditions. Market fundamentals are expected to remain stable, with elevated coastal home prices driving inland migration and sustaining demand for local brick-and-mortar retail.
Still, slowing rent growth may place downward pressure on pricing as investors adjust to changing dynamics. Landlords and tenants alike face rising competition. With demand high for well-located space, competition for prime retail locations is intensifying. Despite offering incentives, landlords continue to face challenges backfilling larger second-generation spaces vacated by national tenants.
