Offices in Bakersfield, which have been easier to come by than warehouse, industrial, or retail space, may be approaching historic levels of scarcity.
Third quarter vacancy rates for city office space are nearing 7.4 percent, which is the lowest in the nation and the third lowest in North America, and developers continue planning at least four new office complexes to meet demand.
At the end of the third quarter of 2013, Bakersfield's office vacancy rate was nearly 8.6 percent, and it actually rose to more than 8.7 percent during the first quarter of 2014 before dropping, according to Colliers International, a global commercial real estate company.
This reflects a national recovery from the recession, and a U.S. economy that has added about 1.3 office-using jobs for every 1 lost during the recession, Colliers officials wrote in their third quarter highlights.
City Manager Alan Tandy said the city had more than 135 commercial building permits issued or in plan review through Nov. 20, in contrast to recession times when numbers were in low double digits.
"There's lots of new commercial development coming in and that's good," Tandy said.
And Bakersfield office space has had some unique insulators that helped keep vacancies from going over 12 percent even during the recession -- and are now driving them to new lows.
"At our worst time, we only got up to about 12 percent and that's always because the oil industry always kept us from feeling the recession like other industries. I've been in the business 30 years and the lowest we ever got was 6 or 7 percent, so we're getting close to the lowest office vacancy rate we've ever had," said Jeff Andrew, a senior director and principal at Pacific Commercial Realty Advisors, an affiliate of Cushman & Wakefield.
Community Development Director Doug McIsaac cautioned that low vacancy rates can cut both ways, driving away employers seeking empty offices.
"It's been an issue and there are some significant office projects coming on line here, which would be healthy," McIsaac said.
Colliers senior vice president David Williams agreed.
"There's not a good adequate supply for a tenant to look around the market, or even for a good user coming into the market," Williams said.
Andrew said his company has three office projects planned in the southwest, each estimated at between 200,000 and 400,000 square feet of space.
One is planned at the intersection of Coffee Road and Stockdale Highway, across from Trader Joe's; a second will be near Cal State Bakersfield; and a third will be on Stockdale between Jewetta Avenue and Allen Road.
The head of Gregory D. Bynum and Associates Inc., said his company plans to break ground in June or July on a project on Camino Media in the southwest. It's the first building in a complex that will yield about 280,000 square feet of office space.
Gregory Bynum also credited low vacancies to developers who didn't over-build.
"I think most people overlook Bakersfield when they're talking about major office markets because we're not considered a major metropolitan area, but we do have one of the strongest occupancy rates in the U.S., and it looks like it will stay that way for some time to come," Bynum said.