Colliers Tingey has released a new report showing five straight years of improvement to the Fresno/Clovis office real estate market. File photo

If the demand for office space in Fresno and Clovis is any indication, the economy here is on a good pace for recovering from the recession.

“In both our first quarter and mid-2017 office market reports, we predicted strong activity and positive market growth would continue,” states Colliers Tingey International’s latest report on office vacancy rates in the Fresno-Clovis area.

“We are happy to report that 2017 turned out just that way, making it the fifth year in a row that we have seen improvements in the Fresno/Clovis market.”

The office market has given Brian Decker, president of the Central California division of Colliers Tingey, reason to smile.

“It’s been excellent. It’s been just a solid five years in a row, and it continues, and we’re optimistic it will continue,” he said.

During the first quarter of 2018, the vacancy rate for office space in the two cities has dropped to 10.4 percent, “considerably lower than the 11.4 percent reported last year at this time,” according to the report.

That translates to 2.17 million square feet of currently available office space out of the 21.61 million existing in Clovis and Fresno.

Colliers doesn’t include in its analysis government-owned offices or those occupied by government agencies, which would increase the amount of office space in the cities to more than 25.5 million square feet.

Craig “Cap” Capriotti, vice president of Fortune Associates, Inc. in Fresno and a commercial real estate broker for 39 years, said he doesn’t agree with Colliers’ numbers, as his company’s own survey puts office vacancies in Fresno and Clovis at more than 2.61 million square feet and the vacancy rate at more than 12 percent.

Still, he noted that different brokers may use different data to analyze the local market, and he did agree that office vacancies in Clovis and Fresno have declined, as his company’s analysis showed a vacancy rate of nearly 14 percent at this time last year.

“It’s coming down for, sure,” said Capriotti, noting, “There aren’t many [new] buildings built, so you are seeing absorption higher than normal.”

In a lot of cases, business owners and operators looking to step up to larger or more up-to-date buildings or downsizing to smaller ones are investing to upgrade or retrofit them to better suit their needs before moving into them, said Capriotti, who is fixing up an older building in Fresno for his company to relocate to in September.

One of the most visible of such upgrades is the top-to-bottom renovation being done to the Rowell Building in Downtown

Fresno, though plans to lease all the office spaces there to the Fresno County District Attorney’s Office currently are up in the air over delays the owner, Lance Kashian & Co., is having in obtaining tax credits to fund completion of those renovations.

The Colliers report notes that all eight submarkets of the Fresno/Clovis area are showing improved occupancy of office space, and “Clovis, Central Fresno and Downtown Fresno submarkets all had vacancy factors under 10 percent, which is a very healthy number. By comparison, only the Clovis submarket vacancy factor was under 10 percent when the [national economic] recovery started in 2012.”

It goes on to state that optimism is driving the market, despite rising rents and asking prices of offices for sale, while the lack of new office buildings is only slightly hampering the market.

“There are times when requirements can’t be filled because there is not suitable property [available], but that is very rare at this juncture,” and the lack of new office space probably would not become a significant problem unless the vacancy rate for the Fresno/Clovis area dropped to 3 or 4 percent, Decker said.

Sam Lucido, owner of Lucido Properties in Fresno, Clovis and Sanger, agreed that “People are feeling better about the economic status,” which is driving interest to upgrade and expand their businesses.

He attributes much of that feeling to the man in the White House, as “I think when [Donald] Trump was elected in November [2016], people realized the days of overregulation are coming to an end.

“Under the Obama administration, the guy was decimating businesses.”

Lucido noted that business people tend to be proactive, so even before Trump’s promised tax cuts for businesses were approved in December, many who anticipated the cuts already were making use of their prospective tax savings by working to relocate, expand or upgrade their businesses.

Capriotti estimated that it might take six to 12 months before the fuller effects of the new tax laws will be visible in the local real estate market.

While the tax cuts likely help in motivating some businesses here to relocate, upgrade and renovate, Decker said, “I think it’s the whole package, that may be part of it. I think the national economy is strong and unemployment is lower here.

“It all fits nicely together.”

“Summing it up, we expect the unabated momentum of the previous five years to continue,” the Colliers report states. “We are bullish that this year will bring more positive growth, as activity continues to be strong in both office leasing and sales.”