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Report: Commercial vacancy rates in Merced County up 70 percent over two years

Staggering increases in vacancy rates — both for homes and commercial buildings — are revealed in a just-issued University of the Pacific economics report.

The university's Business Forecasting Center analyzed U.S. Postal Service data showing buildings where mail hasn't been collected for more than 90 days.

The number of vacant buildings has increased steadily for two years.

Merced County's commercial vacancies rose 70 percent. In Stanislaus County, 7 percent of commercial buildings were empty two years ago, but vacancies soared to more than 12 percent by last fall. That was a 74 percent increase. and San Joaquin County's rose 59 percent. Nationwide, commercial vacancies increased just 14 percent during that time.

Empty houses also have proliferated the past two years. The number of vacant homes jumped 80 percent in Stanislaus, 93 percent in Merced and 37 percent in San Joaquin, compared with just 1 percent nationwide.

Traditionally, vacancy rates are very low in California, according to the Business Forecasting Center's California and Metro Forecast. As recently as two years ago, they were well below the national average, but have climbed dramatically since.

Merced and Modesto now exceed the U.S. average, but Stockton remains a little below it.

The center's director, Jeffrey Michael, said that indicates the Northern San Joaquin Valley's housing stock was not extremely overbuilt compared with the region's population.

"Indeed, the California real estate bust is a story of a price bubble and foreclosures, not a glut or oversupply of housing units as in Nevada, Florida and other parts of the U.S.," the report concludes.

Soaring commercial vacancies are of bigger concern, according to Michael.

"The commercial sector is where we really see the effects of the recession. Without a doubt, there's a big increase," Michael said. "There are a lot of vacant offices and retail buildings out there."

Two years ago, commercial vacancy rates were lower in the Northern San Joaquin Valley than the nation as a whole, but that no longer is the case.

And the Business Forecasting Center doesn't expect this region's economy to get better any time soon.

"The recession will extend through the first half of 2010 for the Merced, Modesto (and) Stockton ... metro areas," the forecast predicts. "While most of the state is slowly transitioning from recession to recovery, the (region) ... will remain mired in recession for the first half of 2010."

The report says the valley is "disproportionately impacted by the three biggest looming economic problems in 2010: the impact of state budget cuts, the closure of the NUMMI auto manufacturing plant on April 1, 2010, and the continuing real estate crisis."

NUMMI's upcoming closure is expected to cost 4,500 jobs at the Fremont plant, plus more than 15,500 jobs at suppliers throughout the state.

"The impacts will be felt statewide, but will be centered in the East Bay and radiate east into the Northern San Joaquin Valley," the report states. "The ripple effects in the Central Valley will be proportionally larger for these smaller metro areas that are also suffering the worst damage from the real estate meltdown.

"We anticipate nearly 6,000 people in the Stockton and Modesto areas will lose their (above-average paying) jobs as a result, roughly 1 percent of the local work force."

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