Noozhawk: Commercial real estate sag

Santa Barbara, California – Published 7/26/2018
By Joshua Molina

Commercial real estate sales stayed flat in the second quarter of 2018, but dropped significantly from a year ago at the same time, according to Radius Group.

After the second quarter of 2017, there were 49 commercial real estate sales. After the first half this year, there were 29 sales.

In terms of dollars, the total Q2 sales volume was approximately $50.2 million compared to $69.5 million last year, according to the quarterly Radius Group report.

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Radius Insight: Q2 2018 Market Report

As the second quarter of 2018 came to close, market activity, as expected, did not seem to change much from the first quarter. Overall, the second quarter’s 15 sales brought the total number of sales for the first half of the year to 29. That is a sharp decline compared to the 49 commercial sales we recorded in the first half of 2017.

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Retail Special Report: State Street’s Sad Song Plays On

It’s no secret there remains much discussion and debate about just exactly what’s going on in our once-bustling downtown corridor. The one thing we can all agree on is the tale of State Street retail is playing out like a re-recording of Willie Nelson’s iconic “Always on my Mind”. Ultimately it’s a song of angst and perhaps regret, with no definitive solution on the table.

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South Santa Barbara County Multifamily Summary

The South Coast multifamily market continues to remain strong and should stay this way through 2018. Renters make up a large portion of the region’s population, with vacancy in the greater Santa Barbara area below 2% as it has been since 2011, which of course is very attractive to investors. Demand for rental units is expected to remain high due to economic, demographic and lifestyle trends, including the continuing trend of baby boomers and empty nesters choosing to downsize.

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Noozhawk: Reimagine Santa Barbara: State Street Remains a Key Focus

Santa Barbara, California – Published 6/26/2018
By Joshua Molina
Staples building in downtown Santa Barbara

After the hit of Thomas Fire and debris flow caused a need for regional economic recovery, State Street retail faces the same challenges it did before

When smoke from the Thomas Fire started to stifle the city last December, retail conditions on State Street were already in bad shape.

The shift from bricks-and-mortar business to online shopping has delivered a significant blow to Santa Barbara businesses. Conspicuous vacancies dot State Street, and businesses, locals and tourists say homelessness and vacancy discourage people from visiting the downtown area.

Wildfire smoke forced businesses to close their doors during the holiday season, and the deadly Jan. 9 Montecito debris flow destroyed and damaged hundreds of homes, and flooded Highway 101.

The 12-day roadway closure cut Santa Barbara off from the south entirely, and according to a May UCSB Economic Forecast Project presentation, Visit California estimated the closure “resulted in a loss of $949,000 per day in visitor spending, adding up to a total of $11.39 million lost over 12 days of highway closure.”

Economic recovery from the disasters will take years.

“Looking ahead, the profound destruction and disruption caused by the Thomas Fire and the Montecito mudslides will have ripple effects on South Coast commercial real estate for years to come and is expected to slow down sales activity in the near term,” the recent UCSB Economic Forecast Project report said.

Now, almost six months after the debris flow, the conditions on State Street, even with the most optimistic face, are at best the same, with little marked change in vibrancy in the downtown core.

Staples is the latest big box store to pack up and leave, reportedly leaving at the end of August. Recently Chipotle also closed its doors, as did a Verizon store.

These stores follow a slew of other chains that have departed downtown, including the Macy’s department store that anchored Paseo Nuevo, Brookstone, Guess, American Apparel and Panera Bread, to name just a few.

“Everyone took a hit during the Thomas Fire,” said Steve Brown, a commercial real estate broker with Radius Group. “We lost a lot of traffic.”

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Noozhawk: Staples Appears to Be Leaving Downtown Santa Barbara Location

Santa Barbara, California – Published 6/22/2018
By Joshua Molina
Staples building in downtown Santa Barbara

Loss of office-supply store would be another blow to the 400 block of State Street, which already has other vacancies.

The 400 block of State Street in Santa Barbara appears about to take another hit.

Staples, “the office superstore,” has not yet renewed its lease, according to Radius Group’s commercial real etate broker Steve Brown.

Radius is currently marketing the building at 410 State St. and looking for a new tenant.

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Radius Insight: Q1 2018 Market Report

Perhaps not surprisingly, sales during the first quarter of 2018 got off to a markedly slower start versus Q1 2017. Altogether the first quarter compiled 14 sales of commercial property totaling approximately $53 Million in volume, not too far off the prior 15-year average of 18.7 sales per quarter but significantly fewer than Q1 2017’s 30 sales and Q1 2016’s 24 sales. In fact, Q1 2018 has been the weakest first quarter since 2013. So what is causing the slow start to the year?

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South Coast Leasing Summary

As expected, Santa Barbara’s office vacancy rate dropped slightly from 6.7% in Q4 2017 to 5.9% in the first quarter of 2018. Average gross achieved rates ticked up from $2.69/SF to $2.93/SF while average gross asking rates remain nearly unchanged at $3.04/SF.

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South Santa Barbara County Multifamily Summary

Just as the Thomas Fire and Montecito mudslides may have impacted the South Coast commercial sales sector, the Multifamily sector also slowed during the first part of 2018, but resilient Santa Barbara is on the mend.

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