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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Radius Insight: Q4 2017 Market Report

The high annual transaction volume that started in 2014 continues. Last year was another strong year with 97 total sales, just six short of 2014’s record 103. The majority of commercial properties sold in 2017 were office buildings (37) followed by retail (24). Though not for lack of demand, industrial and land sales totaled just 17, while there were also two hotel sales. The 4th Quarter’s 22 sales were down from Q1’s high of 31, yet still above the 17 sales-per-quarter average and in line with 2nd Quarter (19) and 3rd Quarter (25)…

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South Coast Leasing Summary

Santa Barbara’s office vacancy rate has been slowly increasing since 2014 bringing the current vacancy rate to 6.7%, the second highest level we have seen over the last 17 years. It would be realistic to expect lease rates to level off or decrease, likely driving vacancy rates back toward 5%…

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South Santa Barbara County Multifamily Summary

We ended 2017 with moderate sales compared to 2016 due solely to lack of inventory. It’s clear strong demand for multifamily isn’t going to wane any time soon. While the Millennial population grows, they remain locked out of the homeownership game. That means as Millennials continue to save for a down payment they must rent. This trend is expected to continue for the next few years…

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Radius Insight: Q3 2017 Market Report

From 2014 to 2016 we experienced the three strongest years of commercial sales on the South Coast since Radius began recording market activity in 1998. In fact 2014’s record 103 transactions were nearly matched by last year’s 101. And despite the fact that dollar volume dipped last year to $366 Million versus $437 Million and $439 Million in 2014 and 2015 respectively, 2016 was still a strong year by any standard.

Enter 2017 and, while we are on track for another strong year, we do appear to be in a bit of a transition period (call it transformation?) with some divergent storylines emerging, particularly involving industrial and retail properties in the downtown area…

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South Coast Leasing Summary

Santa Barbara’s office vacancy rate remained stable with a slight decrease from 5.8% in the second quarter to 5.6% during the third quarter. The majority of vacancies remain below the 3,000 sq. ft. range, with leasing activity skewing heavily to smaller spaces: 48 new leases involving spaces under 3,000 sq. ft. over the past three quarters, versus just 18 new leases for spaces over 3,000 sq. ft. The largest lease during that time period was at 425 N. Milpas St. for 9,200 SF. But perhaps the most noteworty activity came in Q2 when LogicMonitor gobbled up more than 20,000 sq. ft. at 820 State St. (which includes 5,800 SF of former retail space on the first floor). The company is vacating 5,800 sq. ft. at 12 E. Carrillo St…

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South Santa Barbara County Multifamily Summary

South County multifamily sales have continued this year well behind 2016’s extremely brisk pace (there were a record 42 sales of 5+ unit properties last year), and the only reason we are not seeing more is pure lack of inventory. The trend of historically low availability continued through the end of Q3 2017, while demand remains high for apartments particularly in Santa Barbara and Goleta. Still, some sellers are beginning to loosen up on their holdings as they see we remain in a seller’s market…

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Radius Insight: Q2 2017 Market Report

The second quarter of 2017 came to a close with 18 sales, considerably short of the first quarter’s strong haul of 31 transactions which was the strongest first quarter we have seen in the last 18 years. This brings the first half of the year to 49 total deals. That said, the first half of the year was only 4 transactions shy of tying 2014 for the most prolific first half we have ever recorded…

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Leasing Summary: Large Allergan building sublease shrinks Goleta’s industrial vacancy rate

…Goleta (as expected) experienced a major drop in industrial vacancy, plummeting from 3.8% in Q1 to a low of 0.9% in Q2, matching Santa Barbara’s vacancy rate. With this drop we saw a positive absorption of 28.6% over last quarter. The drop in vacancy is largely attributable to the 105,257 SF sublease at 71 S. Los Carneros Rd. by the biotech firm Apeel Technology, Inc…

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Radius Insight: Q1 2017 Central Coast Commercial Real Estate Market Report

South Coast commercial sales for the first three months of 2017 were the strongest we have seen in the last 18 years.

During the first quarter there were 30 commercial sales, twice as many as the 18-year average of 15 for Q1 sales. We even surpassed the 24 sales closed in Q1 2016 which was another strong opening quarter.

Total sales volume for the first quarter was $134 million, up slightly from 2016’s $129 million and completely overshadowing the $49 million closed in Q1 2015…

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Leasing Summary: Macy’s & The State of Retail

Undoubtably the big news heading into 2017 was that Macy’s would be closing their massive 141,000 sq. ft. anchor location in the Paseo Nuevo Mall this Spring. The store is now closed. With 48 years remaining on their lease with the City of Santa Barbara, the retailer is in the process of deciding what to do with the property. Macy’s is able to transfer the lease to another retail tenant as long as a minimum of one floor is dedicated to retail use. A potential tenant could be either another large retailer or a mixed use project. Through the lease language, the City doesn’t have much control over the type of retail tenant…

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