Noozhawk: BizHawk: Santa Barbara’s State Street Vacancies Hit Two-Year High

The more things change, the more they stay the same.

Santa Barbara’s State Street, a puzzle of mismatched pieces, is once again experiencing high retail vacancies.

“Retail vacancy in Santa Barbara continued to climb in the third quarter of 2025, marking six straight quarters of rising inventory. Leasing activity remained slow, with only 11 new leases totaling 17,427 square feet,” according to Radius Commercial Real Estate.

The overall retail vacancy rate increased from 3.4% in the second quarter to 3.8% in Q3, according to Radius. It’s a two-year high. Asking rents increased from $4.26 a square foot to $4.33 a square foot.

One recent vacancy is Habitat Home & Garden at the corner of State and Gutierrez streets. The corner home furnishings store is now for lease, on a block that has experienced its share of vacancies.

Away from State Street, the largest lease of the quarter was at the Mesa Shopping Center at 1924 Cliff Drive. The group fitness studio FS8 has leased the 3,540-square-foot spot of a former bank and is set to open “soon,” according to Radius.

“Despite slow overall activity, fitness users continue to be an important driver of the retail market,” according to Radius.

In the meantime, Montecito retail remains exceptionally strong, “characterized by low availability and high achieved rents.”

The Rite Aid bankruptcy left five large retail vacancies that are unlikely to get filled by a single retail outlet.

“In today’s environment, securing any retail lease larger than 5,000 square feet is considered a major win in the evolving Santa Barbara retail landscape,” according to Radius.