The Santa Barbara office market started the year steady with both lease rates and vacancy remaining nearly unchanged for the last 2 years. During the 1st Quarter, 19 office leases were completed. Asking prices rose slightly from $2.23 per SF at the end of 2011 to $2.26 per SF to end the 1st Quarter 2012, while vacancy rose nominally from 6.1% to 6.2% for the same time periods. Look for both lease rates and vacancy to remain steady for the remainder of the year. Notable leases during the quarter included a 9,700 SF space at 203 Chapala St. and a 5,100 SF space at 3888 State St.

Goleta’s office sector saw improvement from the end of 2011 with a reduction in the vacancy rate from 10.8% to 10.2%. The average asking rate stayed relatively steady, only declining slightly from $1.66 to $1.64 per SF on a modified gross basis. The 1st Quarter of 2012 did see several new office leases in Goleta, including ConMed leasing approximately 16,000 SF and Aplegen leasing approximately 5,500 SF. The vacancy level has been holding steady for the past 5 quarters and it’s likely that we will not see major changes in the near term. Vacancy levels are likely to stay between 9% and 11% for the foreseeable future as larger tenants remain hard to find and smaller availabilities remain scarce. Download a full copy of Radius Insight, 2012 South County Commercial Real Estate 1st Quarter Report.