Noozhawk: Economist Sees Bright Future for Santa Barbara County
Paul Gamberdella presents at the 2014 Radius Real Estate & Economic Forecast Radius Commercial Real Estate & Investments principal Paul Gamberdella delivers a market update during Thursday’s seventh annual economic forecast. (Gina Potthoff / Noozhawk photo)
Tight real estate market forecast during annual Radius event
Two great years are ahead for Santa Barbara County’s economy, which is now officially out of recovery and expanding, along with the rest of the state and nation, according to one economics expert.
Consumer confidence is up, interest rates are lower than a year ago, and unemployment rates are lower than before the recession started, economist Mark Schniepp announced Thursday to a crowded room of locals interested in the ever-changing economic climate.
The only drawback, however, will continue to be the housing market, he said.
Mixed reactions — from excitement to disbelief — accompanied the news, as more than 300 business professionals and real estate moguls gathered for the 7th annual Radius Commercial Real Estate and Investments Economic Forecast at the Fess Parker Doubletree Resort.
The invitation-only morning event featured Santa Barbara Acting City Manager Paul Casey as keynote speaker, a commercial real estate panel of Radius associates, and Schniepp, director of theCalifornia Economic Forecast.
Real estate market forecasts for property between Santa Maria and west Ventura County showed a similar trend — tight inventory, low vacancy rental rates and higher prices.
Santa Barbara rent was the highest, and Goleta and Isla Vista had similar low vacancy percentages, at 0.6 percent and 0.76 percent respectively, said Steve Golis, Radius principal and co-founder.
“UCSB is just knocking it out of the park,” he said. “It’s very good for us as landlords. It’s kind of tough if you’re a renter.”
He predicted 2014 multi-unit complex sales would outpace those of 2013, and estimated rent in Santa Barbara would increase 5 to 8 percent in 2015.
Sales will likely be constrained in 2015 due to lack of supply, and more foreign investors are eyeing the Central Coast market, Golis said.
So far this year, the area has logged 77 commercial sales, a number Radius PrincipalSteve Brown expected to easily surpass 100 by the end of 2014.
Of the sales, 12 were industrial, 17 retail, 34 office, 11 land and three hospitality, since it’s been such a good year for hotels, Brown said.
He predicted 2015 wouldn’t be earth shattering, with interest rates creeping up and more pressure on limited inventory.
Schniepp agreed about the interest rates, but contended 2015 and 2016 could be some of the best years the area and nation have seen since before the recession.
“In the business cycle, we are in an expansion right now,” Schniepp said. “Job growth is accelerating.”
California’s economy is outperforming the rest of the country despite the drought that will mostly affect the farm-focused inner valleys, but could lead to a 5- to 10-percent increase in food prices, he said.
Exceptional occupancy rates and visible increases in retail and auto sales and U.S. exports were good indicators, with housing as the only troubling outlook.
While economists previously thought 20-somethings had pent-up demand for housing, Schniepp said they now understand many young people between 18 and 34 want to continue living with parents.
“The weakness in housing really comes from the inability in that age group to form new households,” he said. “We’ve never seen this. The other thing about housing is there’s not much of it. Median home prices are soaring, and that’s happening all over California.”
Schniepp forecast 2015 could be the best year of the economic expansion — hopefully with a strengthened housing market to follow — but, statistically speaking, he said the next recession could happen in 2018.
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