Pacific Coast Business Times: Commercial Real Estate and Construction Quick Takes

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The Panel:
Gene Deering
Principal
Radius Commercial Real Estate
Santa Barbara

Deering: In the retail world we have seen the greatest demand for spaces under 1,000 square feet as tenants are prioritizing efficiency more than ever. Tenants are willing to pay a higher price per square foot if they can find small spaces and maximize the use. This demand for efficiency is part of the reason the collaborative shared-space model has seen tremendous growth.

For example, the Empty Bowl in the Santa Barbara Public Market is a perfection in efficiency, and every square inch is utilized. Similarly, down in the Funk Zone Tyger Tyger, Dart Coffee, and Monkeyshine combined occupy a total of 1,900 square feet.

The proliferation of Uber Eats and other food delivery services also provide restaurants a new area for revenue growth. Those tenants who can take advantage of this market segment efficiently by modifying their pickup process position themselves for further growth.

This drive toward efficiency exists in the office market as well. The days of 300-square-foot “Mad Men” offices has passed. Executive offices have shrunk down to 100 to 150 square feet. Large file storage rooms have also gone away as tenants are paperless. Ten years ago we were seeing office tenants build larger server rooms, as we move to the cloud those rooms are being repurposed. Tech tenants’ desire for living room environments and smaller cubicles has further contracted the square footage per person ratio.

The market segment which has always prioritized efficiency has been on the warehouse side. This market segment has also seen the greatest growth in demand with no increase in supply along the South Coast.