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Pacific Coast Business Times: Deals in the Works: REI building and former Penfield Smith building both up for grabs

December 12, 2014

Deals in the Works: REI building and former Penfield Smith building both up for grabs

Santa Barbara, California – Published 12/12/2014
By Elijah Brumback

Business Times sources say the high-profile property at 318 State St. in Santa Barbara, which is fully leased and includes retailers REI and Sit n’ Sleep, currently has four purchase offers on the table and negotiations are in full swing.

The 55,500-plus square foot property was listed in September by Radius Commercial Real Estate & Investments with an asking price of just over $21.9 million. Located in the city’s hub within walking distance of the Funk Zone, West Beach, Stearns Wharf, and a handful of new mixed-used development projects, the property is an anchor in a high-traffic retail corridor.

The building, originally constructed in 1930 and updated in 2011, sits on a nearly 95,000-square foot piece of land, with 83 on-site parking spots.

Another property slated for new ownership in Santa Barbara is 111 E. Victoria St. The property is expected to sell early next year, according to a source with knowledge of the deal. Shareholders of Santa Barbara-based civil engineering Penfield & Smith are selling the property, which was built by the firm for its corporate headquarters in 2006.

The office building, listed at $12.6 million, is one of the newest such structures in Santa Barbara County. Stantec, the publicly traded design and consulting firm based in Alberta, Canada, recently signed a new seven-year lease for the property after it acquired Penfield & Smith in October.

The 18,000-square-foot-plus building is located a block from State Street, the courthouse and the arts district. Features include high ceilings, multiple patios, state-of-the-art conference rooms, IT services, 40 private offices and a roof-top deck.

In 2011 Penfield & Smith sublet a portion of the building to McGowan & Gunterman, a local CPA firm. The sublease of about 4,000 square feet of the second floor with the CPA firm is still in place and is now assigned to Stantec.

The sublease expires Nov. 30, 2017. The new lease is a single tenant net lease, and Stantec will manage the sublease with the CPA firm. According to Radius, net operating income for the property in the first year of the new lease would be just more than $630,000, rising to almost $733,000 by year seven. Stantec also has three 36-month options.

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