More News

Pacific Coast Business Times: Funk Revival

November 16, 2012

Funk revival: Santa Barbara’s gritty neighborhood a hub for big projects

The French Press, a locally owned coffee shop in Santa Barbara, recently opened its second location. The Anacapa Street location used to house a bike shop. (Alex Drysdale photo)
Santa Barbara, Calfornia – Published 11/16/2012
Pacific Coast Business Times
Funk revival: Santa Barbara’s gritty neighborhood a hub for big projects
By Marlize van Romburgh, Staff Writer

The gritty, eclectic neighborhood known as the Funk Zone is transforming into a hip, urban alternative to the manicured Santa Barbara experience.

The Funk Zone, a waterfront area off of lower State Street in Santa Barbara, has at least three large new projects coming online, including the long-dormant La Entrada Hotel. There are also new wine-tasting rooms, coffee shops, restaurants and office spaces, in some cases moving in to former industrial or military buildings.

“There are a lot of people betting on the future of the Funk Zone,” said Brad Frohling, a commercial real estate broker with Radius Commercial Real Estate & Investments who has done a number of deals in the area. “In addition, you have wineries collaborating to draw tourists down there.”

One of the larger projects in the works is the former Bay Café property at 131 Anacapa St., currently under construction as a new tasting facility that will be leased out to multiple wineries. Frohling said the property includes both the former restaurant building and an industrial building.

The owner is a group of investors that also own the former BeBop Burgers location on lower State St. After being remodeled last year, the property is up for lease for retail space. One of the investors, Rebecca Ingrim, did not return a request for comment about the Anacapa Street project.

The Funk Zone started moving away from its grittier roots in the early 2000s, when the first wineries opened along what has since been dubbed the Urban Wine Trail. Sixteen wineries now make up the trail, and more are set to come online as the new facilities open. Frohling said the recently opened Hotel Indigo next to the train station on lower State Street and the under-construction La Entrada Hotel a block away are also reigniting interest in the Funk Zone.

“All of these projects create a real synergy,” he said.

Santa Barbara-based real estate development firm The Tynan Group recently purchased the mixed-use property at 121 Gray Ave. While the building will house office tenants, Tynan Group Project Manager Brennan de Raad said the Funk Zone location was a draw for the company. “We definitely think it’s an upand-coming part of town,” he said. “It’s nice that employees can go and get a glass of wine, a block away from the beach, after work.”

Another draw is a large one-block parcel of land bordered by Gray, Santa Barbara and Yanonali streets. On the market for $8.8 million, the 75,000-square-foot parcel is the last undeveloped piece of land in the Funk Zone, making it a coveted piece of real estate.

Frohling, one of the brokers marketing the property, said that surrounding businesses expect the property to be redeveloped into another mixed-use project once it’s purchased.

“There are a lot of people excited about that,” he said. At 528 Anacapa St., in a large retail building formerly occupied by bike shop The Wheelhouse, a second location for The French Press, a locally owned coffee shop, has opened.

And La Entrada, the long-dormant hotel project on lower State Street that was purchased by Los Angeles developer Michael Rosenfeld’s Next Century Associates in early 2011, started construction this year. The exterior walls have been demolished, although the 1920s façade will stay. The property is entitled for a 114-room hotel and 21,654 square feet of commercial space.

At 116 E. Yanonali St., Pali Wine Co. has opened as the newest member of the Urban Wine Trail, in newly built retail space. The mixed-use property features condos on top and retail space on the bottom, making it ideal for retail store owners such as Kate McMahon, who owns clothing firm Kakoon and lives above her business.

The Yanonali Street property has a fraught history of fits and starts, changing hands multiple times in sales and bankruptcies since it was first proposed in 2008. Its current owner is a team of investors called SB6 Group, property records show. But demand for the spaces is already high. “We got all the spaces leased out fairly quickly,” Radius Group broker Gene Deering told the Business Times earlier this year.

Frohling, the other Radius broker, said that with demand for space in the Funk Zone often times exceeding supply, especially of new or remodeled spaces, rents in the neighborhood have roughly doubled in recent years, from about $1.50 per square foot, to in some cases more than $3 per square foot.

Recent News