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On the surface it was a rather unremarkable first quarter on both the sales and leasing side. Activity has eased after 2014’s gangbuster 103 commercial sales with considerably fewer deals during Q1 2015 than the same quarter last year, though we were not far off the 17-year quarterly average with 15 total. In fact, the +$20 Million sale of the REI building in downtown Santa Barbara is just the first of several larger sales we anticipate this year, which may shift the narrative from the number of deals to sales volume.
On the leasing side, vacancy was also relatively stable across the South Coast, for the most part, particularly in Santa Barbara. In the retail space, for example, Santa Barbara’s vacancy remained slight at just 1.5%, despite the large 22,000 SF grocery space recently vacated by Fresh Market. The challenge in this sector continues to be finding tenants for spaces above 3,000 SF.
Commercial Sales Summary
Statistically, in our market the first quarter tends to be the slowest performing quarter. So when the 17-year average of approx. 16 commercial sales per quarter is achieved during the first three months of the year, it is considered a strong showing. Q1 2015 did come in just shy of that mark with a respectable 15 commercial sales on the South Coast, though we were never on pace to match Q1 2014’s astounding 23 deals.
Considering the first quarter’s modest haul, it is unlikely 2015 will surpass last year’s record of 103 total commercial transactions. However, given the properties in the pipeline and the overwhelming number of buyers in the market, we do predict another above average year for South Coast sales.
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