As we predicted in our reporting during the year, the total number of commercial sales for 2018 came in well under the all-time highs we’ve seen during the past five years. In the 4th Quarter there were 24 sales including one agricultural (read: cannabis) property. While this was two more transactions than Q4 2017, total deals for all of 2018 amounted to only 81 versus 97 for 2017, a 16.5% decrease. Part of this decline can be attributed to the catastrophic December and January events on the South Coast which resulted in lower sales during the first and second quarters. It should also be noted that we still surpassed the prior-15-year average of 75 sales per year. And we should not rush to speculate that this softening in sales activity portends anything ominous. As noted in our Q3 report, we may in actuality be witnessing a balancing of the market.
South Coast Leasing Summary
The office vacancy rate in Santa Barbara has been relatively steady over the last three quarters, ending the year at 6.6%. Smaller spaces continue to make up the majority of vacancies in this market, with 83 of the 112 vacant spaces at the end of Q4 being under 3,000 SF in size, representing approx. 135,000 SF or about 40% of total vacant square footage.
Multifamily Investments Summary
No doubt 2018 was a relatively slow year for multifamily investment sales in the South County. The effects of the twin natural disasters from last December and January certainly impacted all commercial real estate sectors at the beginning of the year. That coupled with the continued trend of low inventory, we tallied just 21 total sales of multifamily properties 5+ units in size during 2018, four fewer than 2017 and well below 2016’s record 42 sales.
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