“This is a prime example of a local investor taking an otherwise under-utilized but well-located commercial property and transforming it into a destination center,” said Steve Brown of Radius Commercial Real Estate & Investments in explaining the offering’s attractiveness to potential buyers.
Another prime Santa Barbara commercial property is up for grabs and is catching the eye of hungry investors near and far.
The high visibility building located at State Street and Freeway 101—anchored by popular outdoor gear and clothing retailer REI’s “2013 store of the year”—has entered Santa Barbara’s hotly contested real estate market with a price tag of $21,950,000.
The 94,206-square-foot parcel, which spans from State Street to Anacapa Street on the north side of the freeway, includes 55,545 square feet of fully leased retail space with storefront on both streets and a sizable parking lot in front of REI facing Anacapa.
Agents Austin Herlihy, Steve Brown and Chris Parker of Radius Commercial Real Estate & Investments were hired to market the property exclusively.
“We’ve already received numerous inquiries from around the country,” said Herlihy.
The property had last been renovated in 2011 with REI opening in November of that year. The company occupies the largest portion of the space at about 24,500 square feet with Sit ’n Sleep in the next largest space at about 8,500 square feet. Both companies hold long-term leases.
According to Brown, prior to REI the building had previously struggled with unstable vacancy and was largely not seen as a strong retail location with the majority of it being used as industrial space.
“This is a prime example of a local investor taking an otherwise under-utilized but well-located commercial property and transforming it into a destination center,” he said.
Other similar deals include last June’s sale of the Citibank building located at 3757 State St., as well as last November’s sale of the Marshalls building (formerly Borders Books) at 900 State St. Radius handled both deals.
The Citibank building, which had last been sold in 2012, underwent significant interior and exterior renovations to make the property more attractive to tenants. Its $10 Million sale price marked the largest sale of office property on that corridor of State Street since 2005.
The listing of the REI property continues a streak of local investment activity over the past several months, despite a very limited supply of available property. The 57 commercial deals to date have put 2014 on par with some of the strongest years on record. Radius is bullish on the possibility of the year concluding with total sales transactions in the high 90’s, which would also be the greatest number of annual sales since the brokerage began keeping records about 17 years ago.
Among the year’s notable deals:
February saw the purchase of the historic Bekins building located at 25 E. Mason St., now the R&D headquarters of wifi sound system giant Sonos who occupies the entire building. Listed at $21.5 million, the sale of the Funk Zone building marks the largest transaction involving office/R&D property in Santa Barbara since 2007 when the El Paseo building at 820 State St. changed hands for more than $25 million.
The second quarter witnessed the record sale of the “Starbucks Center” in Montecito which sold for $14.5 Million in an off-market deal and was the largest sale of commercial property ever on Coast Village Road. Radius represented both sides of the deal involving the 13,800-square-foot building located at 1046 Coast Village Rd. The property had last been sold in December of 2012 for $10.2 Million.
Additionally, this spring the Sevilla condo development project at 401 Chapala St. was completed with all commercial units and a number of residential units having been sold.
As previously reported by Radius in the company’s first and second quarter reports of the year, sales activity on the South Coast has returned to pre-recession levels and investors are continuing to purchase prime property for record prices.
The record high sales have all taken place in the South Coast’s most desirable locations including Montecito, State Street and the “Funk Zone”, led last year by the “Old Firehouse” building in Montecito’s upper village which sold for a record $2,500/SF.
“The REI property has a lot going for it,” said Herlihy. He lists its close proximity to the Funk Zone and downtown, as well as a host of long-awaited development projects like the Entrada project and the children’s museum as a few of the many factors that make the property a highly attractive investment opportunity. Both projects are expected to significantly boost foot traffic in the area, a fact that is not lost on surrounding retailers or investors.
“I’ve said it before, competition is fierce for well-located inventory in Santa Barbara when it comes on the market, which is not often these days,” he said.
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