As last year came to a close, office vacancy in Santa Barbara was up modestly from the 3rd Quarter, rising from 5.4% to 6.1%, yet 2011 remained relatively flat from the previous year dropping slightly from 6.2% to 6.1%. Asking prices, however, continued downward to $2.23/sf from $2.30 in the 3rd Quarter, and from $2.40 at the end of 2010, perhaps a sign that lease rates are bottoming out. There certainly remain strong opportunities for tenants to seize long term deals at very attractive rates.
Santa Barbara leasing activity for the 4th Quarter, 2011 was light with mostly smaller leases and renewals. Also worth noting, more than 75% of the office spaces currently on the market are under 4,000sf.
In Goleta, the 2011 office market witnessed strong activity. Average gross lease rates have remained stable at $1.66/sf. Overall vacancy dropped substantially from a year ago by about 21%, from 13.7% to the current level of 10.8%. Still, vacancy remains relatively high when looking at the numbers over the last 10 years. We expect lease rates and vacancy to remain stable with possible downward pressure on rates as property owners seek to keep existing tenants or entice new tenants to their buildings.
Notable 2011 lease transactions included Antioch University upgrading to a 26,600sf space at 610 Anacapa St., and Rightscale taking a similar-sized space at 402 E. Gutierrez.
Download a full copy of Radius Insight, 2011 South Coast Commercial Real Estate Year-End Report.
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