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Santa Barbara News-Press: A stroll up State Street

March 06, 2021

Economic project explores promenade’s real estate, activity, aesthetics

Santa Barbara, California – Published 3/6/2021
RAFAEL MALDONADO/NEWS-PRESS PHOTOS In a webinar by UCSB’s Economic Forecast Project, a panel said that the 500 block of State Street is doing very well, although crowded with the many unique parklets.

State Street has seen a full makeover since the start of the COVID-19 pandemic.

In an effort to improve Santa Barbara’s main downtown corridor, a brainstorming session was held Thursday by the UCSB Economic Forecast Project. The panel examined the street space spanning from Cabrillo Boulevard up to Sola Street.

Prior to the webinar, Dr. Peter Rupert, UCSB economics professor and director of the EFP, and Gene Deering, principal of Radius Group Commercial Real Estate, recorded a video of the two of them walking and analyzing each block.

During Thursday’s virtual event, Dr. Rupert and Mr. Deering were joined by Kristen Miller, president and CEO of the South Coast Chamber of Commerce, as the group examined the vacant and heavily trafficked areas, while also exploring how each block could be improved.

Starting along the waterfront in the first block of State Street, Mr. Deering said the Hotel Californian has made those blocks “very healthy.”

“They (Hotel Californian) did a great job of building out the space and creating small retail spaces within the Hotel Californian,” he said. “No one’s too worried about it in terms of vacancy or lack of traffic.”

Warren Nocon, the managing director of Hotel Californian, shared during the webinar that he, his colleagues and employees are very supportive of how the city has handled the pandemic.

“The closure of State Street and opening of the promenade and these outdoor dining areas gave our agents something to talk about,” he said. “It was nice to see the entire Funk Zone as a community really treat the pandemic as something serious.”

Brad Finefrock, of Finney’s Crafthouse & Kitchen in the same block, had a different review of the promenade.

“Over time, State Street’s closure has kind of developed and matured a bit, but it has adversely affected our business,” Mr. Finefrock said during the webinar. “The promenade is now more of a destination site pulling a larger audience which typically had pulled down to the Funk Zone and our area. It had an adverse affect on our sales over the last six to nine months, so that’s been a slight negative.”

However, he added that he believes outdoor dining should be allowed permanently.

“It’s very difficult for operators like ourselves to not know if we should invest the significant amount of money into patios, parklets, cabanas and overhead structures unless we know that there’s going to be a long-term approach to this outdoor dining theme,” he said.

Next, in the 100 block of State Street, Mr. Deering said the lease rates in that block are about $7 per square foot — some of the highest in Santa Barbara due to the 1,500 to 1,800 square-foot sized spaces. However, the businesses in that block such as Rusty’s Pizza Parlor, McConnell’s Fine Ice Cream and Santo Mezcal are doing “very well.”

In the 200 block, Mr. Deering pointed out that there’s no sign or entrance indicating people are entering the Funk Zone, and he said that could be beneficial to the area. He added that the former Fish Enterprise Co. building was sold twice, but was purchased for $3.5 million, $600 per square foot, and will become a high-end tech office.

The transition from the 200 block to the 300 block, Dr. Rupert said, needs some work.

“My least favorite part of State Street is going under the freeway,” he said. “It’s very narrow, it’s dark, it’s loud … damp, smelly.”

“To me, this is something that doesn’t give us a very good welcoming to tourists who are walking up State Street from the beach.”

He suggested replacing the undercrossing with a pedestrian overpass, so people could also enjoy all the shops and restaurants that are above it as well, such as Dawn Patrol or Casa Blanca Restaurant. Ms. Miller even suggested an interactive lights show in the meantime.

As they entered the 400 block, Dr. Rupert said, “There’s a lot of controversy over which blocks got closed. Many store owners on the 400 block have been asking to close that to cars as well.”

They discussed the stark difference between the 400 and 500 blocks, and Mr. Deering pointed out local developer Peter Lewis’s plan to build an 84-unit residential building in the parking lot behind the old Staples property, at 410 State St.

“So many of us believe housing is the key to revitalizing State Street,” Mr. Deering said. “Developers need scale. There’s only so many larger parcels that can enable building enough housing to make it worth the developer’s while.”

The 500 block marks the bustling State Street that many imagine — parklet after parklet and high foot traffic. Shaun Smith, co-owner of Institution Ale Co. in the 500 block, said he supports the promenade becoming permanent and said the bar will be opening a 5,000 square-foot beer garden next door in the coming months.

“Like most, we’ve also seen some uptick in business thanks to the opening up of State Street and closure of through traffic,” he said. “That’s been beneficial for us and will continue to be beneficial hopefully after COVID-19 as a more permanent solution to bring more people to State Street. It’s finding that balancing act of how we can create the best customer experience and the safest customer experience.”

He added that many of his customers see outdoor dining as a positive experience, and they would choose to do so even if they had the opportunity to dine indoors.

The former scientology building in the 500 block, Mr. Deering said, sold last year for $5.7 million and will become a boutique and hotel. Dr. Rupert pointed out that while the parklets in the 500 block of State Street benefit the restaurants and bars greatly, retail stores can struggle to be seen as visitors walk by.

Three new leases were completed in the 600 block, but the panelists said the non-operating movie theater and the subsequent dead zone is a “big contrast between activity on the 500 block versus what’s happening on the 600 block.”

“The solution is to really look at recruiting businesses in a variety of categories,” Ms. Miller said, suggesting to add something recreational or interactive in that block to liven it up.

The property next to the 7-Eleven, at 700 State St., just leased to a tequila bar, Mr. Deering said, but the vacant Macy’s property across the street needs to be utilized.

He said that from Gutierrez to Sola Street, the vacancy rate for the number of storefronts is at about 18%, the highest it’s been in decades. In lower State Street’s entirety, from Cabrillo Boulevard to Sola Street, Mr. Deering estimated around 46 vacant spaces.

The Starbucks, at 800 State St., recently decided not to renew its lease, opening up that corner space. The 800 block, as of right now, has seven vacancies, but it’s beat out by the 900 block with nine.

“The 900 block is probably the one block that needs the most help,” Mr. Deering said, adding that the Forever 21 building, at 901 State St., could use some sort of repurposing or new tenants.

The Amazon building in the 1000 block has proved to be a success for State Street, selling a few months ago to an international investor for $36 million, making it the largest property sale ever in the downtown Santa Barbara business district.

Dave de L’Arbre is the COO of Santa Barbara Travel in the 1000 block, and he shared his concerns with the promenade at the webinar.
“My primary concern is the pace at which the city will move forward making the financial and infrastructure investments that will fill in vacant storefronts and reinvigorate downtown Santa Barbara,” he said. “The current tangle of parklets, pedestrians, bikes and skateboarders creates confusion and is a potential hazard.”

Dr. Rupert added that he wasn’t even fully convinced State Street should be called a promenade if it’s fully closed. He suggested, jokingly, having residents of the city take a vote on it.

From the 1100 block, specifically Draughtsmen Aleworks, co-founder Scott Stefan chimed in to express his support for the State Street closure.

“The ABC (the state Alcoholic Beverage Control) was very easy to work with to get a (liquor) license. Once we understood it (parklets) better, we got it up in a week and we’ve been going strong the last several months. We’re super stoked about State Street being closed — it makes it better and safer, and everybody loves it,” he said.

Overall, many improvements were mentioned, including bike lanes (which are already being implemented), landlord incentives to build housing, repurposing old buildings, filling vacant spaces with new tenants, setting standards for parklets, more lighting, live music opportunities, addressing homelessness and utilizing creative and new ways to liven up different blocks. Business owners, architects and property owners just need a firm nod from the city that it’s all worth it.

“We focus on both visitors versus people living downtown,” Ms. Miller said. “As we approach both of those priorities, visitors want to be where the locals are, so as we continue to develop a downtown that’s really for us, that will feed our tourism traffic as well.”

The webinar will soon be uploaded to efp.ucsb.edu for the public viewing.

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