Santa Barbara and Goleta Office Vacancy Rates Declining
The South Coast lease market saw positive downward movement in vacancy rates across the board, with the exception of the Carpinteria industrial market. This is the first time in four years that all office indices saw a reduction in vacancy. Santa Barbara benefited from a number of new leases, subleases and renewals that took over 50,000 SF of office space off the market. This reduced Santa Barbara’s vacancy rate from 6.2% to 5.2%.
Additionally, there was a continuation of small office leasing bolstering the recovery of the overall market. As more small office users come back to the marketplace, the general attitude remains positive towards continued recovery. Lease rates continue to adjust slightly to try to remain competitive against lower asking rates in Goleta and Carpinteria. Achieved rates in Santa Barbara are averaging around $0.10/SF to $0.20/SF less than asking rates so there is still room to negotiate for tenants in the marketplace.
The Goleta Office sector continued to improve through the first quarter of 2011 with an 18% decline in the vacancy rate from 13.7% to 11.2%. Goleta saw over 100,000 SF of office space lease during the first three months of this year. Growth from companies like Yardi, Network Hardware and Control Point helped fuel the expansion. This is the third straight quarter of decline in the vacancy rate and indicates a real recovery in one of the hardest hit sectors of the South Coast market. While the vacancy rate remains above the double digit level, the improvement in the market goes beyond statistics. One particular item of note is the small amount of medium size (2,000 SF to 4,000 SF) office inventory in Goleta. There are only a handful of properties in the Goleta market available currently (most of which would be classified as larger spaces – 10,000 SF+).
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