South Santa Barbara County Commercial Property Sales Mid Year Update
Years from now the South Santa Barbara Commercial real estate markets will consider 2011 as the year sales transaction volume returned to the levels seen from 2000 to 2007. Through the first six months of 2011, 37 sales transactions were completed. In July and the early part of August, ten more transactions closed bringing the number of completed commercial sales to 47 for the year.
The high volume of transactions throughout the end of 2010 and thus far in 2011 have helped establish a new baseline for the market. In 2009 and 2010 the limited amount of closed transactions made it difficult to value buildings because of the lack of recent comparables. Sales from 2006 – 2008 are no longer relevant when valuing a building in 2011. The amount of recent sales transactions has reduced uncertainty in the market. This stabilization has further perpetuated the sales cycle as both buyers and sellers now have a basis for a fair market trading price.
While bank financing is now available most of the transactions we have seen thus far in 2011 were all-cash transaction and did not involve financing.
There was a decline in the number of sales during the second quarter when compared to the first quarter of 2011. The sales market produced 11 sales in the second quarter of 2011 while 26 closed in the first quarter. The highlight sales included a 70,000 square foot building formerly owned but still occupied by Mentor at 301 Mentor Drive that sold for $19.4 million and a 29,000 square foot building that currently houses Spectrum Fitness on Calle Real sold for $3.9 million. Even with only 11 sales during the second quarter the outlook is bright for the number of commercial sales to exceed 60 for the entire year. There are currently a number of transactions in escrow which should close during the 3rd and 4th quarters of 2011.
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