After undergoing an extensive remodel to modernize the building and attract high-quality tenants, the three-story office/retail building at 3757 State St. adjacent to Whole Foods has changed hands for nearly $10 million in the largest sale of office property on upper State Street since 2005.
Anchored by long-term tenant Citibank on the first floor, the approximate 20,000-square-foot building underwent a complete renovation in 2012, including taking the second and third floors down to the studs and creating a flexible modern layout.
Gene Deering of Radius Commercial Real Estate & Investments represented the undisclosed buyer who was attracted to the prominence and stability of the asset.
“As a part of a 1031 exchange, the buyer was able to acquire the highest quality office building on upper State Street, fully leased to quality tenants,” Deering said. “With dramatic mountain views, five per thousand parking, and Whole Foods across the parking lot, the tenant experience is hard to beat anywhere in Santa Barbara.”
“The second and third floors were completely transformed bringing numerous efficiencies to the building’s functionality as well as its aesthetics,” Bob Tuler of Radius said.
Tuler and fellow Radian Paul Gamberdella represented the seller in the transaction.
Following the renovations in 2012, Radius was able to extend Citibank’s ground floor retail tenancy, then quickly leased the second floor and penthouse offices to well-known local and regional office tenants.
According to Tuler, the property had not been updated since it was built in the 1970s and had suffered from unstable tenancy through the years. It now stands 100 percent leased and fully stabilized.
Exchanges from one commercial property into another have become a common strategy used by investors to defer capital gains taxes, often saving millions.
In addition to 3757 State St., Radius orchestrated the recent exchanges of two other high profile buildings along the State Street corridor, the Marshalls building at 900 State St. late last year followed by this February’s sale of the historic Bekins building in the Funk Zone, now home to Sonos. Those three deals have accounted for nearly $45 million in transaction value.
— Vince Coronado is the marketing director for Radius Commercial Real Estate & Investments.