As most South Coast commercial real estate firms finish drafting their third-quarter reports, I must disagree with some of my sources who refer to what is occurring on State Street as “revitalization.” Since first writing about Santa Barbara business 22 years ago, I have learned to watch the comings and goings of State Street businesses and to refer to the process as “churning.”

This distinction is important because the storefronts on State Street more resemble the sands on South Coast beaches than just a bunch of empty shops or an economic barometer. Oh, sure, the empty stores looked ominous two years ago when an inexperienced and out-of-town newspaper publisher told me, “Ray, can you write about all the empty stores on State Street?”

I told him what he was looking at in the wake of the recession was a natural process: The weaker businesses are fading, only to be replaced later by someone with a better idea — and much lower triple-net leases. Those leases have plunged from as high as $3.25 per square foot during 2006-07 to nearly $2 per square foot today.

It’s not so much that the publisher was young and inexperienced. Even some older so-called South Coast business experts — who don’t actually live here and may spend their most weekends in the Rockies — lack much institutional knowledge of what things were like during the last Santa Barbara recession and how things churn on State Street.

Let’s face it: Some shops don’t belong in the competitive market that is State Street. Why do they stay there even with lowered triple nets? Since it seems their profits are microscopic if they can be found at all, a few State Street business owners just don’t mind losing some money in hopes of recouping their losses some day in a better economy. However, if they keep the same business plan, that day may never come.

Meanwhile, what that change in triple net leases means, for example, is that an up-and-coming boutique, which couldn’t afford the $3.25 per-square-foot lease three years ago, can now pay the 30 percent less on overhead and compete on State Street. For how long? Well, that’s up to the market.

But one thing is for sure: Most of those empty storefronts are filled today, and cash registers will be ringing as the biggest retail season of the year approaches and tight-fisted consumers hunt for bargains. This is made possible, in part, because of lower triple-net leases and some imaginative business plans.

How many $200 pairs of jeans can be sold from one boutique such as Blue Bee or True Religion? How many used clothes will be swapped for new ones at Crossroads Trading Co. or The Closet? And, how many saris and scarves will be sold at shops such as Namaste? Only time will tell what the market will bear.

The simple fact is that not all State Street retailers will make it in this economy. My favorite — or, I guess least favorite — example of this was the quaint little nostalgia “pre-antique” shop called Retroville, which opened in October 2007 only to shut down in less than a year. Eight or nine years ago, a shop like Retroville might have survived by selling unique knick-knacks that tourists and residents wouldn’t mind spending $20, $50 or more to keep for a while and then sell at a yard sale.

This month’s opening of prAna, 1200 State St., in partnership with the adjacent Santa Barbara Outfitters shop, is just one example of how retailers are looking for a new way to stay on State Street and cut their overhead. The locally owned shop and its best-selling brand, based in Colorado, have similar philosophies on what they sell. A walk down the street will reveal more such ventures, which have adapted to the changing economy.

Meanwhile, a ripple effect takes place as upper some State Street businesses try the waters downtown and vacate their former spaces near the De la Vina Street intersection. Sure, the overpriced, snobbish Thomasville home furnishings store closed near the start of the recession and was replaced by BevMo! But that’s just more churning.

Several interesting businesses, including Brummis, a German eatery, have opened on upper State Street to make a go of it.

Look for more businesses to take advantage of lower lease rates before the end of the year. That, as I have said before, will lead to more churning.

— Noozhawk business writer Ray Estrada can be reached at restrada@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk or @NoozhawkNews.