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Local News

In This Economy, Flat Is the New ‘Up’ for Local Industries

Goleta Valley Chamber of Commerce speakers say real estate, retail, employment and banking have held steady, bucking state and national trends

Flat is the new up, speakers quipped at a Goleta Valley Chamber of Commerce panel discussion Thursday as they outlined the trends their businesses have been experiencing during the economic downturn.

Overall, business in the local real estate, retail, employment and banking industries has remained about the same as last year, and for a region that’s going through the same economic turmoil facing the rest of California and the country, flat is good.

Speakers at the chamber’s Issues and Policy Roundtable included Elaine Abercrombie of Village Properties, Karen Dwyer of Express Employment Professionals, Camino Real Marketplace general manager Mark Ingalls, Pacifica Commercial Realty executive vice president Mark Mattingly and Santa Barbara Bank & Trust business relationship manager Luis Villegas.

According to the California Association of Realtors, the average home price has dropped 33 percent; on the South Coast, the drop has been 18 percent to 20 percent.

“Our area is insulated, but not immune,” Abercrombie said.

An average sale price of $1.5 million in 2007 has become an average of $1.3 million. However, high-end, multimillion-dollar luxury homes are not doing as well as single-family tract homes. Montecito homes are the slowest to sell, while Goleta has the tightest market on the South Coast.

Foreclosures also are trending downward, Abercrombie said. Only 1 percent of the local housing market is in distress, compared with other counties — Merced, Riverside and Stockton — that have 10 percent of their housing markets on the chopping block.

It’s still a great market if you’re a buyer, said Abercrombie, citing the average ratio of 1-to-6 of buyers to sellers. With interest rates as volatile as they are, people waiting to buy may end up paying more for less house, she said.

For Dwyer, owner of the 2-year-old Express Employment Professionals at 9 W. Figueroa St., business has been flat since early this year. Last November was her best month, as laid-off workers formed lines in the Express offices, but dropped in the first quarter of 2008.

“We are a leading economic indicator, so when my business goes back up, business is going to be good because people are going to start hiring again,” she said.

In Santa Barbara County, unemployment stands at 7.6 percent, while the rest of the state is at 10.9 percent and the nation’s average is 8.6 percent. Goleta unemployment is at 3.1 percent, Dwyer said, and Santa Barbara’s unemployment rate is 5.4 percent.

“The good news is that we have the second-lowest unemployment of all 58 counties in California,” she said. Marin County has the lowest jobless rate.

But people aren’t willing to say we’ve hit bottom yet, Dwyer said.

“I think businesses in general are waiting to see where the stimulus money is going to go, and then private investing is going to come along, and then people will be ready to do the hiring again,” she said.

Retail, meanwhile, is picking up ever so slightly on the national level, Ingalls said, but there’s still some catching up to do from this time last year.

Camino Real Marketplace, a regional shopping center at 7004 Marketplace Drive, is starting to recapture the sales it enjoyed from visitors outside Goleta, even after two of its high-performing national retailers — CompUSA and Linens ‘N’ Things — declared bankruptcy last year. Best Buy, which outlived competitors Circuit City and CompUSA, has taken up residence at the marketplace and is expected to draw a good amount of consumers, said Ingalls, who expects to announce the replacement for Linens ‘N’ Things soon.

Its array of shopping opportunities has allowed Camino Real Marketplace to succeed in this economy, Ingalls said.

“The higher end of the retail market has been affected the worst. The Saks, the Nordstroms have reported sales as being off as much as 30 to 40 percent,” Ingalls said. The marketplace’s Home Depot and Costco stores have been running static to last year’s numbers, he said.

“In this new economy, flat is the new up,” he said.

Mattingly, of Pacifica Commercial Realty, agreed: “In the first six months of this year, there were 15 lease transactions in both office and industrial properties in Goleta, and they accounted for 95,000-plus square feet of product. In the first six months of 2008, there were 17 transactions, and they accounted for 110,000 square feet of product. I’d say that’s pretty much flat.”

Vacancy rates and asking-price per square foot hasn’t wavered much from this time last year, he said.

The stability in the Goleta market for commercial real estate can be attributed to the technology sector, Mattingly said.

“Goleta is home to most of the technology companies on the South Coast,” he said. “Goleta has the enviable position of being on the forefront of technology, and that is in large part due to UCSB.” Three new tech companies have set up shop in the Goleta Valley, he added.

“We are blessed in that we’re not being punished as hard as other parts of the country,” he said.

Villegas, of Santa Barbara Bank & Trust, said small-business lending is still alive.

“I will tell you that we continue to lend,” he said. “Not only on the business side, but on the consumer side.”

Like other banks, SBBT tightened its lending criteria, raised the minimum required FICO score to 680 from 640 about two years ago, and now requires more background information to qualify for a loan.

Pacific Capital Bancorp, SBBT’s parent company, recently laid off about 20 percent of its work force, but according to a conference call with CEO George Leis, employee reductions are over, Villegas said.

Small business in this area has had a tough time of it, he said, despite pronouncements from Washington regarding federal aid, though some continue to survive — albeit with a tighter budget.

Construction, for example, is down, but the tech industry is “doing pretty well.” What’s important for small businesses to remember, he said, is to pay attention to accounts receivable.

“What’s also impacting the small-business owner is that people they’re providing the services to or sold products to are not paying as quickly as they should,” Villegas said. Also, small-business owners need to focus on the source of their credit: A bank loan is likely to be charged less interest than a credit card.

Still, it’s not all bad, Villegas said.

“The good news is that even with some of the companies that I have noticed experiencing some tough times, many of them are starting to say that they’re picking up a little,” he said. “That means a lot these days.”

Noozhawk staff writer Sonia Fernandez can be reached at .(JavaScript must be enabled to view this email address).

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