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Thursday, January 24 , 2019, 12:49 am | Fair 44º


Tech Sector Anchoring Recovery of Local Commercial Real Estate Market

Pacifica Commercial Realty report outlines vacancy rates, with the second quarter boasting several notable leases in Goleta

The technology sector has generated most of the second quarter’s new leases in the midst of a gradual recovery for the South Coast commercial real estate market, according to Pacifica Commercial Realty.

Nearly 100,000 square feet of Goleta office space was leased in the second quarter.

“Looks to me like the tech engine that keeps Santa Barbara hopping along as fueled by the R&D that comes out of UCSB is the bright spot,” Pacifica Vice President Mark Mattingly said.

The biggest transaction involved Network Hardware Resale leasing 41,228 square feet of office space at 6500 Hollister Ave., where the privately held company relocated its headquarters from nearby 26 Castilian Drive.

Other notable leases included AppFolio relocating to a 14,527-square-foot space at the Castilian Technical Center, Yardi Systems expanding into 15,563 square feet in the Goleta Business Park, Control Point relocating from downtown Santa Barbara to a 14,227-square-feet space in the Castilian Tech Center, and Deckers Outdoors Corporation temporarily moving to a 14,244-square-foot location at 120 Cremona Drive.

Despite the pickup in activity, the Goleta office vacancy rate increased 0.2 percent this quarter, according to Pacifica Commercial Realty. The vacancy rate dropped from 11.9 percent to 9.8 percent in the first quarter, but rose to 10 percent.

It said the Santa Barbara office market remained strong as the vacancy rate decreased from 5.1 percent to 4.7 percent, while Carpinteria remained mostly unchanged with a 17.5 percent vacancy rate.

The South Coast industrial market saw slight increases in the second-quarter’s vacancy rates, except for Carpinteria, which fell from 11.7 percent to 11 percent. In the retail sector, according to the report, the arrival of Marshalls and REI to State Street will help fuel the recovery.

Lease rates are lower than Santa Barbara has seen in the past 10 years, and Mattingly says it will remain a buyer’s market.

“As we look through history, recessions are relatively short and recoveries are relatively sharp, and what we’re seeing here is a very long period of recovery and a very gradual bounce off the bottom,” he said. “But we’re entering a new period of opportunity, which holds promise for those seeking long-term value in commercial real estate. It’s a great time to buy.”

Noozhawk business writer Alex Kacik can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Become a fan of Noozhawk on Facebook.

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