For Santa Barbara’s retail scene, Macy’s closing downtown was the biggest revelation as the year ended.

With retailers nationwide struggling to adapt to the changing shopping habits of consumers purchasing online, how Paseo Nuevo fills the space will be critical to its success.

Last year was the most active period on record for retail leasing on the South Coast. 

The State Street corridor in downtown Santa Barbara has lost “some of its luster” as a destination and saw a rash of softening rents and vacancies.

La Cumbre Plaza on upper State Street continues to wrestle with challenges, too. 

Those were among the highlights Tuesday during the annual South Santa Barbara County Economic Summit presented by UC Santa Barbara’s Economic Forecast Project.

Several hundred attendees filled the downtown Santa Barbara Granada Theatre for the program, which also focused on the North American Free Trade Agreement and global trade impacts, as well as international trade. 

The 130-page report issued during the 36th annual event included economic information about Santa Barbara County.

The county’s employment and household income were included in the data. 

The county’s total employment for all industries grew by 4,829 jobs in 2016 — a gain of 2.4 percent. This growth is in line with the rate from 2015, which was also a gain of 2.4 percent.

The unemployment rate declined in all cities across the county in 2016, falling 0.3 percent to 4.8 percent.

The city of Goleta had the lowest unemployment rate in the county at 2.6 percent, while Lompoc had the highest, at 5.9 percent.

Leisure and hospitality and transportation, at 9.2 percent, and warehousing and utilities, at 5.8 percent, had the largest employment growth rates.

Professional and business services, at -1.4 percent, and farming, at -2.1 percent, were noted as the industries to have job declines. 

Local wages grew by 2.3 percent in 2015, the largest increase since 2010. 

Within the county, Goleta has the highest median household income at $83,091, while the city of Lompoc has the lowest at $49,494. All of the North County cities remain below the county’s median household income. 

Key points noted in the real estate report included the median home price in the county increasing 0.6 percent in 2016, which was significantly lower than the California average of 4.0 percent.

The community of Montecito was noted as having the most expensive house prices, with the city of Santa Maria being the least expensive.

“The median house price is $3 million in Montecito,” said Peter Rupert, executive director of the Forecast Project. “That’s high.”

Only 21 percent of Santa Barbara County residents were able to afford the median-priced home, compared with 31 percent of residents statewide, and 58 percent nationally.

Santa Barbara’s current median home value ($561,000) remains 19.08 percent below its pre-recession peak of $692,400 in December 2005.

With only 31 percent of California residents being able to afford the median-priced house statewide, Santa Barbara County falls below this number (21 percent), making it the fifth least-affordable county.

Of the 29 counties assessed, San Francisco, San Mateo, Santa Cruz and Marin counties were also noted in the top least affordable.

Compared the last year’s numbers, with 23 percent of residents being able to afford the median-priced house, the county has become even less affordable.

“I’ve talked to many city council members in Santa Barbara, and I try to get rid of the term ‘affordable housing,’” Rupert said. “It’s not affordable. You have to think of affordability in terms of income.”

Over the last few years, the South Coast has averaged a low vacancy rate of 0.82 percent, displaying the overall low rental availability. 

The vacancy rate nearly doubled to 1.68 percent, but remained low compared to the state average in 2016.

The biggest change in vacancy was seen in Isla Vista, which grew to 2.13 percent in October 2016 from 0.24 percent in April 2015.

The report indicated the increase in the vacancy rate may be due to UCSB’s dormitory expansion alleviating the demand on the Isla Vista rental-housing market.

The report’s authors gave this assessment for the South Coast apartment market analysis: 

“There are several things influencing the high demand for rental housing; such as, the housing affordability crisis, natural population growth, and an influx of the younger generation who are willing to forfeit owning a home for the freedom and simplicity of living in an apartment.

“However, as these pressures push the need for more housing, the South Coast rental supply is failing to sufficiency need these demands.”

Tuesday’s keynote speaker was Pablos Holman, an inventor, futurist and notorious hacker, who discussed the growing role of innovation and invention in solving a handful of the world’s problems.

Holman is working for Bill Gates, philanthropist and co-founder of Microsoft, and former Microsoft chief technology officer Nathan Myhrvold at the Intellectual Ventures Laboratory.

Holman noted discoveries that have revealed solutions to issues including powering the world for thousand years from a uranium junkyard and how to end Malaria with mosquito-zapping laser beams.

“We have a lot of work to do — to figure out how to take care of the psychological well-being of a human,” Holman said. “Robots and technology are not going to do this. We need to go back and do the hard work to figure out how we are going to take care of humans.”

Also addressing the crowd at the morning-long program were Esther George, president of the Federal Reserve Bank of Kansas City; Tim Kehoe, a professor of economics at the University of Minnesota and a researcher at the Federal Reserve Bank of Minneapolis; and Russ Roberts, a research fellow at Stanford University’s Hoover Institution.

The program started with a special tribute to the late Michael Towbes for his community impact and supporting UCSB’s Economic Forecast Project for nearly four decades.

He was one of UCSB’s Economic Forecast Project founding directors in 1981.

— Noozhawk staff writer Brooke Holland can be reached at bholland@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.