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The state of retail in Santa Barbara is “anemic,” and it will take a team effort by the government and private sector to revitalize the area.
Brad Frohling, principal at Radius Group, said Thursday that there are more than 50 vacant storefronts along State Street.
“We’re all hopeful we are going to come roaring back, but it is going to take some time,” he said.
Frohling was among those who spoke at the Radius Insight South Coast Real Estate & Economic Update on Thursday morning.
Although the City of Santa Barbara chose to close nine blocks of State Street to cars, Frohling said that was too much.
“Right now, downtown does look like a yard sale,” Frohling said. “Right now, our downtown, the experience has been diminished. It’s really unfortunate.”
Frohling said the closure has helped restaurants, but outdoor patios do nothing for retailers. He suggests closing from Haley Street to De la Guerra Street only.
“What’s happened after COVID is we have taken somewhat of a duct-tape approach,” Frohling said. “The patios and the restaurants, we needed them to do that, it’s kept them alive. The patios don’t do much for the other retailers, by the way.”
He said Santa Monica has closed only three blocks.
“Closing what we have right now is too much, and it’s not a great use of the space,” Frohling said.
The City of Santa Barbara needs to maintain a clean and a safe environment that is attractive to patrons and to tenants. Landlords need to be flexible with their rents, he said.
“At the end of the day, the free market needs to see the value and the opportunity of being here,” Frohling said. “They want to be here and establish their new businesses here. Right now, their confidence in Santa Barbara, in downtown, is fractured. That’s not a secret.”
Gene Deering, principal at Radius, pointed out a few examples of commercial real estate buildings that sold, and then resold in a short amount of time, to illustrate that investors will buy buildings if they have long-term tenants.
“One thing that has happened uniquely in the last 12 months is the number of buildings that have sold twice in a short period of time,” Deering said.
He pointed out that 50-90 Castilian in Goleta sold in December 2019 for $40.1 million. A year later, it sold for $60.5 million.
The tenant, AppFolio, was originally holding several different leases inside the building. The investor, however, signed a 12-year extension with AppFolio, under one master lease.
“They removed the risk, and a year later, they sold it for $20 million more than they paid,” Deering said. “Once you remove that risk from the equation, the investment community is going to reward you.”
Deering also pointed out that in June 2015, the CKE campus in Carpinteria sold for $25 million. An investment company bought the campus as Procore expanded throughout the building.
“Procore grew like a weed within the building and took over much of the project,” Deering said. “They sold it in July of last year for $44 million. Once that stability is added to the asset, the investment community rewarded the owner and that owner made a big profit there.”
He also noted that 1001 State St., the old Saks Fifth Avenue building, sold for $15.5 million in 2015, for $18.5 million in 2018, and then for $36.2 million after Amazon signed a long-term lease for the building.
“Once again, remove the risk, asset value increases,” Deering said.
Smokehouse Gains Salmon Certification
That means that products were grown, harvested, manufactured and traded in “ways that improve livelihoods and protect the environment.”
“We are proud to support the standard and its mission while being the first to produce Fair Trade Certified smoked salmon in the world,” according to the news release.
The Kvaroy Arctic x SB Smokehouse Rope Hung smoked salmon will be available exclusively at Whole Foods Market. Kvaroy Arctic has become the first farmer of fin fish to attain the coveted certification that includes a “rigorous vetting process of the farm’s social, environmental and economic impacts.”
Attorney Opens New Firm
Attorney Frederick “Rick” Montgomery has opened a new practice at 926 Garden St. in downtown Santa Barbara.
He was the co-founder in January 1977 of Fell, Marking, Abkin, Montgomery, Granet & Raney LLP.
The move follows the “natural winding down of Fell, Marking, Abkin, Montgomery, Granet & Raney as attorneys from the decades-old partnership retired or moved on to other ventures,” according to a news release
“I’m not ready to give up the tussle,” Montgomery said. “I love what I do. This is an exciting new chapter in my professional career. It’s invigorating, it’s a brand-new set of challenges, and challenges make my world go round.”
Montgomery specializes in civil litigation, including real estate, commercial and business transactions, intellectual property, probate, estates and construction. For the past 20 years, according to a news release, he’s focused on family law involving complex marital dissolutions involving assessing, valuation, apportionment and division and allocation of businesses and personal assets, as well as the parties’ associated spousal and child support issues. Resolving the complexities of the parties’ needs for both Premarital and Post-Marital agreements is also a focus of his practice. He’s worked on hundreds of cases, many involving high net-worth individuals such as sports figures, celebrities, business leaders, and prominent families, a news release states.