The first six months of 2015 showed a healthy continuation in the pace of commercial property transactions in Santa Barbara County, both investment deals along with owner-user sales, and leases.
The biggest story again in 2015, following the same trend seen in 2104, is the unabated demand for “investment” properties, even if the return on investment is anemic. It seems everyone wants commercial property in his or her portfolio, despite the high prices being paid.
It should be noted, however, that more than half of the sales volume was comprised in two large transactions. It’s not easy to find local buyers with the willingness to spend $20 million or more on local properties. Both of the large sales in the first half were to out-of-town investors.
We have seen more interest from local firms in purchasing buildings for their own use, and we feel this is a healthy trend, and should be sustainable, provided interest rates remain compelling.
Leasing activity varies by submarket. The most desirable market for all property types is downtown Santa Barbara, with Goleta and Carpinteria beginning to show higher-than-normal vacancy rates, particularly in the “office” sector.
Industrial vacancy remains historically low, in all three South Coast submarkets. This seems to be true throughout California.
Whereas this same South Coast market has shown resiliency throughout the economic downturn, when compared to other Southern California markets, the office vacancy rates in Goleta and Carpinteria have not kept pace with Los Angeles and Orange counties, where new speculative development is once again on the rise.
Not so on the South Coast, even though opportunity exists in Goleta and Carpinteria for such new development.
Industry groups that seem to be leading the market in terms of demand include the banking and finance sector; software development; including cloud computing/storage; light manufacturing; and retail sales, with new automobile dealerships coming to the community, including Tesla and other high-end vehicles.
The economic outlook for the South Coast remains bright. Home sales have continued unabated, with the most often heard complaint being a lack of inventory.
Job creation seems to be steady, and with some luck, the office/technology sector of our economy may rebound as well.
Pacifica Commercial Realty has three offices covering the entire Central Coast (Santa Barbara, Santa Maria and Paso Robles), and our team can best help you address your commercial property needs. Please call us at 805.899.2400 with your specific requirements.
Click here for Pacifica Commercial Realty’s full South Coast market report.
— Mark Mattingly is executive vice president of Pacifica Commercial Realty.