The 200 block of E. Yanonali Street in Santa Barbara’s Funk Zone has wine and beer tasting rooms. 
The popular Urban Wine Trail that winds through Santa Barbara’s Funk Zone includes Santa Barbara Winery at 202 Anacapa St. 
The Acme Hospitality-owned complex includes The Lark, Lucky Penny, Helena Bakery, Santa Barbara Wine Collective, and Les Marchands Wine Bar and Merchant. 
The Youth Interactive shop at 209 Anacapa Street. 
Pali Wines and The Valley Project wine tasting rooms at Yanonali Street and Gray Avenue in the Funk Zone. 
Figueroa Mountain Brewing at Anacapa Street and Helena Avenue in Santa Barbara’s Funk Zone. 
The popular Urban Wine Trail that winds through Santa Barbara’s Funk Zone includes Oreana Winery at 205 Anacapa St.
[Noozhawk’s note: Part of a series called Reimagine: Santa Barbara, a Noozhawk special report produced in partnership with Shared Mission Santa Barbara and KEYT News. Over the next several weeks, the series will trace the founding and evolution of downtown Santa Barbara, dive into the challenges we’re confronting today, explore the exciting opportunities in front of us, and take a look at what’s happening with downtowns in other communities. Throughout the series, we’ll be asking you to help us identify priorities and form a vision for State Street’s future.]
While State Street struggles, Santa Barbara’s Funk Zone flourishes.
Seemingly out of nowhere, the Funk Zone has emerged as one of Santa Barbara’s most popular attractions, a destination for both locals and tourists.
What was once a funky mix of warehouses that served as home to artists, surfboard makers and craftspeople has become a hub for wine-tasting, eating and shopping. The Funk Zone has experienced a dynamic, organic creative disruption that has pushed out many of the individual artists and shop owners in favor of a wave of entrepreneurial fire that has transformed the hot spot into Ground Zero of the millennial lifestyle.
“It’s a nationwide trend of people wanting to shop and drink wine in an industrial warehouse type of building,” said Ray Mahboob, who owns property on State Street and in the Funk Zone. “The key is local government not nitpicking it and letting the community embrace it.”
Nestled between Garden and State streets, from Highway 101 to Cabrillo Boulevard, the area evolved into somewhat the antithesis of State Street. Downtown is known for its many tourist amenities, including wide, red brick sidewalks, benches, trash and recycling containers, wayfinding signs, planters, ample lighting, flag program and overall sense of self-importance. The Funk Zone is raw, gruff and untidy.
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Jaime Dietenhofer, founder of Figueroa Mountain Brewery, said he was attracted to the Funk Zone because businesses in the area were allowed to manufacture something and create products, as opposed to only retail.
“That is why we brew beer on-site,” Dietenhofer said.
When Dietenhofer signed the lease and started construction in 2012, many of the projects in the Funk Zone had not yet begun, and there were still a lot of Funk Zone vacancies and not a lot of foot traffic.
“I remember standing on the patio the day we opened hoping people would eventually make it down to the Funk Zone,” Dietenhofer said.
“Lo and behold they did. It is great to see a beautiful area that used to not have foot traffic and a lot of vacancies turn into a thriving local business community. I do hope that there remains a commitment to keep a good mix of business and use types in the area like J7 Surfboards, The Arts Fund and other places that create and manufacture.”
State Street has its parking lots and parking programs, with ample free 75-minute parking. The Funk Zone, however, was never planned as a destination, so there is very little off-street parking. The street parking is occupied by employees or those lucky enough to find a space. Anyone traveling to The Lark, the area’s flagship restaurant, will likely use Signature Valet Services because there’s literally no place to park in the zone.
With little off-street parking, visitors often call Uber to to drop them off, en route to a wine-tasting room.
The 6-foot-wide sidewalks are concrete. There aren’t trash cans on every corner, and no landscaping with box planters exists. Cars also don’t cruise the Funk Zone like they do State Street, largely because it’s not a linear strip.
Apparently, it doesn’t matter. The young professionals who frequent the area use car services or walk into the area after parking in city lots blocks away. Most who enter the Funk Zone are destination driven. In other words, they know where they are going, unlike those on State Street who wander in hopes of finding something.
“Since there’s less foot traffic, you see fewer homeless,” Mahboob said.
The other key to the area’s success, Mahboob said, is supply and demand. There’s not a lot of inventory in the Funk Zone, so when a property becomes available, it moves quickly. The tighter availability of space means landlords can charge more.
“Rent in the Funk Zone is about 30 to 50 percent more expensive,” Mahboob said, also noting that State Street has many absentee landlords and the Funk Zone doesn’t.
The Funk Zone is currently the hot haven for hipsters, but members of the business community believe the city needs to let the Funk Zone be successful, without abandoning focus on State Street. The two areas should work together to attract tourists and locals.
“The Funk Zone is for young guys and State Street will remain the pull for old guys and cultural tourists,” said Steve Cushman, former president of the Santa Barbara Region Chamber of Commerce. “Remember the most popular things for tourists to do are see the ocean, shop, eat Mexican food for lunch, go to the Mission, and take the red tile walk.”
Mike Martz, a commercial real estate broker for Hayes Commercial Group, said Santa Barbara is a beautiful place and will always be a sought-after destination. The Funk Zone, waterfront and State Street all play an important role.
“The Funk Zone has been a success,” Martz said. “It is new. It is different and it taps into people’s desire to have a fun place to go with a dynamic mix of new businesses.”
However, they will always compete with each other at some level, Martz said.
“It will require our city leaders to be visionary and show real leadership to balance the needs of these three areas in a way that makes them all thrive collectively,” Martz said.
Ken Oplinger, president and CEO of the Chamber of Commerce, agreed.
“The Funk Zone is a great new area for the businesses, one that should work hand-in-hand with downtown Santa Barbara and others to address their own unique issues,” Oplinger said. “The partnership of State Street and the Funk Zone, tied together with La Entrada, will ensure Santa Barbara remains a draw for visitors from around the world.”
Funk Zone property owner Mahboob welcomes the regulation, as long as it can maintain its raw identity and city leaders resist the temptation to enhance it. In essence, the city needs to let the market decide the area’s future.
“The Funk Zone is not going to be the Funk Zone if you turn it into State Street,” he said. “We really need government to embrace and promote the artistic value of the Funk Zone and make it thrive, rather than regulate it.”
About This Series
Noozhawk’s Reimagine: Santa Barbara project is exploring the challenges and opportunities in downtown today, and will be working with you, our readers, to identify priorities and form a vision for State Street’s future.
It’s not just about shopping or dining, but finding out what locals want for the next generation of State Street and the downtown experience.
Should the city incentivize more housing projects in the downtown core, or get into the development business itself? Should business organizations work with property owners to curate more locally owned stores?
How can stakeholders work together to come up with innovative solutions for large properties like Macy’s in Paseo Nuevo and Saks OFF 5TH, which is vacating its store on State and Carrillo streets when its lease is up in the spring?
Have an idea? Have questions? Join the conversation in our reader-engagement platform, Noozhawk Asks.
— Noozhawk staff writer Joshua Molina can be reached at jmolina@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.