Santa Barbara commercial real estate is red hot

If there was any doubt that commercial real estate sales have yet to recover from the pandemic recession, a recent report by the Hayes Commercial Group of Santa Barbara certainly proves otherwise.

Trade sales for the fourth quarter of 2021 topped the charts with 117 deals totaling $770 million, the highest sales quarter on record, the brokerage said in its analysis of the South Coast region. Rental volume, however, is still lagging behind the five-year pre-pandemic average.

A handful of notable hotel sales contributed to the banner’s total: Bill Foley bought the Hotel Californian for $130 million; the Santa Barbara Hotel sold to Diane Hendricks for $41.9 million; and Hotel Indigo sold for $18.7 million.

On retail sales, a local development team bought most of La Cumbre Plaza, including the Macy’s building and surrounding parking lots, for $63 million, and an investor bought the Nordstrom building. long vacant at Paseo Nuevo for $13 million. There seems to be a trend across the country to pivot properties away from retail, and those purchases are following suit, Hayes said.

Office space transactions totaled $154 million, with Apeel’s Goleta office, as well as two large office buildings on East Victoria Street, changing hands.

According to the Hayes report, there are only 60 commercial properties currently on the market on the South Coast. Inventories have fallen 27% since mid-2021, ending the year at a three-year low. However, Hayes predicted continued demand for commercial properties from owner-users and investors should drive things forward through the coming year if interest rates and inflation don’t spike too high. high.

On the rental side, 2021 has proven to be another challenging year for many South Coast restaurants and retailers. State Street hasn’t seen much action, with just eight commercial leases signed, the lowest tally in 10 years. Notable offerings included the addition of an Athleta storefront and future Augie’s Tequila and Belching Dragon Tavern restaurants on blocks 700 and 800.

State Street storefront vacancies have topped 10% for five straight years, Hayes noted. By comparison, the Great Recession of 2008 triggered less than two years of a double-digit vacancy rate. But on a more positive note, “there seems to be more local entrepreneurs trying out concepts on State Street, which is encouraging and has the potential to help the neighborhood evolve and attract residents again,” says the report. “The parklet-lined makeshift promenade, combined with a critical mass of local restaurants and retail, are promising ingredients to help revitalize State Street.”

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