Santa Barbara’s State Street signed its largest downtown retail lease on July 23, with U.S. Bank snagging 5,708 square feet for a new location. The deal comes the same day that 700 State St., the former home of Left at Albuquerque, sold for an undisclosed amount.
The U.S. Bank lease at 936 State St. is the largest retail lease in downtown Santa Barbara this year, according to Hayes Commercial Group, which represented the landlord in the transaction, and sits on the same block as the Borders bookstore building, which sold for $10 million in April. Although Santa Barbara’s main drag has seen a slew of vacancy signs since the economy tanked, the core downtown retail area, which includes the 900 block, has held steadier. According to a mid-year market report by Hayes, lease rates in the 600 to 900 blocks of State Street have declined only 1 percent since 2008, but rates in the 300 to 500 and 1,000 to 1,200 blocks have tumbled by 31 percent. The downtown corridor saw 11 new leases in the first half of the year, including Mac’s Fish & Chips and Crossroads Trading Co.
“Since the beginning of the recession over two years ago, smaller retailers and even local ‘mom and pop’ stores have been able to lease space on the 900 block that would have been out of reach at the peak four or five years ago,” broker Michael Martz of Hayes said in a release. The 900 block of State Street has seen 13 deals totaling more than 72,000 square feet since the beginning of 2008, according to Hayes data.
U.S. Bank’s new branch location on the east corner of State and Carrillo streets first became a Santa Barbara banking fixture in the late 1800s when it was purchased by the Santa Barbara Savings and Loan Society. Since then it has gone through several pairs of banking hands, including First Federal Saving and Loan and Mission Federal. The Sobhani family has owned the property since 1994.
As the Business Times reported earlier on July 23, the sale of 700 State St. is the second-largest downtown sale this year, after the Borders building sale, and only the fourth retail sale on the street this year. Although the terms of that deal were not disclosed, the 5,753-square-foot building was listed for $4.1 million. Broker Michael Chenoweth of Radius Group represented the owner and Mike Heisheima of Epsteen and Associates represented the buyer in the transaction.
Santa Barbara retail property sales prices have continued to decline, down 7 percent since the end of 2009, according to Hayes. Limited access to capital and high vacancy rates have kept many investors on the sidelines, but those with cash to spend are taking advantage of low prices.