Betting that the region’s premier commercial corridor is a good place to do business for the long term, the nation’s fifth-largest bank will open its only full branch in downtown Santa Barbara before year’s end and an out-of-town institutional investor recently purchased the space that formerly housed Left at Albuquerque.
Touting the deal as the largest downtown retail lease of the year, Hayes Commercial Brokers said U.S. Bank has leased nearly 6,000 square feet at 936 State St. for a new branch location. Michael Martz and Kristopher Roth of Hayes Commercial Group represented the landlord in the transaction.
Situated on the east corner of State and Carrillo streets, the building will return to its historic roots as a home for financial institutions. The bank will consist of the storefront area previously occupied by defunct footwear retailer Shooz, plus approximately 3,000 square directly behind it, which was used as offices by Santa Barbara County.
The property first became a banking fixture back in 1877 when it was purchased by the Santa Barbara Savings and Loan Society. It changed hands several times thereafter until First Federal Saving and Loan bought the building in 1950. Then in 1965, the building was completely rebuilt for Mission Federal with the solid 14-inch thick walls that exist today. The Sobhani family has owned the property since 1994 and is pleased to see it return to banking use, according to the Hayes agents.
According to Mr. Martz, the U.S. Bank deal is the latest in a series of retail leases on the 900 block of State Street, which has seen 13 deals totaling more than 72,000 square since the beginning of 2008.
That is a remarkable level of activity for a block that has a total of 27 retail spaces. Mr. Martz noted. 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 (of the market) four or five years ago.
Mr. Roth added, Stores like Step N’ Out and The Closet are right there in the mix with national names like Forever 21 and Apple. Despite the fact that a number of for lease signs are prominent along State Street, The blend of national, regional and local is what makes downtown State Street such a vibrant and unique retail corridor, said Mr. Roth.
At the present time, U.S. Bank has a location in Magnolia Shopping Center. It is not a full branch location, but a service area inside the Ralph’s market at 5170 Hollister Ave. The downtown location will be the only full branch in the area. The nearest one is in Ventura.
From a visibility standpoint, It will be a flagship store for the bank, predicted Mr. Martz, adding the bank intends to offer the full complement of financial services, including wealth management.
Mr. Martz said the bank signed a 10-year lease the space was marketed at $4.95 per square foot and the tenant will pay above $4 per square foot for rent.
Once permits are obtained, the bank intends to do extensive improvements to the space. In addition to hiring banking staff, the remodeling project might also benefit local subcontractors and suppliers during construction.
The bank has indicated that it wants to open the branch by the end of the year.
In addition to arranging the lease at 923 State St., Mr. Martz also handled three recent sales on the 500 block of State which house such businesses as The Territory Ahead and the James Joyce.
These sales speak to the fact that investors still hold State Street in high regard for the long term, said Mr. Martz.
[Photo Caption: U.S. Bank will soon be staking out a presence in downtown Santa Barbara. Hayes Commercial Group brokers Kristopher Roth, left, and Michael Martz, who represented the landlord in the transaction, are seen outside the building, which is located at 936 State St. Above, the former home of Left at Albuquerque at 700 State St. was recently purchased by an out-of-area buyer and the building remains for lease. While the sales price wasn’t disclosed, commercial real estate brokers say the deal represents the second-largest retail sale on State Street in 2010, the first being the sale of 900 State St., the home of Borders bookstore, which was acquired for about $10 million.]
Long-term value is clearly part of the equation behind the sale of 700 State St., which is located on another high-traffic corner and which formerly housed the Mexican eatery Left at Albuquerque, which was shuttered in December 2009.
It just closed escrow, said Scott Glenn, a principal at the Radius Group Commercial Real Estate, a firm which represented the property owner, a discreet lady who lives in Montecito. Epsteen and Associates represented the purchaser, an out-of-town institutional-type buyer, added Mr. Glenn. The price was not immediately disclosed due to confidentiality issues. The 5,753-square-foot-building remains for lease.