NHR leases 98,000 sf in Goleta

Mike Sheldon, CEO of Network Hardware, told me his firm has hired 20 or 30 people so far this year, and plans to hire that many more before the end of 2011, bringing its employment in the Goleta Valley to as many as 260.

The firm may well need the additional space as early as the beginning of next year, he said.

During the first quarter, Network Hardware leased 98,000 square feet of office and warehouse space in Goleta. The firm is moving its corporate headquarters from 26 Castilian Drive to 6500 Hollister Ave., a 36,674-square-foot space formerly occupied by Citrix Systems, which consolidated its campus further up on Hollister Avenue.

Network Hardware will also move its regional warehouse facility from 26 Castilian Drive to 57,600 square feet of industrial space at 80 Coromar Drive, marking the largest new industrial lease since 2005, according to Hayes Commercial Group, which represented Network Hardware in both deals.

“The demand for business infrastructure is growing,” Sheldon told me.

Fueling that demand are a couple of factors: with the move to smart phones, iPads and all things mobile, many companies need tech upgrades. But they’re not willing to pay top dollar for those goods. “IT budgets are going up with GDP, low single digits, yet bandwidth needs are growing at 30-40 percent a year,” Sheldon said.

Network Hardware sells computer network hardware, specializing in pre-owned, used and refurbished equipment that’s been put through performance testing.

The firm has additional offices in Amsterdam, Singapore, New York, and London. It told the business times recently that it pulls in upward of $200 million a year in revenue.

Network Hardware’s expansion comes as other south coast technology firms are also snatching up space.

Francois DeJohn, a broker with Hayes who represented Network Hardware in the recent deals, said a trend is emerging: “I’m starting to see bigger high-tech and successful companies leasing space for expansion instead of leasing to cut costs.”

Other firms that have snapped up space recently include engineering management firm Control Point, which leased 14,000 square feet in Goleta; software firm AppFolio, with 6,000 square feet in Goleta; and Yardi Systems, expanding by 15,563 square feet in Goleta.

And cloud computing firm RightScale is taking over the entire 26,000-square-foot technology incubator on Gutierrez Street in downtown Santa Barbara, a move that will double its headquarters as well and pushes dozens of smaller tenants out to backfill spaces elsewhere.

A first-quarter market review by Hayes noted that the South Coast office vacancy rate dropped almost 1 percent in the first quarter, with Goleta seeing the bulk of the leasing activity. Helped along by large deals, the city’s vacancy rate dropped to 10.8 percent – from 13.9 percent nine months ago.

Despite the pickup in activity, achieved leased rates dropped 17 percent in the first quarter, Hayes said, signaling that it’s still a tenant’s market out there. (Sheldon hinted that Network Hardware did in fact get a good deal on its leases.)

“The first four months of the year have been quite dynamic,” DeJohn said. “The big six or seven companies that are fun to work at and grow with are expanding now. They’re not contracting, and that’s kind of a breath of fresh air.”