As State Street stumbles, Santa Barbara’s ‘Lagoon District’ soars

As Santa Barbara’s State Street struggles with the largest number of commercial properties for sale in its history, and the greatest number of vacant retail spaces since the 2008 recession, an unheralded, unofficial business district is exploding, just a few blocks away.

Santa Barbara’s “Lagoon District”, an eclectic array of commercial business bounded by Garden, Cota, Milpas, Montecito, and Anacapa streets. has rapidly established its own identity and people are taking notice.

According to Hayes Commercial, the Lagoon District produced 21 sales valued at $47.3 million over the past 18 months. Almost all of those properties had either industrial improvements or undeveloped land, according to Hayes.

Most recently, 519 Garden St., 100-102 E Haley St., 719 Bond Ave., and 314 Edison Ave. all sold in the second quarter.

“We want to shine a lot on a really cool part of Santa Barbara,” said Jacob Tell, the owner and founder of Oniracom, in the heart of the district on Gutierrez Street. “We see it as the next generation coming in and mixing with what had been in this area.”

Tell was one of the original people who came up with the idea for the name, a take on Laguna Street, which runs through the district.

He owns a digital marketing company and said that he chose the word “Lagoon” because of its internet search engine optimization capability. Tell created a Website for the district, made stickers and information sheets, and encouraged any business in the area to join — for free.

Twenty years ago, male and female prostitutes roamed Haley Street looking for clients. It was once regarded as an unsavory part of town because of a reputation for crime and unruly behavior.

Tell and others say that a new generation of businesses have opened up in the area bringing it new vibrancy.

“We wanted to brand the area without it losing its culture and neighborhood and history,” Tell said.

Area businesses include Oniracom, The Sandbox, Pure Order Brewing Company, Appel Sciences, Twenty Four Blackbirds, The Rose Cafe and dozens of others.

Tell said he likes the fact that the Lagoon District is eclectic, and hopes that it remains that way.

“I love that it has its commercial, a little bit of residential, an industrial-warehouse, all mixed in,” Tell said. “I like how none of the buildings look the same. I like the fact that there is Latino and white culture in the same area. It, to me, really captures the melting pot of Santa Barbara.”

Alan Macy, an artist at the live-work space called the Santa Barbara Center For Arts, Science, and Technology, or SBCAST, remembers when people used to loosely refer to the area as “SoCo,” for South of Cota. He said the area is changing.

“I don’t think there is any part of the city that isn’t being gentrified, and the Lagoon District is part of that,” Macy said.

Macy said that he doesn’t have any problem with the name or the fact that the area is being branded, but the increase in property sales and the new name aren’t coincidental.

“When someone brands an area, it is deemed to have a cache, and it has an impact on property values,” Macy said.

Danielle Winkler was one of the original owners of The Canopy, an alternative health and wellness center, on Milpas Street. She sold her portion of the center and moved to Lake Arrowhead, because she thought Santa Barbara was becoming “too busy.”

When she was starting her business, she was struck by the Lagoon District’s potential.

“I always thought it was dramatically different from the rest of the city,” Winkler said. “It had so much potential.”

She hopes that branding the area will help elevate the area. She said the Lagoon District is near Montecito, next to State Street and below the Riviera.

“It’s at the center of it all,” she said.

Change is inevitable, she said, but the Lagoon District is headed in the right direction.

“This is just the beginning,” Winkler said. “You have to change and you have to evolve or you will become obsolete. The whole premise of existence, of everything in life, is about change.”