In industrial leasing, Goleta ran dramatically counter to the rest of the South Coast, yielding a record-high 36 transactions, while Santa Barbara and Carpinteria both had record-low transaction counts of 10 and 6, respectively.
Goleta’s unprecedented transaction volume led to a 19% year-over-year contraction of available space. HERBL, Inc made waves in the cannabis distribution industry, leasing 51,176 SF at 749, 759 and 839 Ward Dr. Curvature has scaled down its warehouse footprint in Goleta substantially but leased 21,600 SF at 80 Coromar Dr in September. The balance of that building, 36,000 SF, was the city’s largest availability at year-end. Expect a jump in vacancy, though, as 100,000 SF at 30 S La Patera Ln will be brought to market in February 2020 and hoist the vacancy rate to about 7%. Goleta’s four-year span of sub-3% vacancy from 2013 to 2016 now seems a distant memory.
Santa Barbara had its slowest industrial leasing year on record with only 10 leases totaling 25,317 SF, despite strong demand. Limited inventory is a perennial condition, and the vacancy rate has been below 1.5% for more than seven years. Santa Barbara needs more industrial space. The one newly constructed industrial property for lease has been on the market for 20 months, priced 75% above the average rate for other available spaces. That example encapsulates the challenge: given the high costs of land, permitting and construction, it’s practically impossible to develop industrial property in Santa Barbara and find tenants to pay enough rent to generate a positive return.
Carpinteria’s six leases, the lowest annual count on record, totaled only 54,595 SF. Nevertheless, available space contracted by 43% compared to 2018 and ended the year at a lean 1.9% vacancy rate. All of the leasing occurred in the first half of the year, including 20,000 SF at 570 Linden Ave leased by Studiomarks, 13,500 SF at 525 Maple Ave subleased by Wonderful Things Inc, and 11,250 SF at 1132 Mark Ave leased by Gigavac.