2021 Q4 Industrial Leasing Update

Goleta’s industrial market established new highs for gross absorption (260,000 sf) and consideration ($18.8 million) in 2021, including nine leases larger than 10,000 sf. Four transactions totaling 47,000 sf at 30 S La Patera Ln, including a renewal by Microdyn and new leases by OSI Hardware, Lemonkind, and Jordano’s, were all signed in Q4. There is 19,500 sf still available there of the 102,000 sf made available after Skate One departed. Another notable Q4 deal was Sonatech’s renewal of 40,000 sf at 879 Ward Dr. The year’s largest transaction was 47,000 sf at 7418 Hollister Ave, signed by Deployable Space Systems. Two sizeable spaces were brought to market in Q4: 26,875 sf at 26 Castilian Dr and 23,150 sf at 147-149 Castilian Dr. Even with these new additions to inventory, available space contracted 51% year-over-year, and the year-end vacancy rate of 2.8% is the lowest since 2016.

[This is an excerpt from the full market report, which is available here.]

In addition to seeing heavy sales activity, Santa Barbara’s industrial leasing market was relatively active in 2021 as well. The gross absorption of 88,000 sf was the highest total in four years, and contributed to a 57% year-over-year contraction of available space. Just a handful of spaces are available, the largest being 15,674 sf at 4183 State St. There were only three leases in Q4, including 8,617 sf at 4179 State St leased by Kopu Water Company and 4,000 sf at 614 Santa Barbara St leased by the Varela Company. With an industrial vacancy rate of 0.6%, Santa Barbara is back in its familiar state of undersupply. However, lease rates have remained stable, and the 2021 average gross rate was $1.81 per sf.

Carpinteria’s contraction to sub-2% industrial vacancy at midyear proved short-lived. There were a handful of leases in the early months of the year, including the 19,400 sf lease at 1015 Cindy Ln by Dakar. The remaining transactions of size were renewals, including ZBE, Inc’s renewal of 18,700 sf at 1035 Cindy Ln in Q3. Vacancy grew as two substantial offerings emerged late in the year: Procore brought the 24,030 sf building at 6384 Via Real to market for sublease, and 14,500 sf was listed for direct lease at 1025 Cindy Ln, which had been occupied by an event rentals business. All told, the year-end vacancy rate was 3.7%, which is lower than 2020, but still relatively high compared to the historical trend.