Santa Barbara economic summit discusses State Street’s needs
The need for housing throughout Santa Barbara County is well documented, as is the need to reinvent Santa Barbara’s State Street.
But with the cost of construction costs and permitting taking even longer in 2024, those projects with great ambition to help the county are becoming less desirable, Gene Deering, a principal at Radius Real Estate, said during Santa Barbara County’s annual Economic Summit.
“If you’re a developer, you are not going to move forward with a project unless you’re absolutely sure you can make money because you’re risking all of your various assets. And without new projects, I feel like our downtown isn’t going to get back to where it was with locals,” Deering said.
During his presentation, Deering talked extensively about revitalizing State Street and what he believes could be the key to doing that.
In particular, Deering noted the necessity to adapt and reuse old building giants on State Street like the former Macy’s and Nordstrom.
He called the former Macy’s building a “dinosaur.”
“This isn’t a building that can easily be repurposed, (but) this is a building that needs to become apartments, and we, as a city and a community, need to find a way to help that developer move the project,” he said.
“(If not) It’s going to drag downtown down for what, maybe 40 years, as the land lease runs its course.”
He shared similar sentiments on the former Nordstrom building.
“That’s another building that if that developer comes to the city with a creative idea to repurpose, redo, we need to embrace them and try to figure out how we can get them to move that forward because those two pieces can make such a big difference in downtown,” Deering said.
Deering also supported more housing downtown and applauded the construction of 78 units behind the Staples building on the 400 block of State Street.
“This is kind of largest scale apartments we’ve seen in downtown and I think it’s going to do a lot for the 400 block and for downtown because 78 units might mean 300 People living downtown,” Deering said.
“This should be finished right around the spring and you’re gonna get a bunch of new housing stock released into the market and so that, to me, is a step in getting locals back to downtown.”
Deering noted that there are about 247 storefronts on State Street from Sola Street down to Gutierrez with about 37 available for leasing.
Deering said the 900 block of State Street has the most commercial property vacancies with eight.
Deering also discussed the possibility of reopening part of State Street back up to cars, noting that he believes reopening at least the upper blocks of State Street to one-way traffic and making room for parking would be a good way to get people back downtown.
In regards to the larger economy, Peter Rupert, the director of the UCSB economic forecast project, noted that it is doing “incredibly well” and so is the labor market.
He did warn those hoping the fed would be cutting interest rates this year to not get their hopes too excited as inflation is still rising.
Looking at purely Santa Barbara County numbers, he noted that retail and leisure and hospitality sectors are almost back to when the Covid-19 pandemic first struck, but they are not returning to the pace that the U.S. economy has, Rupert noted.
He also noted the number one industry looking for work is in healthcare.
Rupert also spoke against rent control, which is when high rent prices call for rent stabilization.
He quoted multiple authors and shared many slides on city’s on how rent control is a tax on developers and landlords and overall hurts everybody in the city.
After both Rupert and Deering spoke, they hosted a small discussion with Rick Caruso, a billionaire businessman and the owner of Rosewood Miramar Beach.
He spoke at length about his business ventures and noted how he at one time wanted to own property on State Street though it didn’t work out and “in hindsight, it was probably the right move.”
Overall, however, he believes “The better State Street does, the better everybody does.”
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