South Coast commercial real estate sales see strong 4Q
Commercial real estate sales in Santa Barbara County’s South Coast market saw a major uptick in the fourth quarter of 2024 over the fourth quarter of 2023.
That’s according to Santa Barbara-based Radius Commercial Real Estate’s fourth quarter 2024 report released March 12 at its 15th annual real estate and economic forecast event at the Hilton Beachfront Resort.
Meanwhile, the event’s keynoter speaker, economist Christopher Thornberg, told the Business Times that he doubted President Donald Trump’s imposition of tariffs on Mexico, Canada and elsewhere would lead to a 2025 recession.
Trump said March 9 that he couldn’t rule one out, causing indices like the S&P 500, the tech-heavy Nasdaq and the Dow Jones Industrial Average to plummet.
“Is he really going to push this to that extent?” Thornberg, founding partner of Beacon Economics in Los Angeles, said. “I don’t think he will.
“Trump’s M.O. has always been ask for everything, take what you can get,” Thornberg, who opposes the tariffs, said. “I think he will back off. This is just him raging.”
According to the Radius report, the fourth quarter of 2024 saw 27 commercial real estate sales in the South Coast market — Santa Barbara, Goleta and Carpinteria — totaling $107.5 million in sales volume.
That’s a significant hike from the fourth quarter of 2023 — 14 sales totaling $68.5 million — and back on par with the fourth quarter of 2022 — 29 sales totaling $105 million, according to the report.
Fourth quarter 2024 was the most productive quarter of the year, a big bump from the 18 sales totaling $61.3 million registered in Q3 2024, according to the report.
In total, 2024 saw 84 commercial sales, surpassing 72 in 2023, the report notes.
“Interestingly, office product led the way with the most transactions as the breakdown included 10 office sales, nine retail, six industrial and two land sales,” the analysis says.
Nine of the 10 office transactions were completed by owner-users, reversing the trend of fewer owner-user sales over the past year, according to the report.
“On the other hand, the majority of the retail assets sold as investment properties,” it says.
Overall, owner-users dominated the quarter with 16 sales, compared to 11 investment sales, the report says.
Notable deals in fourth quarter 2024 included the 208,000-square-foot Vercal Building at 1 N. Calle Cesar Chavez in Santa Barbara, the largest commercial building on the South Coast (the report doesn’t list the sale price); and the 33,000-square-foot retail/office complex at 250-270 Storke Rd. in Goleta, which traded for $10.5 million.
“We attribute the increase in activity to a pent-up demand and increased inventory on the market as buyers and sellers have seemingly stepped off the sidelines,” the report says.
South Coast vacancy rates in fourth quarter 2024 were mixed compared to third quarter 2024, according to the study.
The fourth quarter office vacancy rate in Santa Barbara was 10.3% compared to 11% in the third quarter, in Goleta 7.9%, same as the third quarter, and in Carpinteria 29.3% compared to 29.1% in the previous quarter.
The fourth quarter 2024 industrial vacancy rate in Santa Barbara was 1.1%, same as the third quarter, in Goleta, 3%, compared to 2.9% in the previous quarter, and in Carpinteria 2.8%, down from 3.3% in the third quarter.
The fourth quarter retail vacancy rate in Santa Barbara was 3.2%, up from 3% in third quarter 2024, “stunting the positive momentum seen earlier in the year,” the report says.
Only eight new retail leases were signed, absorbing a total of just 15,745 square feet, according to the analysis.
“While demand for smaller spaces remained steady, the availability of larger retail spaces continues to push overall vacancy rates higher,” the report says.
The study notes that the office vacancy rate in western Ventura County and the Conejo Valley continued to climb in 2024, reaching 24.1% and totaling more than 3.5 million square feet of available office space.
“With roughly 113,000 square feet in new leases signed in Q4, this resulted in the lowest new lease activity since 2020,” the report says.
Overall, however, Radius sees a good 2025 for commercial real estate.
“Further momentum points to an active year,” the study says.
“With a new administration and expected improved economic data pertaining to inflation and interest rates, the broad outlook on commercial real estate is positive,” the report concludes.
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