Despite the slight increase of interest rates and the drought’s persistence, real estate brokers are bullish on 2016.
The Federal Reserve’s decision to gradually raise interest rates throughout 2016 will not likely have a short-term impact on development and real estate activity, industry sources told the Business Times. And while the city of Pismo Beach recently issued a building moratorium as the drought continues and the region decreases its water use, most in the industry do not expect bigger cities to follow suit in the near-term.
Brokers and industry sources said they expect 2015’s momentum to roll into the New Year.
“It’s been a good year and I’m bullish on 2016,” Lee & Associates Principal Steve Leider said. “Things are starting to feel better but it’s not like the economy is running full speed. There is still some trepidation out there but I think that will fade.”
It’s a good sign for the tri-county commercial real estate market when retailers and service providers, both chain and independently owned, are adding locations.
While space in places like Santa Barbara continually draw interest due to its tourism-fueled economy, that lure seems to be spilling over into other areas throughout the Tri-Counties.
Proposed projects and ones already underway — like the Hollister Village in Goleta, commercial and housing space proposed for downtown San Luis Obispo and redevelopment along Thousand Oaks Boulevard — seem to be attracting businesses.
One example is Los Agaves. The Santa Barbara-based Mexican eatery recently landed in Westlake Village with its fourth location.
That region is starting to attract new companies, like a Ferrari showroom on Willow Lane, especially around Thousand Oaks Boulevard. The boulevard’s specific plan has facilitated more redevelopment and building upgrades that will hopefully draw more tenants.
Los Agaves, which opened its first location on Milpas Street in 2008, opened a second space on De La Vina in 2013 and a third at the Camino Real Marketplace in Goleta. Jane, On The Alley and Pascucci have opened or will soon open second locations at the marketplace.
In San Luis Obispo, Cal Poly plans to renovate the Blackstone-Sauer building on Monterey Street to house 32 innovation and entrepreneurship students. It will feature 6,000 square feet of commercial space and 12,600 square feet of residential.
There is also an 80-room hotel and plaza proposed for the heart of downtown as well as a new public market.
“San Luis Obispo is going to be exploding,” Lee & Associates broker Vivian Hanover previously told the Business Times.
Senior housing hot
There are dozens of rental housing developments in the pipeline throughout the Tri-Counties, especially ones catering to the region’s aging demographic.
“The demand for senior housing is pretty significant and will likely continue,” Winton Berci, an associate at the real estate brokerage company Marcus & Millichap’s Oxnard office, previously told the Business Times.
RRM Design Group is developing two affordable senior housing developments in Santa Barbara featuring close to 150 units.
Ventura County has 11 senior housing projects underway, according to data from Marcus & Millichap.
The Towbes Group is developing the Westgate senior housing development that would add 189 units near Blosser and Battles roads in Santa Maria.
In addition, the office building at 5464 Carpinteria Ave. will be converted to a 76-bed senior living property. Irvine-based Steadfast Companies purchased the property for
Apartment vacancy rates average around 0.6 percent on Santa Barbara County’s South Coast, about 2 percent in North Santa Barbara County, just more than 2.1 percent in West Ventura County and a little less than 2 percent in San Luis Obispo County.
The average rent for a one-bedroom apartment in Santa Barbara is $1,518 a month, up from $1,383 a year ago.
Leider does not expect the Fed’s rate hike to have a short-term impact on real estate investment, but it may cause some developers to pause and reconsider in about 18 months.
The city of Pismo Beach recently issued a tiered building moratorium.
The first tier is effective immediately — the city will not issue new building permits but permits already in the pipeline will move forward.
New applications will still be accepted throughout the process and the city will evaluate the water supply monthly and change the tiers as necessary.
Industry sources said other tri-county cities are not preparing similar measures yet, but they are hoping for a wet winter.
• Contact Alex Kacik at [email protected]