February 26, 2024
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Guest Commentary: Santa Barbara’s CRE market must embrace a transformative future

IN THIS ARTICLE

Housing needs and vacant commercial space are at the forefront of policy and community discussions. 

With the introduction of potential housing developments, along with state housing mandates, Santa Barbara’s residential and commercial real estate market is evolving. 

With recent announcements from Santa Barbara’s City Council about a potential Paseo Nuevo housing project, refocused uses for vacant spaces or outdated infrastructure are top of mind leading to a potential ripple effect within the region’s commercial real estate market. 

Our city stands at the forefront of this pivotal moment, giving the opportunity for embracing innovation and adaptability in the face of challenges.

According to the Radius Economic Forecast Group, excluding the Paseo Nuevo bookends, which include the old Nordstrom building and the former Macy’s space, the overall vacancy rate drops is about 8%. 

While this is lower than last year’s vacancy rate, it is still near historic highs for the area, signifying that the market is undergoing a period of adjustment. 

The commercial real estate landscape in Santa Barbara, much like many parts of the country, has witnessed a surge in office and retail vacancies. 

This phenomenon, however, is not necessarily a cause for alarm, but rather an opportunity to reimagine and revitalize our community. 

The potential conversion of these vacant spaces into housing could herald a new era for the region. 

Santa Barbara City Council recently voted 7-0 to begin negotiations to transform Paseo Nuevo into 500-plus housing units, apart from the Nordstrom building which has a separate owner from the rest of the mall footprint. 

City Council believes that converting the mall into housing in the heart of downtown Santa Barbara will transform the area. 

This vision also includes 60,000 square feet of commercial space. 

This ambitious project in partnership with AllianceBernstein, a multibillion-dollar investment firm based in New York City that owns the land lease on the property, has the potential to redefine downtown Santa Barbara. 

By blending residential and commercial spaces, we’re not only addressing our housing needs but also creating a more vibrant, integrated community where residents, professionals, and businesses can thrive together. 

The shift towards mixed-use developments is a trend that has gained significant momentum over the past decade. 

The Funk Zone is a prime example of this, offering a complimentary blend of convenience and lifestyle amenities for both residents and professionals. 

A well-curated living and working space can truly enhance the quality of life for our residents and improved economic vitality of a region.

At The Paskin Group, we’ve experienced firsthand the positive impacts a well-run apartment property can have on a community. 

We have operations across nine cities throughout the U.S., including our beloved Santa Barbara. 

Being headquartered downtown, allows us to directly contribute to the growth and prosperity of this community’s dynamic economy. 

Through strategic investments and meticulous management, we aim to not only provide quality living spaces but also contribute to the overall fabric of every city we manage properties in, by creating spaces that enhance the quality of life for all residents. 

This experience fuels our belief in the potential of mixed-use developments to shape a more dynamic, interconnected future for Santa Barbara.

Embracing mixed-use developments in Santa Barbara is a strategic move with immense potential upside for our city. It fosters vibrant, integrated communities where residents, professionals, and businesses coexist. 

This approach not only caters to the evolving needs of our dynamic city but also unlocks additional levels of convenience, efficiency, and sustainability. 

We have seen regions completely transform economically with a shift towards mixed-use developments in markets throughout Texas and Colorado, where my company currently provides housing to over 5,500 people.  

In Santa Barbara, we have the opportunity to lead by example, showcasing how a thoughtful blend of residential and commercial spaces can stimulate our community and local economy.

I hope that together our residents and property owners embrace creative solutions to address our housing shortage. 

There are solutions available to us that can be both profitable and truly enriching for our community.

Michael Paskin is the CEO and founder of Santa Barbara-based The Paskin Group, which was founded in 2006.