Santa Barbara's availability rate has been on the rise and stands at 6.3% during the second quarter. That is trending at the highest level in the past decade. Vacancy, too, has climbed to its highest level in the past 10 years after falling below 3% as recently as 2023. Each rise can be attributed to a 200,000-SF cannabis growing facility that became available in 2023 in Carpinteria. Net absorption has tallied roughly -310,000 SF in the past 12 months.
Hollandia Produce signed a nearly 800,000-SF leaseback for 25 years at the buildings it sold in Carpinteria in 2023, solidifying its footprint in the market, while also boosting leasing volume. Overall leasing volume has also been propelled by Raytheon's renewal for 120,000 SF of flex space in Goleta for five years. However, leasing volume during 234Q1 fell to the lowest level since 2017, and only about 10 new leases were signed during the quarter.
Santa Barbara faces little near-term supply-side pressure to vacancy or rent growth. That trend is not new, and industrial construction is often farther south in Ventura where logistics facilities can take advantage of proximity to the Port of Hueneme.
Rents have shifted by 0.7% during the past year, and by 23.8% during the past five. Rent growth is expected to moderate further before returning to the historical benchmark.
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