Tuesday, February 24, 2009

Z Gallerie Closing Its Doors

It has been rumored that Z Gallerie will be closing their doors soon. This is part of the company's efforts to trim down their number of stores by about a third or 25 stores.

The impact on Santa Barbara will mean an additional 8,500 SF coming on to the market. We previously mentioned that the retail vacancy for Santa Barbara will approach 2% if the spaces currently being discussed like One World Imports and Borders do come on to the market. Adding this to the mix will definitely push the vacancy over the 2% mark.

Monday, February 23, 2009

January CPI Numbers Go Negative

The BLS index came out Friday and for the MSA that covers Santa Barbara the numbers don't look good. Every landlord that has a minimum CPI increase for that month should be happy. The change from January 2008 to January 2009 was a negative .01%. This comes despite an increase from December to January.

Commercial tenants should be arguing as hard as possible against minimum annual CPI increases right now. The flip side of that is what happens if we do have an increase in inflation on the back end of a recovery? The maximum increases that landlords also negotiated of 5% to 6% could disappear and we could actually see much higher increases year over year in the next 2 to 3 years. What's the solution?

Perhaps it is time to go back to fixed increases in certain instances. We will probably see more retail leases done with fixed rent for 3 to 5 years with a 10% to 15% bump after that. Office leases will undoubtedly see some kind of annual increase but perhaps it will mean shorter lease terms for the foreseeable future. That has benefits for the tenant and landlord.

More State Street Retail Available

The newest listings on State Street include One World Imports being available for lease and Borders Books being available for sublease. It is not guaranteed that Borders would leave, just that they are advertising their space for sublease.

Combine that with the long standing rumor of an H&M Clothing store taking over the Barnes & Noble space and that leaves many thinking that the revenge of the independent bookseller may be coming.

Santa Barbara retail vacancy is fast approaching 2%. Incredibly low for any market out there but it will be the highest Santa Barbara has seen in 12 years.

Wednesday, February 18, 2009

Wine Cask Now Closed

After reporting that they were cutting back their schedule, I have found out that the Wine Cask has officially closed.

Tuesday, February 17, 2009

Santa Barbara Restaurant Trends

I am not sure if there is a trend here but if you look back at the last six months of restaurant openings and closures it appears that the ones that are opening are not the traditional sit down restaurants (with a few exceptions like Melting Pot). The closures appear to be the traditional "fork and knife" restaurants and the ones replacing them are often times "on the go" or less traditional type places like Grapevine Foods. We are even seeing some very entrenched locations change their operating structure.

For example, Wine Cask is moving away from a nightly dinner offering. They are going to a Thursday through Saturday dinner service as diners are eating out less. We know Wine Cask is for sale by the same owners who bought the Big Yellow House in Summerland. They even have that property back on the market for sale after doing very little to upgrade that property.

I am sure we will see more closures or name changes over the next 12 months. The current economy should see the normally fickle Santa Barbara diner become even more so.

Thursday, February 12, 2009

New Location

For all of you that have followed my blog at Wordpress.com, I am moving it over to Blogger as it is a little easier for me to use. Here is a link to my old blog and the old postings that I had there. I will keep this around, but won't be blogging there anymore.