Santa Barbara's tech industry is growing, and expanding firms are absorbing office space on State Street in Downtown Santa Barbara. There has been a growing tech presence in the market for a decade, and now expanding companies that have already planted roots in the market are filling into the downtown area. Software company Invoca and Well Health are the most recent tech companies to expand into the downtown market.

“Tech companies have becoming a significant presence in Downtown Santa Barbara over the last 10 years,” Greg Bartholomew, one of our partners and a specialist at Hayes Commercial Group, tells GlobeSt.com. “Prior to that, tech companies gravitated to the suburban office parks in Goleta. The two main factors driving this migration have been the allure of downtown for tech workers and the increased availability and affordability of downtown space during the recession. Led by Sonos and RightScale, tech companies began leasing office space downtown during the recession about ten years ago.”

Like other emerging tech hubs, Downtown Santa Barbara has a wealth of lifestyle amenities, walkability, restaurants and entertainment. The retail market has struggled on State Street since the recession, but the office market has helped to fill in the market. “They recognized that the State Street area of downtown provided a lifestyle benefit to tech employees, many of whom value the energy and walkability of downtown over amenities like ample parking,” Bartholomew says. “The recession hit the State Street retail sector particularly hard, and Sonos and other companies converted retail buildings fronting or near State Street to “creative” office space. The repurposing of retail space to office space has generally been well received by the community, especially given that retail vacancy on State Street is about as high now as it has ever been.”

Traditional tenants historically occupied the majority of office space in Downtown Santa Barbara, but the market was hit hard by the recession. However, the rise of tech companies in the market has helped to keep office rents up. “Prior to the recession, the DTSB office inventory was almost entirely occupied by professional office tenants, especially in the financial and legal sectors,” says Bartholomew. “As the tech companies have been converting retail and in some cases industrial space for their use, the impact on professional office users has not been significant, and office lease rates have remained stable.” Still, the market can't support large tech users. The spaces available are better suited to smaller firms and start-ups.

The market is poised for more tech growth this year, and beyond—and it has the all of the elements tech firms want in an office area. “Tech companies are competing for talent, now more than ever,” says Bartholomew. “I do expect DTSB to continue to appeal to tech employees, and with Amazon moving a research team to State Street in 2019, there is a lot of momentum for other firms to follow.”

Instant Insights /

Tech Industry Revitalizes Downtown Santa Barbara

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