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Commercial real estate transaction volumes have been on a slow decline in Santa Barbara since 2016, when 101 commercial properties traded hands. In 2016, the number fell to 97, and last year, transactions fell to a seven-year low of 81 transactions, according to research from Radius Commercial Real Estate Group. This year, only 15 properties traded hands—on par with quarter 1 2018 and below first quarter activity in both 2016 and 2017.

According to Paul Gamberdella of Radius, there are three main causes behind the trend. “The first is a widening gap between buyer and seller expectations regarding value,” Gamberdella, a principal with the firm, tells GlobeSt.com. “This relates mainly to straight investment sales where sellers are expecting the same lower cap rates that existed a few years ago, whereas buyers seem to be seeking higher returns under current market conditions.”

Buyers have also slowed acquisition activity as the market continues to mature. This trend has also contributed to the slow down in commercial deals. “There is this feeling that we may be at the top of the market, and this relates to straight investments and owner-user deals,” says Gamberdella. “Buyers are apprehensive about buying at the top. We often talk about economic downturns coming in cycles, which feeds into this psychology, yet the fact is the economy continues to chug along at a good clip despite the fact that we’ve exceeded the historical cycle, and there are no indications of a weakening market.”

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.

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