A panel of South Coast experts had mixed views when the topic “Economic Recovery or Downturn on the Central Coast in 2012” was discussed November 10. The panel spoke at the Santa Barbara Executive Roundtable meeting at the University Club on commercial and residential real estate, investing in stock and bonds, and other economic trends.
“I do see good things happening in the [commercial] real estate market,” said Pacifica Commercial Real Estate’s Jerry Beaver, who has been a South Coast broker since 1960. “But there are no new projects coming on today and that may cause a shortage of space that will drive [retail lease] rates up.”
Agreeing in general with Beaver was Mark Schniepp, director and chief executive officer of the Goleta-based California Economic Forecast. He said while the economy is moving “laterally,” he sees a slow recovery from the recession. Schniepp said while more jobs have been created each month for the past 19 30-day periods, unemployment remains “exceptionally high” at more than nine percent in the county. But he pointed to other positive local economic signs that can be seen in an increase in hotel occupancy and fewer apartment vacancies.
The former UCSB professor said while the stock market has been shaky, it still is only a few hundred points from its all-time high. “We don’t predict another recession,” Schniepp said.
However, Chief Executive Officer of Partnervest Financial Group Kenneth R. Hyman disagreed with Schniepp on some of his points. Hyman said it’s not a good time to invest in the stock market because of its recent roller-coaster ride. Hyman also pointed to the uncertainties in Europe’s economy, with Greece, Italy, and perhaps Spain on the brink of crises. Schniepp admitted that Europe’s problems do pose a threat to the U.S. economy because 25 percent of the nation’s exports go there. “And that’s the fastest-growing part of the U.S. economy now,” he said.
Realtor Dan Encell, who sells mostly high-end residential real estate, said the market he knows the most about is down sharply and shows few signs of rebounding right away. “To date, we only have three, multimillion-dollar homes sales this year,” he said. “Usually, at this this time of year, we have 20.”
Despite low interest rates, many average potential home buyers won’t qualify easily for a loan. South Coast home sales are off 40 percent and value has dropped by a third, he said. “We haven’t hit bottom yet,” Encell said.
However, Beaver pointed to some rays of hope along the State Street corridor where leases cost as much as $5 per square foot before the recession hit more than three years ago and forced dozens of shops to shutter their operations. He said large chains and some small businesses can afford the $2 per square foot triple-net leases being offered along State Street these days. Those types of leases include monthly rent, utilities, and other services.
The South Coast Biz Blog is a roundup of the latest business news in the Santa Barbara area and is written by Ray Estrada, [email protected], who has covered business in the region for numerous publications over the past couple decades. See more at independent.com/biz and wordpress.com/southcoastbizblog.