Op-Ed: Revitalizing Santa Barbara’s State Street by Lowering Rent and Keeping it Car Free

State Street Promenade in Santa Barbara (edhat file photo)

By Joan Albion

Downtown areas are the heart and soul of any city, offering a vibrant atmosphere and numerous economic opportunities. However, the decline of main streets like State Street in Santa Barbara raises concerns about the future of these areas.

In order to revitalize downtown and attract small businesses, it is essential that landlords lower rents. Additionally, keeping State Street a pedestrian and bicycle only street will not only benefit the environment but also enhance the overall appeal of our town.

One of the most significant challenges faced by small businesses in downtown areas is the soaring rental prices. Edhat has reported several small local businesses have closed their doors this year citing rental increases.

As evidenced by the decline of the Third Street Promenade in Santa Monica, high rents have driven out local mom-and-pop stores in favor of national retail chains. According to a recent SF Gate article, as the promenade grew in popularity, national retailers were able to pay higher rents, leading to the displacement of small businesses. Santa Barbara must learn from this example and take proactive measures to support local entrepreneurs.

By lowering rents, landlords can create a more favorable environment for small businesses to thrive. Affordable rents will encourage innovation, creativity, and diversity among vendors on State Street. This, in turn, will attract a wider range of consumers seeking unique and locally sourced products, resulting in increased foot traffic and economic growth.

Maintaining State Street as a bicycle and pedestrian-only street, not only improves the overall aesthetic appeal but also creates a safer and more enjoyable experience for visitors. It allows people to explore, dine, and shop without the noise and pollution associated with vehicle traffic.

Retaining State Street as a pedestrian-only area aligns with our town’s commitment to sustainability. By discouraging car usage, we can reduce carbon emissions, promote alternative transportation methods such, and ultimately contribute to a healthier and greener environment.

The SF Gate article highlights the similar decline experienced by the Third Street Promenade in Santa Monica. Just like State Street, the promenade was once a vibrant and sought-after destination. However, a combination of factors, including high rental prices and the influx of national chains displacing local businesses, contributed to its downfall.

In Downtown Santa Monica, the overall vacancy rate is about 25%. In a recent article, State Street has a 14.86% vacancy rate from Gutierrez to Sola streets.

Santa Barbara must learn from the mistakes made in Santa Monica, there is still time to turn this ship around. By lowering rents and providing opportunities for small businesses to thrive, we can prevent the homogenization of our downtown area. The decline of Third Street Promenade serves as a cautionary tale, reminding us of the importance of maintaining a balance between well-known brands and local establishments to preserve the charm and character of our town.

I urge landlords to lower their rents and for the City of Santa Barbara to take action now.  The decline of the Third Street Promenade demonstrates the negative consequences of high rental prices and the displacement of local establishments.


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54 Comments

    • If lowering rents and providing more shoppers are the answers, what difference does it make if the street is opened or closed? Should we keep building more unaffordable housing to attract more affluent shoppers? Or should we dictate the rents? I don’t like the first “solution,” and I suspect the courts would not like the second. Alternate solutions?

      • ANON – kinda my point. Allowing cars won’t fix things. No need for more affluent shoppers though. Keeping most of lower State closed and then this is the important part – making it nice, will attract more people to street events, music, dining, shopping.

        Again though, re-opening State to cars will not improve business on its own. It’s not the answer. Plus, who wants to eat outside next to hundreds of idling cars stuck in traffic? Gross. Keep it closed to cars and open to outdoor dining, music, etc.

            • Sure, cleaner air is better. If cars there must be then an option would be to allow only e-cars on the street. As it is now, it is not a “promenade” but a bicycle freeway accessible to pedestrians.

              “Promenade” from vocabulary. com: “Promenade is a fancy word for going out walking. If you like to stroll through town in a leisurely way, then you like to take promenades. Besides meaning the nice walk you just took, the noun promenade can also mean a special walking place for pedestrians, like a boardwalk.”

    • How will lowering rents attract more shoppers? No cars isn’t bringing more shoppers either. If rent is the issue, how come the Funk Zone and Coast Village Road have significantly higher rents yet lower vacancies?

      • ANON – “How will lowering rents attract more shoppers?” – No one ever said that. I said lowering rents AND attracting more shoppers will help businesses.

        “significantly higher rents” – are they? Not sure about that.

        Also, CVR has a different kind of clientele. Not really the tourist destination State St. is so can’t really compare the two in terms of rent. A place that sells a floppy polo hat for $1000 can definitely pay more in rent than a place selling pizza slices or Santa Barbara tshirts, etc. The Funk Zone is almost entirely food/alcohol, which always pays. State st. was / is a lot different.

      • You are 100% correct! Lower rents do not bring shopper, but successful areas like CVR bring higher rents. Not all businesses can operate on CVR and make a profit, making a condition of survival of the fittest, high rents, prices and all.

  1. Hi sacjon

    not picking a fight, but why not have more affluent shoppers?
    They tend to spend more volume, which equals more volume of sales tax. They do also buy high ticket items, pay high amounts of sales tax on one particular item.
    Maybe what you mean is you think the retail shop mix has enough shops geared toward selling affluent items? If so, I get that, but think the market eventually equals that out (because affluent group has fewer numbers and can support only a limited number of “affluent” shops) Most shops will naturally evolve into the sweet spot that caters to everyone leaving few high end places. I say let the over population of affluent shops fail naturally, stats will soon show how much affluent market there is or isn’t and smart people will now a saturated market when they see one, the ones that don’t see it will fail or have to bring something new.

    I’m agnostic to where my city’s sales tax revenue comes from: Top of the line all the bells and whistles Mercedes? Great. (10) Base model KIA? Great. From rich to poor, thank you for your contributions. Y’all come back now.

    Hope all is well with you

    • EDNEY – “why not have more affluent shoppers?” – Ok…… how do you replace average shoppers, like locals and most weekend tourists, with only “affluent shoppers?” Just allow (which we can’t do since it’s a free market) only high end retail on State? Like you said, that will kill itself. Charge an entry fee? How do you fill the market with affluent shoppers?

  2. If cars on State Street doesn’t help, or hurt business. Then it stands to reason that we should also close-off lower State Street and the Funk zone to cars as well. We might as well get rid of the cars, since they provide no benefit to consumers, right? Of course, we won’t do that because we all know it would hurt business. Some people just like the idea of a car-free area, but there’s no question that it hurt business on State Street…… because it did. We have actual evidence. And the streets that remain open to traffic, are thriving. Not a coincidence.

    • BOARDER – “We have actual evidence.” – Ok, please show us.

      As for closing off lower State (I suppose you mean below Gutierrez) and Funk Zone, that’s not the same. Those streets are actually used for traveling, access and parking. State St. has NEVER been a necessary access road for through traffic or with parking (in the last few decades). It’s always been jammed up with cruisers and lookilooers, providing no real benefit for anything else. Same with CVR – it is a necessary thoroughfare, again unlike State.

      I’m eager to see the actual evidence you have.

            • No, I’m denying the logic of your “evidence.” Just because other streets (that are thoroughfares – meaning they’re necessary to get from one part of town to the other) that have cars (and parking) on them have less vacancies than State St. (one of the, if not the, most expensive places to do business in SB County), doesn’t mean that the lack of cars on State Street is the, or even a main, cause of the business failures, especially when looking at the start of the business decline and rampant vacancies starting BEFORE, long BEFORE State St. was closed to cars.

              So no, that’s not “actual evidence.”

              • BASIC – if you truly think the argument that cars will improve business on State St. because business is bad on State St. and there are cars on other streets with shops is “logical,” then you have no business practicing medicine.

                When I went to UCSB, I took a great class, one of my favorites actually – Logic 101. Sounds like you missed that one. Then again, you could also use basic, common sense, but that’s a toughy for you, we know.

              • Gorf, you AND Sack are denying reality. Boarder provided a logical answer to your never-ending questioning. It’s pure real-life observations, not a taxpayer-funded “study” or consultant from who knows where that’ll just waste your money. What’s more simple than that?

        • The comment begs the question: evidence of what? The answer to which, as your comment implies, is “business decline”

          So businesses in decline is evidence of…. businesses in decline?

          You’re describing the problem as if it were evidence, instead of the problem.

          • He’s implying that a carless street in decline while other streets that aren’t carless are not in decline is “evidence” that the carlessness caused the decline. But that’s not “evidence”, it’s an argument–and a clearly specious one, as the decline preceded the carlessness and is at least in part caused by high rents, and the comparison is apples-to-oranges because there are no other streets in SB that are comparable to State St.

  3. Lowering rents – how do you wanna do that Joan? This ain’t China. We live in a free-market and capitalism-based economy. I’m guessing you’re not a landlord. Nor am I, but I’m not about to propose telling someone who owns something that they have to rent it for less than they choose to. In this country they have the right to try to rent it for whatever they want, and sit on it if itgues unoccupied. You wanna have the government tell landowners what they should charge? I don’t think so.

    The car part – it’s not working now, so you wanna keep doing the same thing and expect a different result? I think there’s ZERO evidence that such a strategy will work.

  4. Ms. Albion-

    The fact is that people calling for lower rents on State Street do not understand the way that commercial property is valued. Property values are based on the return on investment, which is normally the net profit of a rental property after the deduction of all expenses from the gross rents.
    If a property owner cuts rents of a given property and they bought the property during a period of higher rents, the property will have a reduced value and probably have to be sold at a loss in the future as long as the lease is at lower rents. The issue is that in most instances, it is better to hold an empty property for years, rather than devalue it for a long period. Secondly, lower rents would not change the conditions on State that have seen dozens of once profitable businesses (even those with higher rents) become losing propositions for their owners. Low rents will not change a once vibrant shopping area that has been driven to being put on life support by council after council digging State Street’s morass ever deeper. Merchants paying any strata of rent will have to believe that they can thrive and survive on State Street in order for them to risk and invest their time and money in a business venture there. Higher rents or lower rents, at present they dare not risk both.
    It will take a long and hard slog to make downtown State Street a viable shopping area again!

    • THEKID5 – lowering rents won’t happen. The point I and others have been making is that it’s not the lack of cars that’s causing the businesses to fail, and as such, opening State back up to them won’t fix the problem. High rents, competition – capitalism, is what has been killing State street for years before it was ever closed to cars.

      So no, lowering rents is not a viable solution as it can’t practically be done.

      I believe, despite the unaffordability for small business and the competition from online retail, some shops could flourish down there if the area was really invested in and made nice. Clean it up, create permanent pedestrian only blocks, help businesses create nice outdoor eating areas, keep the police patrolling, plant some plants, encourage street musicians, plan outdoor sponsored music or other small events, etc etc. Make the place an attraction. More people equals more money. Simply allowing cars to clog the streets and make outdoor eating unpleasant, without doing more, will drive State even further into desolation and disrepair.

      Make it nice so people want to come spend money. But for Pete’s sake, just do it already!

    • It seems to me anyway that, in theory, lower rents would mean a lower vacancy rate. I can’t produce any economic studies that empirically support that, but it seems intuitive. If there are more shops, especially those run by local entrepreneurs rather than deep-pocketed chains, then local flavor and vitality increases, voila. It sounds simple and it might at least help.
      The problem you are describing with businesses facing a lower overall resale value because of a lower annual income from rent also sounds real, but perhaps some local or state agency could create a program of tax breaks or other incentives derived from voluntarily lowering rents? After all, property owners who participate would be doing their community a favor and should be rewarded and supported.
      I have no knowledge of municipal tax policies, but if it is true that the practice of holding an empty property indefinitely in order to avoid or defer the costs of maintenance and improvements works as you describe, it is working in the opposite direction, and creates blight. It is a self-defeating and greed-based process and should be stopped.

    • What’s the ROI on a rental property that isn’t producing any rental income?

      Also, you make a series of completely unsubstantiated statements. And what does “been driven to being put on life support by council after council digging State Street’s morass ever deeper” even mean? When I’m on State St. I haven’t noticed any “morasses” or council members with shovels. How many councils back does this go? Perhaps provide some specifics rather than this wild handwaving and hot air.

      “It will take a long and hard slog to make downtown State Street a viable shopping area again!”

      And what do you propose to fill up the deep “morass” dug by “council after council”?

  5. Although this discussion is again going in circles, the mention of the vitality of Coast Village Road bears some comments.
    1. Coast Village road is surrounded by housing within 1 block for the most part. Consequently it is very walkable and immediately accessible by local residents not only by car but by walking- evidenced by the success of the area despite the tiny amount of parking on the main street
    2. Coast village Road is composed of a diverse mix of tenants including hotels, housing, restaurants and local office space
    3. Coast Village road is anchored on one end by a Grocery Store and a hotel on the other end which generates traffic for the main

    Is Coast Village Road a model for downtown Santa Barbara? No, due to a major scale difference, but there are some clues.
    1. Mix of uses that includes housing
    2. Basic retail (Grocery Store) that draws traffic
    3. Wide variety of mixed uses
    4.Low percentage of retail

    The historic model of State Street as a primarily retail environment just does not work any more . It is time to work towards integrating housing (from affordable to upper tier), hotels, grocery and other primary retail stores and urban park space. State Street now is effectively a 12 hour environment which does not work economically or socially any more-time to get over that and work on the financial incentive mechanisms attract more diverse and financially sustainable uses. The tools for that exist. (Tax Increment Financing district and affordable housing incentives)- we need to use those.

    • SAIL – good question, really. They’re blamed primarily because they’re the ones making the decision to raise rent. No one else to blame for that. Is it properly directed blame? That’s another question and I don’t always believe it is. Having to pay teenagers $20 an hour to hand over a bag of food or ring up a tshirt sale is kinda ridiculous, I agree. There are other costs they incur thought that require raising the rent of course.

      Taking a pay cut? Again, there are other ways to help them cut costs to lower rents, BUT….. how many are actually taking a significant pay cut by not doubling rent (as has been happening in many cases over the decades) or a new developer coming in and taking over ownership and realizing how low the previous landlord was charging so they raise it? Lots of scenarios down on State over the years. Hard to always take the landlord’s side. I’ thinking that anyone owning commercial property on State at this point isn’t just a mom and pop landlord just trying to recoup their monthly costs.

  6. While I do not have the inclination to try and do this myself, I never-the-less think it would add to the analysis in this discussion.

    It would be helpful to see a detailed listing of all street-level businesses that exist between Cabrillo Blvd. and Victoria Street.

    Restaurants – what category? High-end, mid-range or fast food? Type of food served. Breakfast?
    Restaurants that are mostly geared to evening drinking?
    Retail – clothing, souvenirs, trinkets, high-end, etc. ?
    Other – art galleries, service businesses, etc.

    With a list of this kind, it would enable an analysis of where the strengths and weaknesses lie. For example, too many restaurants, not enough something else? Is there an optimal mix to attract tourists and locals alike, for without both the area eventually dies.

    Food for thought and a task for someone more industrious than me…

  7. Both sugested tactics are foolish, wrongheaded, would be harmful to Santa Barbara, and ought NOT be adopted.

    “LANDLORDS MUST LOWER RENTS” is an utterly fantasyland pipe dream in this era of high economic inflation (brought by the Democrats/Modern Monetary theory).

    “KEEPING STATE STREET CAR FREE” means certain death to retail shops there. People seeing the shops as they drive by generates customer traffic for the shops. “Car-free” would mean those shops are dead. Proof=3rd Street in Santa Monica, a trashy wastland still, ever since the 1980s.

  8. “No one ever drove down State St., saw a shop, and decided to go park and shop in it.”
    Attraction in most humans is primarily visual with senses of smell and hearing being supplementary

    When I am travelling around the USA, I often drive down the main street and see attractive restaurant, shops attracting me to look into, to feel the overall vibe. In larger cities a taxi driver will do that.
    Obviously, that drive by is my personal preference and obviously that doesn’t work in congested downtowns because sitting in traffic making smog, breathing smog ruins the vibe too.
    The people who like/need that type of drive by visual experience need trolleys, bike cabs etc and those need to be super easy to find. The parking lots, trolley and bike cabs need to be well integrated. Signage needs to be clear. Visitors need things to be attractive, easy, to have a natural flow.
    The State Street shop owners and restaurant owners can have attractive storefronts, but they can only be seen by the car visitors (day trippers) if the day trippers have easy time finding the parking, easy time finding their way out of the clean attractive lots and onto State to where those attractive businesses are. The parking lots I like to use the most for State St. are those that have a direct “pass through” to State. You can see the street, the people, hear the energy, smell the food. It’s animal nature- we don’t like walking into a wall and being made to walk around it, we want to flow directly out into the energy, delicious smells, happy voices, the music onto clean beautiful State and then flow either right or left as our eyes ears, noses draw us. Car traffic on State isn’t necessary, but smooth easy attractive flow into the lots, smooth easy attractive flow out onto State is

  9. All this arm waving by, what I presume are, folks who have never run a small business. Stop the studies by book experts. Open the frigging street to cars. How about closing the street one or two days a week or month to traffic, (Saturday & Sunday) and have various themed events, music, sidewalk painting, etc.. ‘Closed’ has only worked for rats and other pests, some two legged.

    • GETTHECHANGEUP – since I presume you have “run a small business,” do tell us how, exactly (not antidotally) allowing cars back on lower State will improve business?

      “Because Coast Village Road” or “Because business is bad now” are not answers.

  10. The state of State is exactly where you’d predict and expect it to be based on decades of public policy. The city of SB gave away our city to the Tourism industry. A sector that is always a race to the bottom.

    The demographic of the average SB weekend tourist is not what you think. They’re not rich. They do not have big travel budgets, they do not come for our sophisticated take on California cuisine, nor to purchase a $600 sweater. They come to get away from their crowded towns and to spend a little on burgers and burritos and maybe, just maybe a nice dinner. But a trip to SB costs a lot. $1000+ for mediocre hotel room for a weekend, leaves the average tourist with little left to spend. This is who today’s State St was built for, that’s exactly who is coming and is exactly why we have such conditions. This is the city’s design!

    When you build a downtown for low income tourists and then pack low income (and no income) residents into the area, you get the results we have now. Undesirable business catering to low income, cheap tourists looking for a quick bite or drink.

    Montecito retail is doing just fine. Why? Because those with money enjoy shopping at the boutiques and have no issue spending $500 on dinner. There is not much about lower State St that is appealing or attractive to those with money. They take a walk, see the crap and head back to their $1500 a night hotels to enjoy a $50 sandwich.

    The city sold our city so they could earn more TOT to pay for their bloated staff, bloated budget and incompetence. It’s not hard to figure, when you look at the actual figures.

    SB is not a rich town. The Downtown is buffered by students, working poor and those on government assistance. No one with money lives downtown and no one without money is buying stuff. People who come up for a weekend getaway and drop $400 a night on a crappy motel, are not the folks who buy $400 sweaters and drop $300 on a dinner. They are the ones who buy cheap t-shirts and tacos on special. This is who the city decided was their target customer and this is who we get. The market is reacting accordingly. Government interference (especially by an inept city staff) will never fix this problem. The city is the problem. Expecting the very people who put us here to get us out is straight up crazy.

    The fix is to completely change our approach as a city and to focus on building a healthy, viable, self sustaining business friendly city. Tourism is and will always be the worst possible choice for a sustainable, healthy community. But it’s easy money and doing nothing is easier than actually making decisions and taking risks. We need to build a city of people who can afford to live here, build a family and a community. The only way that happens is to attract and foster high paying, highly skilled jobs and companies. Take advantage of our world class Universities and keep the graduates here. Unless we change our industries and demographic make-up, SB will be bankrupt and decrepit in a decade or less.

    • You’re absolutely right Steve Py. In the 70’s and 80’s (and earlier) Goleta (largely through the County and efforts of Supervisor Bill Wallace) was building beautiful business parks for think tanks, skilled manufacturing and design (to attract high paying earners and University researchers), nice clean neighborhoods and community parks. At the same time, Santa Barbara City Council nixed the zoning on East Beach which was exactly the same as the Goleta business parks, and changed the entire beachfront strip to tourism related. Slowly the entire waterfront from City College to the Child’s estate evolved into the Disneylandish tourist trap we see today, including large polluting ocean liners unloading day tourists, canopied “surreys” taking over publicly funded bike paths and sidewalks, and commercials in L.A. promoting — more tourism. The big losers were those of us living in Santa Barbara and enjoying a small town community of mostly middle class folks, health downtown retail and a beautiful beach. Agree with Steve that tourism is the cause of much of the problems we are seeing today, as more low paying jobs related to tourism (such restaurant and hotel employees) are squeezed into less and less available housing, and more transient tourists wash in and out of the town and airport.

      • You’re both right – tourism is an economic model that benefits government with a virtually unlimited income stream, while creating the need for vast amounts of low-income housing for hospitality workers. To be fair, though, no one rezoned East Beach; it had been designated for “visitor serving” use since the first General Plan was written in the sixties. It was not a priority for downzoning when growth control efforts were restricting development elsewhere in the city in the seventies largely because it was essentially a swamp backing right up to the railroad tracks. When Fess Parker came along with his proposal for a luxury resort for the site, there was no legal basis to deny it (though the scale was substantially reduced during the approval process). Once it was completed, the largest hotel in town began advertising to attract visitors; SB became a “destination resort,” which it had not been previously. All those affluent tourists now needed something to do. Bars and restaurants opened and expanded, and soon more new hotels opened to cash in on our new status, followed by more and more bars and restaurants and more hotels, ad infinitum. City government soon became dependent on the growing “bed tax” (officially the TOT, or transient occupancy tax), and, like a junkie, kept seeking to get more. The TOT is now the largest component of the city budget. We keep feeding our addiction with more and more hotel and motel rooms, while not addressing the exponential growth in the need for affordable housing that comes with it. Needless to say, the growth control plans essentially stopped when the Red Lion (now the Hilton) came in, and now the state has stepped in to reverse all previous efforts. Fess Parker built a beautiful luxury resort on our waterfront, and Santa Barbara’s destiny was changed forever. We have all of that income now, and yet somehow, the city budget is still in the red. Time to approve a new hotel…

  11. With all due respect, as a native born Santa Barbaran whose maternal ancestors settled here in 1900 I am mortified that our beautiful State Street has turned us into a shanty town. We need to adopt the plan of Cass Ensberg. Check it out and bring us back to pre-Covid conditions with her guidance.

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