In concert with its seemingly nonstop rise in popularity and sales, Sonos will soon be expanding its Santa Barbara presence in a big way. The private company — which has dominated the wireless speaker market since it started in Santa Barbara in 2002, and which boasted $535 million in revenue last year — recently announced that it has leased more than 100,000 square-feet of new space along the downtown corridor and in the Funk Zone.
Over the coming months, Sonos will move into the two-story, 22,000 square-foot building at 614 Chapala Street, the three-story, 28,000 square-foot building at 419 State Street, and the three-story, 47,000 square-foot building at 25 East Mason Street. Global facilities director Ingvar Meijers said Sonos will also be announcing a new lease on Salsipuedes Street — where the company already has offices — by next month. Right now, Sonos is headquartered on De La Guerra Street, has other small locations on Garden and State streets, and boasts facilities all over the world, including China, Germany, the Netherlands, and the United Kingdom.
The Chapala Street property is currently occupied by Samy’s Camera, which has been at the location for 10 years and is in the process of looking for a new home. According to sources close to the deal, the building was sold around four months ago, its property value was re-assessed, and its lease rate then increased. The camera store is reportedly unable to pay the higher rate, and is therefore considering a move to 1117 State Street, a 11,000 square-foot space between CVS and Anthropologie.
Meijers said Sonos intends to turn the sprawling, multiple-building Chapala Street location into an urban campus and the company’s global headquarters. Sonos will also expand into 600 Chapala Street next door, he went on, which will add another 6,000 square-feet to its floor plan. The company will keep its De La Guerra Street location in the meantime and largely transition out by October, but maintain the property’s front building after that. All of the new spaces will need renovation work, Mujers said, some of it major.
The 419 State Street space was formerly occupied by Territory Ahead’s corporate offices before the company sold to a Massachusetts-based holding firm and shuttered the location in July 2012. Sonos will use the property for its software development and customer service departments, Mujers said, explaining Sonos currently employs around 270 people in the area. That number could reach 500 in just a few years, he went on, and Sonos will likely need even more floor space by the year 2016.
Research and development for the wireless HiFi systems will be centered at the Mason Street location, Mujers went on. Like the Chapala Street property, it was recently sold to an undisclosed buyer then leased out by Sonos, which always aims to completely occupy its properties rather than sub-lease, Mujers said. The Mason Street building, referred to as the Bekins building after its original use as a Bekins Storage facility in the early 1900s, was listed for $21.5 million when it sold this week. It last changed hands in 2012 when East Mason SB LLC bought it for a reported $9 million.
Mujers wouldn’t disclose how much Sonos is paying for its many leases, saying only that the dollar amount is “significant.” He said he’s been working on the Santa Barbara deals for the last two years, and that the city afforded some rental challenges other places don’t. “We’re focusing on spaces that are 25,000 square-feet or bigger, but there’s a short list of places like that in town,” he said. Mujers explained that the company looked at four different areas for expansion scenarios — Goleta, Carpinteria, Santa Barbara at large, and downtown Santa Barbara — but settled on the heart of S.B. because it remains “part of the company culture. … We appreciate the downtown vibe.”
Eric Nielsen, public relations manager, noted that “Sonos has been part of Santa Barbara since Day 1” and that the company is working to integrate within the city as it grows. To that end, he said, Sonos will likely implement a bike-sharing program to connect its various downtown spaces, and would create an incentive plan for employees to take public transportation to work. “We’re not just creating office space,” he said, “we’re creating a lifestyle set-up that fits with the city.”
Nielsen said Sonos — which ran a Rick Rubin-produced ad during this year’s Super Bowl — is enjoying the niche it created for itself with relatively little competition, even from acoustic tech giants like Bose, Samsung, and LG. “Everything we do is done by Sonos and our team,” he said, explaining their employees often come from places like MIT and JBL. “They’re the best in the world,” he noted. Thus far, Nielsen went on, no one else has been able to “put together hardware, software, acoustics, and the Internet” the way Sonos has. Perhaps most importantly, Nielsen summed up, the company early and effectively connected their wireless speaker systems to the streaming music trend and maintains a relative lock on that area of the market.