The last time any meaningful amount of rental housing was built in the City of Santa Barbara, Ronald Reagan was president, The Golden Girls had just debuted, and rent averaged around $500 a month. For the next 30 years, virtually no apartments would be constructed as the city intentionally slowed growth to preserve Santa Barbara’s small town character, and developers found far better profits in single-family homes and condominiums.
This drought in new rental housing ― which has helped squeeze the vacancy rate to below one percent and driven rent prices to record levels ― will start to lift February 25 when The Marc hosts its grand opening. The project is the first to go online since the city launched its experimental housing program ― the Average Unit-size Density (AUD) program ― in 2013 to incentivize affordable homes for local workers. It’s been extremely and surprisingly successful with dozens of new rental projects sitting in the development pipeline.
The Marc, situated on the corner of State Street and La Cumbre Road, features 89 one-, two- and three-bedroom apartments ranging in size from 646 to 1,026 square-feet with prices starting at $2,900 per month and topping out at $3,750. Its “resort-style amenities” include a pool and spa, rooftop lounge, gym, bocce courts, and a vegetable garden.
Tripp Dubois, a managing partner of Los Angeles-based real estate investment firm The Kor Group, which built The Marc in partnership with REthink Development, said a quarter of the units have already been leased. “They’re all locals,” he said of the tenants. “They’re all ages from all walks. It’s a fantastic mix. It’s exactly what we envisioned from the beginning.” Dubois said he hopes to have The Marc fully leased in the next six to nine months. He said its location, within walking distance of shopping and dining, and its “luxury construction,” with quartz countertops and private balconies, are irresistible selling points.
But the project is not without its critics. They’ve balked at The Marc’s high price points and are skeptical it will attract the Santa Barbara-area workers for whom the AUD program was designed. City Councilmember Jason Dominguez has questioned why “workforce housing” is defined in Santa Barbara as units that are occupied by residents earning 120 to 200 percent of the area median income, which is $77,100 for a family of four. He’s said that target range misses much of the middle class. Dominguez and fellow councilmember Bendy White have proposed putting the brakes on the AUD program until it can be tweaked to better meet its intended goals.
Others on the council have cautioned against prematurely reworking the program before its true impacts can be measured. Yes, The Marc may be expensive, they’ve said, but it should be given time to mature and produce a variety of projects at different price points. Adding new housing stock for tenants across varying income levels will eventually soften Santa Barbara’s drum-tight rental market.
REthink Development principal Greg Reitz conceded The Marc will attract a “certain kind of renter,” but he said the rates are not out of line with what other high-end apartment complexes charge. “The market tells you what people are willin pay for these kinds of units,” he said. “And this project is going to see a premium because it’s new.” Steeper rents can be found all over Southern California, he said, including Hollywood, Santa Monica, and northwest Los Angeles. “The Marc is not an outlier.”
Reitz noted other, smaller AUD projects being proposed that will likely have less expensive rents. “Those will appeal to a different part of the market,” he said. Being first out of the AUD gate has had its public relations challenges, Reitz said, but he and his partners have also been receiving a lot of positive feedback from nearby business owners and homeowners. “They’re definitely happy to have us in the neighborhood,” he said. Last April, REthink Development proposed a “cousin” project to The Marc right next door that would knock down the Galleria Mall and replace it with an 85-unit mixed-use development under AUD guidelines. That proposal remains in its early stages.