SANTA BARBARA, CA—A private investor operating under the name Hollywood Western LLC has purchased a 46,813-square-foot retail property on State Street in Santa Barbara from State Street Properties LLC, GlobeSt.com reports exclusively. An Off Saks 5^th Avenue currently occupies the property, but has a lease that rolls in three years. Because the property is located in the high-barrier-to-entry State Street area, the investor took the risk, paying $15.5 million at a 5% cap rate.

"This was a 5% cap rate on in-place NOI, and the term of the lease had three years remaining. There is some risk to the buyer, and yet they were still willing to pay a 5% cap rate," Clarice Clarke, the president of Lee & Associates Santa Barbara, tells GlobeSt.com, adding that State Street has extremely high barriers to entry. The buyer wanted to be in this location and was willing to take a 5% cap rate and potential re-tenanting risk to be there. Clarke represented the seller in the transaction, along with Lee & Associates' principal Stephen Leider.

Even if the tenant were to vacate the property, however, the demand on that section of State Street is so high, the new owner shouldn't have a problem back filling the building to another single tenant. "State Street is our Fifth Avenue, if you will," Leider tells GlobeSt.com. "There are sections of it where the retail presence and the tenancy is stronger, and that is really in the 1200 block and down to the 700 block, so there is a five-block area, and this is in the epicenter of that area. It is a main and main location."