Searching for Space, Acceptance
When boosters for Santa Barbara County’s tech industry began production on a 10-minute video extolling the region’s virtues a year ago, office vacancy rates in some parts of the county stood at 40%.
Just eight months later, the rate was 4%, convincing officials that the video should be used for a dual purpose: to attract new employers and to persuade local residents that those already there could grow without eroding the region’s vaunted quality of life.
Therein lies the rub for fast-growing tech firms that call Santa Barbara home. On one side, they’re being squeezed by record-low office vacancy rates. On the other, they’re bumping up against the area’s famed penchant for slow growth.
In addition, observers say, the county’s geography, which wedges Goleta, Santa Barbara, Carpinteria and Ojai into a cramped valley between the mountains and the sea, will never allow the area to spread to the extent that other technology hubs, such as Silicon Valley, have.
“Santa Barbara isn’t for everyone, because there’s just not enough of it to go around,” said Jim Neuman, executive director of the Santa Barbara Region Economic Community Project, a group formed in 1995 to promote collaboration between the region’s tech industry, its residents and politicos.
Enticed by the area’s sun, surf and small-town but upscale ambience, technology firms moved here by the score in the early 1990s. Today, about 500 technology businesses call Santa Barbara County home.
But as the local tech industry matures, its software, telecommunications, medical device and multimedia members find themselves grappling with skyrocketing housing prices, scarce venture capital and a record tightness in available office space.
Fourteen-year-old Vetronix, for example, has more than tripled its work force in the last four years and is quickly outgrowing its sunny campus on a hill behind the famed Santa Barbara Mission.
Tech companies are experiencing other growing pains. When Southern California’s aerospace industry tanked in the early 1990s, Vetronix scooped up so many aerospace engineers from General Motors’ Delco Electronics it became known as the “Delco lifeboat.”
Today, the lifeboat passengers are cutting their own deals, and the fast-growing firm--which develops hardware and software for auto diagnostic equipment--finds itself facing the same quandary plaguing technology companies nationwide: a dearth of qualified workers.
“There’s a tremendous shortage of software engineers in the area,” said Jim Zaleski, Vetronix president and founder. “Of course, Silicon Valley is turning on the vacuum cleaner and offering huge salaries to pull people to the San Jose area.”
Although tech firms account for only about 15,000 of the area’s 160,000 jobs, these high-wage, low-polluting positions are having a disproportionately large impact on the region’s economy.
Said Mark Schniepp, director of the UCSB Economic Forecast Project, “what makes them very important is not necessarily the numbers they employ, but the payroll. The multiplier”--that is, the impact of the wages as they ripple through the general economy--”tends to be larger as a result.”
Despite the shrinking amount of available office space, start-ups continue to pop up. About 35 of them are taking advantage of an 8-month-old, 70,000-square-foot office park operated by the Systems and Software Consortium, a nonprofit organization that provides legal counsel, a travel agency and an accountancy firm on-site, along with Internet access at a reduced rate.
“An explosion of start-ups is very new for Santa Barbara,” said Michael Ditmore, director and president of Electronic Offsite Services. The consortium itself has gone from 70 members in January 1997 to more than 135 today.
Home-grown boutiques here find themselves competing for resources with larger, more established tech veterans like 72-year-old Hendry Telephone Products.
And then there are the area’s best-known players, such as software makers Alias/Wavefront, Durand Communications, MetaCreations and QAD.
The latter, founded in 1979 in Santa Barbara, went public last year. It employs about 470 in Santa Barbara County.
“In January, we hired 30 to 40 people. Many people we brought in from out of town in the last two years because of the fast growth,” said Barry Anderson, QAD’s vice president of administration.
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QAD has also learned that working closely with community groups is key to the successful expansion of its holdings in the county. The company spent long hours working with Summerland and Santa Barbara County community groups to devise an expansion plan for its scenic 26-acre Ortega Hill facility. Construction is to begin on the site later this year.
The success of tech companies’ expansion plans here, experts say, will rest in part on their ability to convince residents who have traditionally resisted development that fostering growth in the tech industry is vital to maintaining the region’s quality of life.
“We’re starting a campaign next month where we will highlight a special business in the local press so we can make people here aware of how important this industry is to the economic success of the whole area,” Neuman said.
