Village Mixed Use Development
For Sale
$2,000,000
425 1st Street, Solvang, CA 93463
Clean-slate VMU development parcel with an existing structure scheduled for demolition, suited for hospitality or residential concepts.
Property Size21,344 SF
Price / SF$93.70
Days on Market98
Property Features for 425 1st Street
General Information
Standard status
Active
Size
21,344 SF
Property subtype
Lots/Land
Zoning
VMU
Listing Agency:
Keller Williams Studio City
(818) 335-0923
Listed By:
Hooman Emanuel · License #01200237
(818) 335-0923
Source:
Exitrealty
Added: May 4
Changed: Aug 8
Last Checked: Jun 30 at 8:02PM
Displayed information is deemed reliable but is not guaranteed and should be independently verified. All listing content including descriptions, pricing, images are the copyrighted material of Keller Williams Studio City
Investment Insights
Based on property information with market context.
425 1st Street in Solvang is a village mixed-use (VMU) development site offering approximately 21,344 SF and a true clean-slate opportunity. The property was previously improved with the Water Wheel building, which is scheduled for demolition, allowing redevelopment without retrofitting the existing structure.
According to the public remarks, the site is located about one block from Copenhagen Drive in the heart of the city’s tourism corridor. The parcel is positioned within the Santa Ynez Valley, an area commonly associated with visitor activity, and it is described as walkable to local shops, restaurants, and tasting rooms.
The VMU zoning designation provides flexibility for multiple development strategies. The public remarks note potential paths including a boutique hotel, mixed-use development, residential uses, or senior housing. Additionally, the remarks reference the possibility of increased density through the California State Density Bonus Law, with the buyer to verify eligibility and requirements. This parcel is best suited for developers and buyers seeking a VMU-zoned site that can be planned around hospitality, housing, or mixed-use concepts once demolition is complete.
According to the public remarks, the site is located about one block from Copenhagen Drive in the heart of the city’s tourism corridor. The parcel is positioned within the Santa Ynez Valley, an area commonly associated with visitor activity, and it is described as walkable to local shops, restaurants, and tasting rooms.
The VMU zoning designation provides flexibility for multiple development strategies. The public remarks note potential paths including a boutique hotel, mixed-use development, residential uses, or senior housing. Additionally, the remarks reference the possibility of increased density through the California State Density Bonus Law, with the buyer to verify eligibility and requirements. This parcel is best suited for developers and buyers seeking a VMU-zoned site that can be planned around hospitality, housing, or mixed-use concepts once demolition is complete.
Key Highlights
- 21,344 SF VMU (Village Mixed Use) development site at 425 1st Street in Solvang
- Former Water Wheel building is scheduled for demolition, offering a clean‑slate development parcel
- Located one block from Copenhagen Drive in the heart of the city’s high‑traffic tourism corridor
Financial Insights
Estimated NOI and Cap Rate
NOI = area × lease_rate × (100 − vacancy) / 100 × (1 − expense_ratio). Net Operating Income — what the owner takes home each year before mortgage payments and income tax. Effective rent (asking rent minus vacancy losses) minus operating costs (taxes, insurance, maintenance, management).
NOI / Yr
$151,031
Cap rate = NOI / list price × 100. Capitalization rate — annual return on a fully cash purchase, before financing. NOI divided by price. Higher means more income per dollar invested, but usually also more risk or older condition. 5–8% is typical for stabilized commercial property; double digits often signal distressed deals.
Cap Rate
7.55%
Suggested Prices Based on Cap Rates
Cap rates vary significantly by property type, market, and asset quality.
Typical U.S. stable-market ranges:
Multifamily — 4.5% to 6.5% (Class A in primary markets often sub-5%; Class C in secondary markets 6%+)
Industrial / Logistics — 5.0% to 7.0% (compressed heavily in recent years due to e-commerce demand)
Office — 6.5% to 9%+ (wide spread post-2020; CBD Class A vs. suburban Class B varies dramatically)
Retail — 5.5% to 8.5% (grocery-anchored on the low end, unanchored strip centers higher)
Hospitality / Hotels — 7.5% to 10%+ (higher due to operational risk)
Self-Storage — 5.5% to 7.5%
Medical Office — 6.0% to 7.5%
Net Lease (single tenant, credit) — 5.0% to 7.0% depending on tenant credit and lease term
Rules of thumb:
Primary markets (NYC, SF, LA, Boston, DC) trade at lower cap rates than secondary/tertiary markets, often by 100–200 bps (bps, aka basis points; 1 bp = 0.01%).
Class A assets trade ~50–150 bps tighter than Class B, and Class B tighter than Class C.
Cap rates move inversely with price — a lower cap rate means a higher price for the same NOI.
Spread to the 10-year Treasury is a common benchmark; historically 200–400 bps over the 10-year.
Cap Rate 5%
$3,020,620
$3.0M
Cap Rate 7%
$2,157,586
$2.2M
Cap Rate 9%
$1,678,122
$1.7M
Market Conditions
NOI Build-Up for 21,344 SF
Vacancy — income lost from leasable area expected to sit empty during the year, subtracted from gross rent.
EGI (Effective Gross Income) — gross rent minus vacancy losses, the realistic income before paying operating costs.
OpEx (Operating Expenses) — recurring costs to operate the property (property tax, insurance, utilities, maintenance, management); excludes financing and capital improvements.
NOI (Net Operating Income) — income a property generates after operating costs but before financing and taxes.
Gross rent
$281.7K $13.20/SF
− Vacancy
−$40.1K −$1.88/SF
EGI
$241.6K $11.32/SF
− OpEx
−$90.6K −$4.25/SF
NOI
$151.0K $7.08/SF
Area
Santa Barbara County, CA
Vacancy
14.23%
Lease Rate
$13.20 /SF/Yr
Expense Ratio
37.50%
Simulate Cap Rate and NOI
Suggested Prices Based on Cap Rates
Cap rates vary significantly by property type, market, and asset quality.
Typical U.S. stable-market ranges:
Multifamily — 4.5% to 6.5% (Class A in primary markets often sub-5%; Class C in secondary markets 6%+)
Industrial / Logistics — 5.0% to 7.0% (compressed heavily in recent years due to e-commerce demand)
Office — 6.5% to 9%+ (wide spread post-2020; CBD Class A vs. suburban Class B varies dramatically)
Retail — 5.5% to 8.5% (grocery-anchored on the low end, unanchored strip centers higher)
Hospitality / Hotels — 7.5% to 10%+ (higher due to operational risk)
Self-Storage — 5.5% to 7.5%
Medical Office — 6.0% to 7.5%
Net Lease (single tenant, credit) — 5.0% to 7.0% depending on tenant credit and lease term
Rules of thumb:
Primary markets (NYC, SF, LA, Boston, DC) trade at lower cap rates than secondary/tertiary markets, often by 100–200 bps (bps, aka basis points; 1 bp = 0.01%).
Class A assets trade ~50–150 bps tighter than Class B, and Class B tighter than Class C.
Cap rates move inversely with price — a lower cap rate means a higher price for the same NOI.
Spread to the 10-year Treasury is a common benchmark; historically 200–400 bps over the 10-year.
Cap Rate 5%
$3,020,620
Cap Rate 7%
$2,157,586
Cap Rate 9%
$1,678,122
Alternative Uses
Best Use
Mixed Use
$2.16M
$1.89M – $2.52M
NOI $151,031 @ 7.0% cap · market cap 7.55%
Second Best
Hotel Hospitality
$1.79M
$1.57M – $2.09M
NOI $125,218 @ 7.0% cap · market cap 6.26%
Theoretical Best
Multifamily LT 5
$6.70M
$5.86M – $7.82M
NOI $468,930 @ 7.0% cap · market cap 23.45%
Zoning and permitted uses should be independently verified with authorities.
Property Analytics
Property Profile
Current Use
Location Intelligence
Trade Area within ½ mile
986
Businesses Nearby
Explore this area
Business Placement
Demographics for 93463, CA
8,731
Population
3,672
Households
2.4
Avg Household Size
52
Median Age
44%
College-Educated
94%
High-School Grad
33.9 sq mi
ZIP Area
258
Density / Sq Mi
$130,123
Median Household Income
$53,188
Median Earnings
$1,895
Median Rent
$1,044,100
Median Home Value
Questions? Ask Rey
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Frequently Asked Questions
What type of property is this?
Commercial land - Clean-slate VMU development parcel with an existing structure scheduled for demolition, suited for hospitality or residential concepts.
Where is this commercial land located?
The property is located at 425 1st Street Solvang, CA.
What is the asking price?
The asking price for this property is $2,000,000.
What are key features of this property?
This property features: 21,344 SF VMU (Village Mixed Use) development site at 425 1st Street in Solvang; Former Water Wheel building is scheduled for demolition, offering a clean‑slate development parcel; Located one block from Copenhagen Drive in the heart of the city’s high‑traffic tourism corridor
