The Paseo Nuevo Redevelopment Is Poised to Change Downtown Santa Barbara

For decades, Paseo Nuevo has been stitched into the fabric of downtown Santa Barbara, a place for shopping, socializing, and feeling the city’s rhythm. As lifestyles and economies evolve, the spaces we once knew are finding new purpose in a changing city. The proposed Paseo Nuevo Redevelopment aims to transform this familiar gathering spot into a vibrant mixed-use community, where people can live, work, and connect in the heart of the city.

The Plan That Could Redefine Downtown Living

The Paseo Nuevo Redevelopment proposal outlines one of the most transformative plans in Santa Barbara’s recent history. The project envisions 233 market-rate homes and 80 affordable units, reserved for households earning up to 80% of the area median income, ensuring a mix of residents in the city’s core.

Alongside housing, the plan features over 125,000 square feet of new retail and dining spaces, designed to blend daily convenience with local character. Cultural fixtures like the Museum of Contemporary Art Santa Barbara and Center Stage Theater will remain, preserving the city’s creative pulse while welcoming new life around them.

Buildings could rise up to 75 feet under the state Density Bonus Law, which is higher than existing downtown height limits. The plan covers the site between State and Chapala Streets and from Ortega Street to just south of Carrillo. The former Macy’s parcel and part of City Parking Lot 2 are included, but the Nordstrom building is excluded from current plans. This mix aims to inject new energy into State Street, bring more residents downtown, and preserve public and cultural spaces as key gathering points.

Rebuilding Connection and Commerce Downtown

The Paseo Nuevo Redevelopment seeks to reimagine the heart of Santa Barbara into a more connected, livable, and community-driven environment. With more residents living downtown, local businesses could see stronger, year-round activity and increased support for retail, dining, and cultural spaces.

Key goals include:

• Strengthening the residential presence to create consistent downtown activity

• Supporting local businesses through steady foot traffic and mixed-use design

• Enhancing public spaces that foster connection and community engagement

If realized, this redevelopment could redefine how people live and interact downtown, bringing renewed vibrancy to the streets while keeping Santa Barbara’s creative and coastal identity at its core.

Balancing Progress and Preservation

As discussions move forward, city leaders and residents are weighing how to preserve Santa Barbara’s historic charm while embracing modern urban living. Maintaining architectural integrity, addressing affordability, and managing traffic impacts remain at the forefront of planning conversations.

Community feedback continues to shape the proposal, ensuring that the project reflects the city’s vision for sustainable growth and cultural continuity. By balancing progress with preservation, Santa Barbara aims to evolve without losing what makes it distinct.

The Locale Group’s Role in Santa Barbara’s Next Chapter

As new developments like the Paseo Nuevo Redevelopment redefine downtown living, Locale Group helps clients stay ahead of the curve. Our team understands how shifts in urban planning, housing supply, and mixed-use growth can influence property values and reshape buyer and investor priorities across the city.

With a deep knowledge of Santa Barbara’s evolving market, we guide clients in identifying opportunities and making informed real estate decisions that fit their goals. Connect with our team at [email protected] or visit thinklocale.com to see how you can position yourself for what’s ahead in Santa Barbara real estate.

Sources:

• Paseo Nuevo Overhaul the Focus of Planning Commission Review & Open Houses – Noozhawk, Oct. 6, 2025
• City of Santa Barbara and Alliance Bernstein to Host Open Houses on Paseo Nuevo Redevelopment Project — SantaBarbaraCA.gov (Press Release, October 6, 2025)
• Size of Proposed Paseo Nuevo Housing Projects Sparks Concerns – Noozhawk, Sept. 28, 2025
• Paseo Nuevo Project at Center of Upcoming Public Meetings – Santa Barbara Independent, Oct. 7, 2025
• Shuffled Paseo Nuevo Deal Could Bring High-End Market Housing & Fitness Center Downtown – Noozhawk, Aug. 4, 2025
• Paseo Nuevo Redevelopment Project Overview – City of Santa Barbara (SantaBarbaraCA.gov), 2025
• Learn About Paseo Nuevo Redesign Project at Open Houses – Noozhawk, Oct. 7, 2025