Santa Monica’s Third Street Promenade feels the retail downturn
Eight out of a hundred retail locations are now vacant this summer. Another seven storefronts were recently leased but haven’t opened yet. However, this gives the appearance of further vacancy, the Los Angeles Business Journal reported.
But Third Street hasn’t struggled with any vacancy since it turned pedestrian three decades ago. Typically, there’s no downtime between leases, which accounts for $517 million in retail sales annually. It formerly featured architectural bookstores along with specialty boutiques and chic restaurants. Now, the most upscale stores in the area are Zara and Victoria’s Secret: most of the present store occupants sell low end sneakers and sports apparel. The pricey restaurants have been replaced by fast food, ice cream and national coffee chains.
American Apparel and Nasty Gal, both of which leased spaces on the strip, filed for bankruptcy protection and closed all their stores, another factor in its downturn and sparse occupency.
Kathleen Rawson, chief executive of Downtown Santa Monica, said landlords will now need to adjust their rent expectations in order to make new deals. Many of the owners, mostly private investors or family trusts, are accustomed to raking in rents in the $12 to $18 per square foot a month range – but that will have to come down for the area to thrive again.
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