The Real Deal Los Angeles

SaMo’s Third Street Promenade hit with high retail vacancies

As of last month, 6 percent of spaces were empty
July 13, 2017 12:15PM

Third Street Promenade, Kathleen Rawson (Getty Images/Santa Monica–Malibu Education Foundation)

The retail apocalypse is taking its toll on Santa Monica’s famed Third Street Promenade.

The popular tourist corridor is seeing an unprecedented turnover in retail tenants, with 6 out of 100 spaces vacant as of the end of last month. Another seven storefronts were recently leased but have not yet opened, giving the appearance of further vacancy, the Los Angeles Business Journal reported.

While those numbers don’t seem that dramatic on the surface, they’re notable for Third Street, which hasn’t struggled with any vacancy since it turned pedestrian three decades ago. Typically, there’s no downtime between leases on the corridor, which accounts for $517 million in retail sales annually.

American Apparel and Nasty Gal, both of which leased spaces on the strip, filed for bankruptcy protection and closed all their stores.

Kathleen Rawson, chief executive of Downtown Santa Monica, said landlords will need to adjust their rent expectations in order to make 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.

“The market is here, the tourism is here, we just have to get property owners to understand how to shift,” Kathleen Rawson, chief executive of Downtown Santa Monica, told the Business Journal. [LABJ] — Subrina Hudson