market report - downtown santa monica · annually and generates more than $1 billion in taxable...

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Edition: Second Quarter, 2018

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Downtown Santa Monica is bounded

by the 10 Fwy to the south, Wilshire

Blvd. to the north, Ocean Ave. to the

west, and Lincoln Blvd. to the east.

The district is divided into 5 benefit

zones. Property owners are assessed

annually based on the zone in which

their property is located.

Downtown Benefit Zones

Downtown Santa Monica is a dynamic, urban envi-ronment located on the bluffs overlooking the Santa Monica Bay and is the proud home of the world-famous Third Street Promenade, a beloved and celebrated destination. The district features retailers for all age groups, hip casual dining options, and sophisticated fine dining restaurants. Ranked as one of the most walkable neighborhoods in the Los Angeles region, Downtown Santa Monica welcomes 16 million people annually and generates more than $1 billion in taxable sales for the City of Santa Monica each year.

Downtown Santa Monica, Inc. is a private 501c(3) non-profit organization that works with the City of Santa Monica to manage services and operations in Downtown Santa Monica while promoting economic stability, growth, and community life within this unique neighborhood.

The organization is governed by a 13-member Board of Directors. Six members are appointed by the Santa Monica City Council, six are directly elected by property owners within the district, and one is the Santa Monica City Manager or his/her designee. The board and staff of DTSM, Inc. focus their work around 5 priorities:

Downtown Community Plan Implementation

Circulation & Mobility

Infrastructure Improvements

Retail Support

Community Connections

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About Downtown Santa Monica, Inc.

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Executive Summary

Transportation Snapshot

Consumer Snapshot

Market Updates

Residential

Office

Retail

Hospitality

In Development

Map & Featured Projects

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Table of Contents

Average Monthly Gross Rent this

Quarter for:

R E S I D E N T I A L

$4.80

A L L O F F I C E

$5.20

C L A S S A

O F F I C E

$5.81

A L L R E TA I L ( N N N )

$6.59

P R O M E N A D E

R E TA I L ( N N N )

$10.98

According to Realtor.com, zip code 90401, within which Downtown San-ta Monica sits, saw the greatest increase in median home listing price in the country since last year. With a 60.7 percent year-over-year in-crease, the median home price rose to $3 million. This was likely driven by houses along and near the beach, just out of the Downtown district. In Downtown, where apartment renters dominate, rents and occupancy rates remain consistent.

Residential

Globally, the office market is strong and strengthening, particularly in prime office locations. With its concentration of tech and creative businesses and its amenities, Downtown is counted among these prime locales. In Q2, however, the office occupancy rate was down slightly from the previous quarter and net absorption was -66,850 square feet.

In the retail world, occupancy rates held relatively steady from last quarter, but occupancy continues to be lower than last year. Aver-age rent lowered significantly on both the Promenade and the rest of Downtown. Leasing activity hints that we may see stronger occupancy rates next quarter. This spring saw a flurry of openings, closings, and relocations (for more on this, see the Retail pages).

Tourism in Downtown Santa Monica is looking quite healthy this year: comparing hotel occupancy rates over the past ten years reveal this Q1 and Q2 had record highs.

Office

Retail

Hospitality

* A L L R E N T S R E F L E C T E D I N T H I S R E P O R T A R E M O N T H LY.

Q2 Executive Summary

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Promenade Pedestrian Impressions (Q2 2018)

Parking Data

2,507,063 27,550

Q 2 2 0 1 8 T O TA L

T O TA L P E D E S T R I A N I M P R E S S I O N S P E R M O N T H

Q 2 2 0 1 8

A V G P E R D AY

6,194

P U B L I C P A R K I N G

S T R U C T U R E C A P A C I T Y

Promenade Pedestrian Impressions change since Q2 2017

-8.3%

Transportation Snapshot

* S O U R C E : C I T Y O F S A N TA M O N I C A ,

P A R K I N G O P E R AT I O N S

0 4

S O U R C E : S P R I N G B O A R D . D ATA

R E P R E S E N T S T H E F R E Q U E N C Y

O F P E D E S T R I A N S PA S S I N G A

F I X E D C O U N T L O C AT I O N A N D

S H O U L D N O T B E I N T E R P R E T E D

A S A C O U N T O F U N I Q U E / I N D I -

V I D U A L P E D E S T R I A N S .

*

1200 Block

1300 Block

1400 Block

2 , 0 0 0 , 0 0 0

1 , 5 0 0 , 0 0 0

1 , 0 0 0 , 0 0 0

5 0 0 , 0 0 0

0

65%

A V G D A I LY P E A K

O C C U P A N C Y

7/ 1 7 9/ 1 7 1 1 / 1 7 1 / 1 8 3 / 1 8 5 / 1 8 6 / 1 8

Consumer Snapshot

0 5

S O U R C E : B U X T O N , U S - B A S E D V I S A T R A N S A C T I O N S F O R 2 0 1 7*

S P E N D B Y O R I G I N

14% Santa Monica

45% Los Angeles

41% US, Outside LA

S P E N D B Y C O N S U M E R I N C O M E D I S T R I B U T I O N

27% <50k

26% 50-100k

28% 100-200k

19% >200k

S P E N D B Y C O N S U M E R A G E D I S T R I B U T I O N

24% < 35

17% 35-45

20% 45-55

19% 55-65

20% 65-75

S P E N D B Y B U S I N E S S T Y P E

Restaurants

Specialty Sports Computers Fast Food

Apparel Department Stores Hotels

31%

7% 6% 5% 4%

20% 15% 11%

DTSM Consumer Profile (2017)

Market Update: Residential

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Q2 2018

Occupancy Rate Occupancy Rate change since Q2 2017

92.5%

Average Rent per Square Foot

$4.80

0.8%

Average Rent per Square Foot change since 2017

1.7%

—B R A N D O N S H A P I R O Downtown Santa Monica resident

It doesn’t get better than living in sunny Downtown Santa Monica — I can walk to the beach, the pier, and the Third Street Promenade. What more can I ask for? There are so many upbeat and happening bars and restaurants on every street corner. I love calling Santa Monica home.

T O TA L U N I T S

T O TA L U N I T S P E R C E N T C H A N G E S I N C E Q 2 2 0 1 7

3,167

0%

Average Rent per Sq. Ft. 10 Year Trend

Occupancy Rate 10 Year Trend

$ 3 . 5 0

$ 4 . 0 0

$ 4 . 5 0

$ 5 . 0 0

9 5 %

1 0 0 %

9 0 %

8 5 %

8 0 %$ 3 . 0 0

* S O U R C E : C O S TA R2 0 1 02 0 0 9 2 0 1 2 2 0 1 62 0 1 1 2 0 1 52 0 1 3 2 0 1 72 0 1 4 2 0 1 8

2015 reduction in Occupancy

Rate was due to new units

becoming available for rent.

N E T A B S O R P T I O N S Q U A R E F E E T

T O TA L L E A S I N G A C T I V I T Y S Q U A R E F E E T

-66,850

107,974

Market Update: Office

Q2 2018

0 7

Occupancy Rate Occupancy Rate change since Q2 2017

93.7%

Average Gross Rent per Square Foot (CLASS A)

Average Gross Rent per Square Foot (ALL PROPERTIES)

$5.81 $5.20

1.3%

Average Rent per Sq. Ft. 10 Year Trend (ALL PROPER TIES)

* S O U R C E : C O S TA R

Average Gross Rent per Square Foot change since Q2 2017 (ALL PROPERTIES)

-2.7%

—B R I D G E T F AY Community Lead, WeWork

I love working in Downtown Santa Monica for the fresh ocean air while I walk to my favorite lunch spots around the city. On lunch breaks I can get my errands done at local shops, which is amazing! I also love work-ing in Santa Monica during the fall for the Twilight Concert Series, so I can just walk to the pier for an absolute party!

2 0 1 02 0 0 9 2 0 1 2 2 0 1 62 0 1 1 2 0 1 52 0 1 3 2 0 1 72 0 1 4 2 0 1 8

$ 4 . 0 0

$ 5 . 0 0

$ 6 . 0 0

$ 7. 0 0 1 0 0 %

9 5 %

9 0 %

8 5 %

8 0 %$ 3 . 0 0


0.0%

$5.20 $5.11 $5.46$4.16 $4.87

$4.09

Q2 Market Comparisons

1.3%

-2.7%

-4.3%

-2.1%2.0% 9.2%0.8%

-1.6% -3.3% 0.3% 4.6%

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Downtown Santa Monica Santa Monica Beverly Hills

Culver City

West Hollywood Westwood Business

Improvement District

Occupancy 93.7% 90.6% 90.2% 84.3% 86.5% 88.4%

“Macerich Renews Lease in Santa Monica Headquarters” (The Real Deal)

“ICX Media Opens Los Angeles Office to Better Serve Media & Entertainment Industry Clientele” (Business Wire)

“ZipRecruiter Moves to New 45,000 SF Space in Santa Monica” (Los Angeles Business Journal)

Major shopping center owner and operator (including Santa Monica Place) Macerich has renewed its lease of 82,000 square feet of office space at 401 Wilshire.

Downtown Santa Monica is a central piece of the tech and startup influx to the Westside, which led to the nickname “Silicon Beach.” In April, video intelligence platform ICX Medio announced the opening of its third office, after Washington D.C. and New York City, at 520 Broadway.

Online employment company ZipRecruiter has consolidated from two offices into a single headquarters of 45,000 square feet at 6th and Arizona.

Office News

Avg Gross Rent per Sq. Ft.

Market Update: Retail

Q2 2018

Promenade Occupancy Rate

Occupancy Rate

90.2%

93.2%

Promenade Average NNN Rent per Sq. Ft.

Average NNN Rent per Sq. Ft.

$10.98

$6.59

Promenade Occupancy Rate change since Q2 2017

Occupancy Rate change since Q2 2017

-6.4%

-1.9%

Promenade Average NNN Rent per Sq. Ft. change since Q2 2017

Average NNN Rent per Sq. Ft. change since Q2 2017

-5.3%

-17.1%

T H I R D S T R E E T P R O M E N A D E

D O W N T O W N S A N TA M O N I C A ( T O TA L )

N E T A B S O R P T I O N S Q . F T.

T O TA L L E A S I N G A C T I V I T Y S Q . F T.

-14,447

20,855

0 9

Average NNN Rent per Sq. Ft. 10 Year Trend


2 0 1 02 0 0 9 2 0 1 2 2 0 1 62 0 1 1 2 0 1 52 0 1 3 2 0 1 72 0 1 4 2 0 1 8

$ 4 . 0 0

$ 5 . 0 0

$ 6 . 0 0

$ 7. 0 0 1 0 0 %

9 5 %

9 0 %

8 5 %

8 0 %$ 3 . 0 0

* S O U R C E : C O S TA R

Q2 Market Comparisons

Gourmandise School of Sweets & Savories, which teaches culinary classes,

reopened in a larger location with two kitchens in Santa Monica Place.

Mel’s Drive-In opened on Lincoln, bringing 24-hour diner vibes to Downtown

and maintaining the penguin sign from the 1950s-built Penguin Coffee Shop.

On Fourth Street, West Elm relocated next door to create a modern, sun-filled

space that features a rotating set of local artisans.

The Refinery, a coffee shop at 413 Santa Monica Boulevard, has closed, but at 631

Wilshire a new cafe arrived: Bluestone Lane, serving Australian coffee and treats.

In Promenade accessory news, Converse, Fossil, and Crocs have shut.

Developers plan to add a second floor of retail to 1437 3rd Street Promenade,

which previously housed Converse.

Abercrombie & Fitch is relocating to another location on the Promenade, and

lifestyle store Muji will open a flagship store in its previous spot.

Cycle Bar (1221 Second St)

Elephante Beach House

(1332 2nd St, rooftop)

Burgerim (1237 3rd St Promenade)

Casa Martin (relocation to

1251 Third Street Promenade)

Silverlake Ramen (1319 3rd St Promenade)

Clayton Children’s Museum

(Santa Monica Place)

Tesla (relocation to Santa Monica Place)

Wally’s Wine & Spirits (214 Wilshire Blvd)

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O N D E C K :

Store Openings and Closings

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—M E G A N H E R I TA G E General Manager, Locanda del Lago and Caffe Bella

Being in business in Downtown Santa Monica since 1991 has been rewarding and inspiring on so many levels. From working at America’s greatest beach destination to working on important issues such as greening businesses and diminishing our carbon footprint by collaborating with City officials, DTSM employees, the Chamber, and the Travel and Tourism board, Santa Monica pioneers as a leader in the hospitality business & we are thrilled to be a part of this business community. Ritual Gym (315 Wilshire Ave)

The Gables (331 Wilshire Blvd)

Halo Top Scoop Shop

(304 Santa Monica Blvd)

Blue LA (331 Santa Monica Blvd)

Hi De Ho Comics

(relocation to 412 Broadway)

Burton Snowboards (1460 4th St)

Custom T-Shirt Design Studio

(720 Santa Monica Blvd)

Dainese (1418 Lincoln Blvd)

$5.91 $6.42$3.88

$6.15$6.73

Downtown Santa Monica

Santa Monica Beverly Hills

Culver City

West Hollywood

Westwood Business Improvement District

$6.59

1.9%

-17.1%33.0%

-8.0%-6.8%

3.1%

-11.9%

Occupancy 93.2%

-0.8% -0.8% -0.5%-1.8% 0.4%

95.3% 95.7% 92.9%95.1% 98.8%

Avg NNN Rent per Sq. Ft.

Market Update: Hospitality

Q2 2018

O C C U P A N C Y R AT E R E V P A RA V E R A G E D A I LY R O O M R AT E

March

April

May

March

April

May

March

April

May

86.1%

88.3%

84.8%

$288.98

$290.35

$271.26

$335.65

$328.68

$319.73

1 1

Avg Daily RoomRate by QTR 10 Year Trend

Occupancy % by QTR 10 Year Trend

* S O U R C E : S T R

2 0 1 0

Q 1

2 0 1 1

Q 4

2 0 1 3

Q 4

2 0 1 5

Q 4

2 0 1 8

Q 2 *

*A P R I L & M AY 2 0 1 8

$ 3 0 0

$ 4 0 0

$ 2 0 0

9 0 %

8 0 %

7 0 %

DTSM Hotel Map

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* S O U R C E : S T R G L O B A L , LT D . S C A L E B A S E D O N S T R R E P O R T A N D

I N C L U D E S A V E R A G E D A I LY R AT E A N D O T H E R F A C T O R S .

Courtyard Santa Monica Upscale 136 Rooms

Hotel Carmel Upper Upscale 100 Rooms

Shore Hotel Luxury 164 Rooms

Huntley Santa Monica Beach Luxury 204 Rooms

Ocean View Hotel Luxury 70 Rooms

Hotel Shangri La Luxury 70 Rooms

Georgian Hotel Luxury 84 Rooms

Fairmont Miramar Luxury 302 Rooms

Wyndham Santa Monica Beach @ The Pier Upscale 132 Rooms

Hampton Inn & Suites Los Angeles Santa Monica Upper Midscale 143 Rooms

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7

6

5

4

3

2

1

9

10

Santa Monica Prevails over Airbnb in Court” (The Real Deal)

“

In June, a U.S. District Court judge dismissed Airbnb’s legal challenge to the City’s requirement that home sharing renters must register with the City of Santa Monica in order to rent their homes to guests through the site.

Hotel News

8

10

9

7

64

2

3

1

5

1337 7th St. Firestation 1

710 Wilshire Blvd. Santa Monica Proper Hotel

1560 Lincoln Blvd. Mixed Use Residential



1626 Lincoln Blvd. Affordable Housing






1201 3rd St. Promenade Commercial Building Addition

302 Colorado Ave. The Mark 302 Sears Building

1415 5th St. Mixed Use Residential

1437 5th St. Senior Affordable Housing

500 Broadway Mixed Use Residential


601 Wilshire Blvd. Mixed Use Residential

1133 Ocean Ave/101 Wilshire Blvd Fairmont Miramar Hotel Redev.

101 Santa Monica Blvd. Ocean Ave Project

120 Colorado Ave Wyndham Hotel

1437 3rd St. Promenade Commercial Building Addition

4th/5th and Arizona Ave The Plaza at Santa Monica





501 Broadway Mixed Use Residential

525 Colorado Ave. Mixed Use Residential



603 Arizona Ave. Hotel




1447 Lincoln Blvd. Commercial Building Addition

Under Construction

Under Construction

Under Construction

Under Construction

Under Construction

Under Construction

Under Construction

Approved

Approved

Approved

Approved

Approved

Approved

Approved

Approved

Approved

Approved

Approved

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

Pending

100

89

191

64

66

43

100

43

98

64

43

249

61

43

up to 108

79

25

48

23

24

51

75

65

55

100

56

7

60

62

+1

7,000

13,775

10,617

11,498

6,000

3,224

5,910

3,598

7,135

62,277

7,535

1,001

63,690

10,214

6,589

+9,783

24,700

17,284

+6,211

40,000

1,873

3,341

54,564

9,689

6,040

3,677

9,525

1,983

1,128

854

10,140

3,617

+3,934

2,208

45,000

12,000

271

+11

115

211

200

63

+3,154

52,183

209,000

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S TAT U SA D D R E S S

RES IDENTIA L

U N I T S

HOTEL

ROOMS

OFFICE

SQ . F T.

COM M ERCIA L

SQ . F T.

COM M U NIT Y/

CU LT U R A L SQ . F T.

In Development

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Developers proposed a new plan for the redevelop-ment of the Fairmont Miramar Hotel. The new design lowers the building from the previously-proposed 21-stories to 10, which wrap around the historic fig tree. The proposal includes hotel rooms, condomini-ums, basement parking, restaurant and cafe spaces, and affordable housing across the street on 2nd.

Construction of Community Corporation of Santa Monica’s five story affordable housing project on Lincoln Boulevard is well underway. The building will house 64 apartments for low-income tenants.

R E N D E R I N G V I A O C E A N A V E N U E L L C RENDERING VIA COMMUNIT Y CORPORATION OF SANTA MONICA

1 4

Development Map

Pending

Approved

Under Construction

Featured Projects

D O W N T O W N S A N TA M O N I C A , I N C .

1351 Third Street Promenade, Ste 201 Santa Monica, CA 90401 www.DowntownSM.com

@DTSantaMonica

DTSantaMonica

DowntownSantaMonica

market report - downtown santa monica · annually and generates more than $1 billion in taxable...

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