Promenade Sales Rise in Midst of Citywide Drop

By Jorge Casuso

April 24 -- While the city’s economy spiraled downward in the wake of 9/11, posting a 2 percent drop in taxable sales last year, the Third Street Promenade saw a 2.3 percent hike, according to sales figures released Thursday by the City.

Sales on the Promenade saw a marked boost during the holiday season last year, posting a 17.5 percent rise in the fourth quarter, compared to a 1.6 percent increase for the city at large.

In all, the city reaped $22.5 million in sales taxes last year, or 1 percent of total sales, with the Promenade accounting for $2.08 million.

“These are really thrilling statistics,” said John Warfel, the chair of the Bayside District board, which runs the Downtown, including the Promenade. “We're attracting businesses that are successful. We're doing what we need to be doing.”

The spike in sales on the popular shopping strip was in part due to the opening of several businesses and the late reporting of tax figures by several others, said Mark Richter, who is in charge of the Downtown for the City’s Department of Resource Management.

The Bayside District as a whole also capitalized on new businesses to post a 7.6 percent hike in the fourth quarter, compared to a 0.5 percent increase for the year.

“This reflects Houston’s opening” on Second Street, “and other businesses on Fourth Street that weren’t open,” Richter said.

By comparison, Santa Monica Place -- where officials hope to boost sales by ripping open the façade facing the Promenade and opening up the indoor mall -- saw an 11 percent drop for the year and a 7.8 percent decrease in the fourth period.

The Ocean Avenue/Pier/Hotels segment posted a 16 percent increase in the fourth quarter, but were “flat” for the year, Richter said.

In a good sign for the city, office vacancies dipped to less than 15 percent for the first time in 18 months, after peaking at 20 percent, Richter said.

The Promenade is expected to remain economically healthy, despite a turnover in a number of businesses, said Robert York, a consultant for the Bayside District.

“We’re still holding our own and doing quite well,” York said. “We’ll end the year with net retail gained, but we will see a number of stores turn over on the Promenade, including some big names.”

York said that the turnover is not “problematic” because the vacancies may be filled by restaurants, whose exodus due to escalating rents spurred a City Council-imposed moratorium on the conversion of restaurants to retail.