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Investment Downtown Signals Revitalization Underway, Officials Say


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By Jorge Casuso

June 21, 2024 -- The recent purchase of eight parcels on the Third Street Promenade, major investments in hotel projects and a wave of new business openings are signs that the Downtown is headed in the right direction, Downtown officials say.

Once an international model for revitalizing downtown districts, the Promenade has been struggling with persistently high vacancy rates, a highly visible homeless population and a surge in shoplifting that are plaguing cities across California.

But Downtown officials say Santa Monica's Central Business District is poised to reap the benefits of real estate deals and investments that have been quietly building momentum behind the scenes.

“The investment happening in Downtown Santa Monica reflects the ongoing commitment to revitalization and economic development in the area,” said DTSM, Inc. CEO Andrew Thomas.

On Monday the Real Deal reported that Federal Realty Investment Trust had recently sold eight parcels along the Promenade for a combined total of $104 million.

Seven of the parcels were bought by tech founder Daniel Negari for a sum totaling $84.4 million, according to the real estate news site, which cited property records filed with Los Angeles County

The other parcel -- a 31,000-square-foot building occupied by liquor store Wally’s Wine -- was sold for $19.5 million to United El Segundo, a gas station operator that is now a developer, the Real Deal reported.

According to property records, Negari purchased 1202, 1222, 1225, 1232, 1339 and 1344 Third Street Promenade.

He also picked up a 24,600-square-foot building at 301 Arizona Avenue that is currently 50 percent vacant for $900 a square foot, "one of the most expensive commercial deals to trade across Santa Monica over the last year," the Real Deal wrote.

The deal was reported days after Downtown officials announced last Wednesday that 24 new businesses would be opening in the Central Business District, the main driver of the City's economy.

"Projects planned for the area include brands and businesses across experiential, entertainment, retail and dining and new concepts," Downtown officials said.

Their presence, they noted, "is facilitated by the City’s simplification of zoning and permitting rules" and indicates significant capital investment and positive economic growth for the future of the district."

The new Promenade businesses planned for 2024 include the "highly-anticipated return" of Barnes & Noble and openings of the international fitness brand JD Sports, variety store MINISO and craft milk tea brand Odd One Out. The Brazilian steakhouse Fogo de Chão will open on Ocean Avenue.

DTSM officials also note that more than $1 billion is "currently being invested in hospitality projects across new construction and renovations."

They include a 316,750-square-foot mixed-use project designed by world-renowned architect Frank Gehry that stretches east along Santa Monica Boulevard from Ocean Avenue to the Promenade.

The project -- which includes 120 hotel rooms and 100 apartments -- features Gehry's famous organic forms, with undulating lines and unexpected protrusions ("Council Gushes Over Gehry's Ocean Avenue Project," July 21, 2022).

Two blocks north on Ocean Avenue, the Fairmont Miramar Hotel will be undergoing a 502,157-square-foot redevelopment that features 312 rooms that are twice the size of the exiting 300 rooms and restores the 100-room seven-story historic Palisades building.

It also adds 60 luxury condominiums on the top floor and a 42-unit affordable apartment building across Second Street ("Coastal Commission Gives Miramar Redevelopment Enthusiastic Approval," March 11, 2022).

The projects are part of an ongoing residential boom Downtown that began in the 1990s and is picking up with more than 2,300 units of housing either under construction, approved or pending approval in Downtown.

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