Investor activity is also increasing. Over the past 12 months, retail property sales in Santa Monica totaled about $143 million, up from $135 million the previous year, according to the report.
Retail real estate activity in Santa Monica is showing early signs of recovery after several difficult years following the pandemic, according to a new report from CoStar Group.
The city’s downtown retail core — including the Third Street Promenade — saw vacancies surge during the pandemic amid declining tourism, rising homelessness concerns and public safety issues that affected foot traffic in the beachfront district.
Data cited by CoStar shows retail availability along the Promenade has fallen from a peak of 15.1% in 2024 to about 13.6%. The rate remains above the historic average of roughly 8.2%, though asking rents remain among the highest in the country at about $70 per square foot, despite declining slightly over the past year.
Investor activity is also increasing. Over the past 12 months, retail property sales in Santa Monica totaled about $143 million, up from $135 million the previous year, according to the report.
One of the largest recent investors is entrepreneur Daniel Negari, founder of XYZ.rent, who has been acquiring properties in the downtown district. His firm recently purchased the historic Junipher Building on the Promenade for $17 million.
The acquisition follows other purchases by the company, including a former REI store property on Santa Monica Boulevard. Altogether, Negari’s holdings in the area now total roughly 368,000 square feet of office and retail space along with more than 150 apartments across several nearby complexes, CoStar data shows.
Property prices in the area have softened, creating opportunities for investors. The average price per square foot for retail assets in Santa Monica declined about 2% year over year.
At the same time, city officials have introduced policies intended to help revive the district, including allowing designated open-container entertainment zones along parts of the Promenade and encouraging housing development. About 470 residential units are currently under construction in the city, according to CoStar.
Negari told CoStar he believes the district’s long-term strength will depend on experience-focused businesses such as restaurants, entertainment venues and fitness concepts rather than traditional retail stores.
