DOWNTOWN SANTA MONICA. Market Report. Edition: First Quarter, 2018

Transcription

1 DOWNTOWN SANTA MONICA Market Report Edition: First Quarter, 2018

2 ABOUT DOWNTOWN SANTA MONICA, INC. Downtown Santa Monica is a dynamic, urban environment 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 Downtown Benefit Zones 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 DIS- TRICT IS DIVIDED INTO 5 BENE- FIT ZONES. PROPERTY OWN- ERS ARE ASSESSED ANNUALLY L BASED ON THE ZONE IN WHICH THEIR PROPERTY IS LOCATED. 0 02

3 TABLE OF CONTENTS Consumer Snapshot Executive Summary Market Updates RESIDENTIAL OFFICE RETAIL HOSPITALITY In Development MAP & FEATURED PROJECTS Market Happenings Co-working firm Work Well Win plants flag in Santa Monica (The Real Deal) The popularity of coworking continues, with the announcement that coworking company Work Well Win will move into the top two floors of 1201 Third Street Promenade, formerly Barnes & Noble. CBRE Announces the Sale of Adidas & Burn Fitness Building in Santa Monica, CA for $30.3 Million (CBRE) Third Street Promenade was sold to Golden West Properties and Starpoint Properties from San Diego Promenade Investors LLC at $995 per square foot. Seritage Growth, Invesco Partner to Own the $145M Development in Former Sears Santa Monica Space (Los Angeles Business Journal) Invesco Real Estate paid $50 million to enter a joint venture with Seritage Growth Properties to redevelop the Sears building at 302 Colorado Avenue. The landmarked Sears will be given a new life with over 50,000 square feet in office space and over 60,000 square feet in shops and restaurants. 03

4 CONSUMER SNAPSHOT Promenade Pedestrian Impressions ( 2018) 2,336,850 25,965 AVG PER DAY Promenade Pedestrian Impressions change vs % TOTAL * SOURCE: SPRINGBOARD. DATA REPRESENTS THE FREQUENCY OF PEDESTRIANS PASSING A FIXED COUNT LOCATION AND SHOULD NOT BE INTERPRETED AS A COUNT OF UNIQUE/INDIVIDUAL PEDESTRIANS. DTSM Consumer Profile (2017) SPEND BY ORIGIN SPEND BY CONSUMER AGE DISTRIBUTION SPEND BY CONSUMER INCOME DISTRIBUTION 14% Santa Monica 45% Los Angeles 41% US, Outside LA 24% < 35 17% % % % % <50k 26% k 28% k 19% >200k TRANSACTIONS BY BUSINESS TYPE 31% Restaurants 20% 15% 11% Apparel Department Stores Hotels 7% 6% 5% 4% Specialty Sports Computers Fast Food * SOURCE: BUXTON, US-BASED VISA TRANSACTIONS FOR

5 EXECUTIVE SUMMARY While the number of residential units has remained steady over the past ten years, average rent has seen a slow increase and occupancy is up from this quarter last year. New development underway on Lincoln Boulevard will bring significantly more units to downtown in the coming years. Developers broke ground on the Lincoln Collection, which will house 280 units, and the City approved plans for mixed-use buildings at 1318 and 1650 Lincoln. Average Monthly Gross Rent this Quarter for... $4.76 Office Downtown Santa Monica continues to be one of the most sought-after office locations, with a 95% occupancy rate and net absorption of 81,270 square feet this quarter. RESIDENTIAL Retail In retail, occupancy rate for downtown is up from last year, at 93.9%, though occupancy on the Promenade is down from last year, now at 90.5%. On the Promenade, Adidas relocated with a new store prototype from the 1200 block to the 1300 block of the Promenade. On the 1300 block, Armani A/X closed and Sketchers moved in. Tumbi Craft Indian Kitchen, serving modern pan-indian fare, opened on Santa Monica Boulevard between Second Street and Ocean Avenue. The Gateway, a virtual reality studio, opened at 716 Colorado Avenue. $5.32 ALL OFFICE $5.72 Hospitality This quarter saw an average hotel occupancy rate of 83.3% and average revenue per available room (RevPAR) of $ Construction of Santa Monica Proper, at 710 Wilshire, topped out in February. The hotel, with 271 guest rooms and 7,000 square feet of retail and event space, is due to open in early CLASS A OFFICE $7.36 ALL RETAIL (NNN) $11.86 * ALL RENTS REFLECTED IN THIS REPORT ARE MONTHLY. PROMENADE RETAIL (NNN) 05

6 MARKET UPDATE: RESIDENTIAL % change vs % 3,167 TOTAL UNITS Average Rent per Square Foot $4.76 Average Rent per Square Foot change vs % 0% TOTAL UNITS PERCENT CHANGE VS What I love about living in Downtown Santa Monica is the energy here - the vibe. There isn t a day that passes when I don t wake up and feel inspired to be here. And for somebody that works in a creative space, in a creative field like myself, it s very important to me to wake up feeling inspired. WELLINGTON MORENO Downtown Santa Monica resident $5 3,500 $4.50 $4 3,000 $3.50 $3 2, Average Rent per Sq. Ft. 10 year trend * SOURCE: COSTAR Total Units 10 year trend 06

7 MARKET UPDATE: OFFICE % change vs % 81,270 NET ABSORPTION SQUARE FEET Average Gross Rent per Square Foot (CLASS A) $5.72 Average Gross Rent per Square Foot (ALL PROPERTIES) $ ,920 TOTAL LEASING ACTIVITY SQUARE FEET Average Gross Rent per Square Foot change vs (ALL PROPERTIES) -0.2% Downtown Santa Monica is hands down the best place to work! Super walkable! Abundant food choices (for before, during, and after work), shopping, and of course the BEACH all within a few blocks. Easily accessible from the freeway, major back streets, and the Metro. Extra points for being so bike and scooter friendly too! JESSICA VAZQUEZ Tala App $6 4,350,000 $5 4,300,000 $4 4,250,000 $3 4,200, Average Rent per Sq. Ft. (All Properties) 10 year trend * SOURCE: COSTAR Total Square Feet 10 year trend 07

8 MARKET UPDATE: RETAIL 2018 THIRD STREET PROMENADE Promenade 90.5% Promenade Occupancy Rate change vs % Promenade Average NNN Rent per Square Foot $11.86 Promenade Average NNN Rent per Square Foot change vs % DOWNTOWN SANTA MONICA (TOTAL) 93.9% change vs % -36,610 2,500 NET ABSORPTION TOTAL LEASING SQUARE FEET ACTIVITY SQUARE FEET Average NNN Rent per Square Foot $7.36 Average NNN Rent per Square Foot change vs % $8 2,800,000 It s been really neat to see the food scene grow in Santa Monica. We have the best restaurants and the best small shops. There s nothing unattractive about being near the beach, and having the best weather, and slightly more relaxed people than the $6 $5 $4 $3 $2 $1 rest of Los Angeles KATHRYN COKER Co-owner of Esters Wine Shop & Bar $ Average NNN Rent per Sq. Ft. 10 year trend Total Square Feet 10 year trend 2,775,000 2,750,000 2,725,000 2,700,000 2,675,000 2,650,000 2,625,000 * SOURCE: COSTAR 08

9 MARKET UPDATE: HOSPITALITY 2018* Room Supply Average Daily Room Rate RevPar 491, % $ $ * JAN & FEB 2018 $400 $300 90% 80% Average Daily Room Rate by QTR 10 year trend Occupancy % by QTR 10 year trend * SOURCE: STR $ * 70% $400 90% $300 80% $ % $400 90% $300 80% $ % $400 90% $300 80% $ % 09

10 IN DEVELOPMENT ADDRESS STATUS RESIDENTIAL UNITS HOTEL ROOMS OFFICE SQ. FT. COMMERCIAL SQ. FT. COMMUNITY/ CULTURAL SQ. FT Wilshire Blvd. Santa Monica Proper Hotel Under Construction 271 7, Lincoln Blvd. Mixed Use Under Construction 89 10, Lincoln Blvd. Mixed Used Under Construction , Lincoln Blvd. Affordable Housing Under Construction 64 2, Lincoln Blvd. Mixed Use 43 3, Lincoln Blvd. Mixed Use 100 5, Lincoln Blvd. Mixed Use 43 3, Lincoln Blvd. Mixed Use , Lincoln Blvd. Mixed Use 66 6, Lincoln Blvd. Mixed Use 98 7, Broadway Mixed Use , th St. Mixed Use 64 7, th St. Senior Affordable Housing 43 1, th St. Mixed Use 64 6, Colorado Ave. The Mark 302 (Sears Building) 52,183 62, Wilshire Blvd. Mixed Use 43 6, th St. Firestation 1 26, Ocean Ave./101 Wilshire Blvd. Fairmont Miramar Hotel Up to , Santa Monica Blvd. Ocean Ave. Project ,700 45, Colorado Ave. Wyndham Hotel , th/5th and Arizona Ave. The Plaza at Santa Monica ,000 40,000 12, Arizona Ave. Hotel 63 1, th St. Mixed Use 24 3, th St. Mixed Use 51 54, th St. Mixed Use 75 9, th St. Mixed Use 60 10, th St. Mixed Use 62 3, Broadway Mixed Use 65 6, Colorado Ave. Mixed Use 55 3, Colorado Ave. Mixed Use 100 9, th St. Mixed Use 23 1, th St. Mixed Use

11 Development Map Under Construction Featured Projects RENDERING VIA OCEANAVENUEPROJECT.COM In January, Developer Jeff Worthe and architect Frank Gehry introduced a new design for their Ocean Avenue Project, which includes hotel, museum, residential, and commercial space. RENDERING VIA CENTURYWESTPARTNERS.COM In February, Century West Partners broke ground on the Lincoln Collection, with 280 units and 25,000 square feet of ground-floor retail. * DOWNTOWN SANTA MONICA, INC. MAKES NO REPRESENTATION AS TO THE LIKELIHOOD OF ANY SPECIFIC OUTCOME FOR INDIVIDUAL PROJECTS. 11

12 @DTSantaMonica DTSantaMonica DowntownSantaMonica DOWNTOWN SANTA MONICA, INC Third Street Promenade, Ste 201 Santa Monica, CA