seen in many years in Santa Monica,
(Save the date: RealShare Apartments comes to the Westin Bonaventure, Los Angeles, October 24.)
SANTA MONICA, CA-With at least eight mixed-use projects combining residential and retail either under construction or in planning stages, the city currently has approximately 500 units of housing in the pipeline. A major impetus for the development is the Expo Light Rail line, which is due for completion in 2015, but factors such as high downtown demand and easily available capital are also fanning the flames, according to Lee & Associates-L.A North/Ventura Inc.
The projects represent a combination of redevelopments and ground-up projects with a majority of the residential component consisting of rental apartments along with some condominiums. Each project will contain approximately 50 to 100 units of residences.
“This is more activity than we have seen in many years in Santa Monica,” says Christine Deschaine, a principal of Lee & Associates, who is preleasing one of the projects underway and advising on another. “It is being fueled by several factors: high demand for apartments in the Santa Monica downtown core and the availability of financing mostly from private-equity firms and construction lenders.”
Deschaine is representing SeventhandArizona LLC in the leasing of the retail portion of a mixed-use project at Arizona Ave. and 7th St. The project, which has not yet broken ground, is slated to open in late 2013. She has also been advising Century West Partners in Los Angeles, a joint venture formed by real estate heavyweights Steve Fifield, head of Fifield Cos. in Chicago, and Michael Sorochinsky, founder of locally based Cypress Equity Investments, on another project here. The joint venture has additional projects in the planning stages here.
“Santa Monica has long been an outstanding trade area for retailers because of its demographics, tourism and the critical mass of stores located there,” says Sorochinsky, whose company strategy is to acquire assets in value-add space throughout Southern California and to develop class-A multifamily and mixed-use property in strong infill locations. “Now, with a renewed focus on housing, it is going to be even more attractive to retailers.”
Fifield, whose company specializes in urban-infill development and acquisition of apartment and office properties, notes that the demand for housing is far outstripping supply here. “Five-hundred units of new housing barely meets the first year’s demand for new housing,” Fifield says. “Santa Monica is highly coveted as a residential address, both because of its location and character and the number of employers located there.”
To that end, in 2010 adopted a Land Use and Circulation Element that is designed to crate transit-oriented neighborhoods along the three planned Expo stations: Bergamot Station at 26th St. and Olympic Blvd., Memorial Park at 17th St. and Colorado Ave. and Downtown Santa Monica at 4th St. and Colorado Ave. LUCE provides a vision to replace regional office and commercial uses with local businesses located within walking distance of surrounding neighborhoods.
“We are seeing a great deal of interest from a variety of retailers who have been unable to get into the trade area until now because there just has not been a lot of retail space available,” says Deschaine. “These retail spaces are smaller than what many of the retailers we are working with typically lease, but they are willing to reduce their footprint to enter the trade area.”
Deschaine notes that she is seeing interest from grocery, drug and soft-goods retailers including big-box stores, as well as banks and food uses. “Despite the continuing soft retail economy elsewhere, markets like Santa Monica are seeing increases in sales and retail lease rates. These new projects are generally leasing at a premium due to the residential component and the location, and we are not seeing very much resistance from the retail community.”
Other developments underway include a site at Lincoln Blvd. and Colorado that currently houses a Denny’s restaurant with 1.5 years left on its lease, which is being redeveloped by NMS Properties; NMS@Lincoln will include 97 residential units plus ground-floor retail. Other developments underway include the Brand Building at 555 Santa Monica Blvd., which is under development by Promenade Properties.
Also, as GlobeSt.com previously reported, in February Related California broke ground on its Village at Santa Monica project, which is slated for completion in January 2014. The $350-million residential and retail development is expected to generate approximately 1,500 construction jobs over the next two years.