Relaxed Parking Regulations Stimulate Leasing Activity

Santa Monica has reduced its parking requirements. The new requirements have reduced from one spot for every 75 square feet to one spot for every 300 square feet and one spot for every 500 square feet for restaurants. For adaptive reuse, parking requirements have also been reduced to one spot for every 2,500 square feet. The result has had a significant impact on retail leasing activity, according to research from JLL.

“Santa Monica business district has over 10,000 parking spaces and much of it was not being used efficiently,” Devin Klein, a associate at JLL, tells GlobeSt.com. “By reducing the amount of required parking, the overall cost to build new housing can be lowered, remove some of the challenges to opening businesses, activate creative reuse of existing buildings and encourage drivers to more efficiently use the spaces that already exist in the Downtown Santa Monica corridor. The retail district in Downtown Santa Monica has ventured beyond the Third Street Promenade, which was once the only “go-to” retail street and spilled over to neighboring 4th Street, 2nd Street, Wilshire Blvd, Santa Monica Blvd, Broadway, Colorado and Ocean Ave.”

As a result of these new regulations, the retail district in Santa Monica has expanded, along with growth for other asset classes as well. “Mixed-use projects are popping up all over the neighboring streets contiguous to Third Street Promenade as well as hot restaurants, fitness uses, health & wellness concepts and creative office users which is creating a new sense of buzz and cohesion between merchants, residents, office tenants and consumers in Downtown Santa Monica,” says Klein.

The success of the reduced parking requirements in Santa Monica could be the catalyst for similar changes in other cities. Klein is already seeing other cities following suit. “West Hollywood has reduced commercial parking requirements by up to 70% depending on the type of business and up to 100% for some businesses moving into smaller spaces,” he says. “The City is cutting the minimum from 15 spaces per 1,000 square feet for bars to five, 10 to three for gyms, nine to three-and-a-half for restaurants, four to two for personal training facilities, and three-and-a-half to two for general retail, including grocery stores. The requirement for hotels is going from one to 0.5 per room. Downtown L.A. has also done away with many of the previously existing parking requirements.   More cities will follow suit soon.”

Overall, this could lead to a lower retail vacancy rate throughout the city. “Like the City of Santa Monica, lowering parking requirements should lead to less vacancy in the city, lower development costs, job and tax revenues from new businesses, increased new and repurposed housing and preservation of the environment,” adds Klein.