Bisnow — For years, the Third Street Promenade in Santa Monica, the heart of Silicon Beach, has been a shopping and dining destination. But times in the outdoor pedestrian mall are changing. As tech companies continue to pour into Silicon Beach, some of the retail storefronts that lined the area are becoming creative office suites.
With the retail industry on the decline, several retailers have either left or are downsizing for smaller footprints, CBRE First Vice President Orbell Ovaness said. “There’s just no need for a big footprint anymore,” Ovaness said. “Retailers are more focused on creating a much larger online presence and downsizing their storefronts. Landlords are either repositioning their property to creative office or creating smaller units.”
Last year, the retail strip faced a 6% vacancy. Though that number appeared low, it was historically high based on numbers since the 1989 opening of the popular Third Street Promenade where spots would easily and quickly be gobbled up by another retailer. “For many years, nobody would ever see a vacancy on the Promenade, and we would switch tenants before the buildings became vacant,” Tenzer Commercial Brokerage’s Barbara Tenzer told the Los Angeles Business Journal in August.
Some of those vacant stalls are now being replaced with creative office and mixed-use projects. Co-working and wellness company Work Well Win recently announced it is leasing the 30K SF former Barnes & Noble space. With tech companies and startups getting priced out of Silicon Valley, more are coming to Silicon Beach — the Santa Monica, Playa Vista and Culver City area. Southern California’s lifestyle, proximity to beaches and larger office space for lower rent compared to Northern California are driving the demand for creative office space.
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