Looking Back

By Ed Moosbrugger

When this column was launched in May 2001, little did anyone realize just how difficult the next three years would be for Downtown Santa Monica.

Granted, there already were signs of an economic slowdown in early 2001, but no one anticipated the biggest economic blow of all – the fallout from the 9/11 terrorist attacks that hit Santa Monica’s vital tourism industry especially hard.

Other factors, including extensive road work and the bursting of the Internet bubble, compounded the economic disruption and hurt business.

But through it all, Downtown has remained a vibrant economic engine for the city. And now business appears to be solidly on the upswing, with reports of improved retail sales, higher hotel occupancies and a stabilized office market.

Some Downtown businesses have been bolstered by the many new apartment residents in the area. One sign: reports of strong breakfast business by some eating places.

New construction on streets surrounding the successful Third Street Promenade attests to the basic strength of the area.

Despite the resiliency of Downtown, however, important issues remain.

Debate continues over the direction of the Promenade, with some City officials voicing concern about the proliferation of chain stores and loss of independents and restaurants because of high rents.

A City moratorium on most conversions of restaurants to stores on the Promenade has helped stem the loss of eateries (with Barney’s Beanery soon to open in the former Teasers restaurant space), but has not entirely solved the problem.

More debate is expected on the issue of whether to put limitations on new chain stores on the Promenade. That could be a quagmire because one person’s unwanted chain is another person’s favorite store.

Ironically, while the City says it wants to keep independent businesses, some small business owners complain of excessive delays in getting building plans approved.

Although retailers have become more cautious about committing to new stores over the past three to four years, the Promenade continues to attract flagship level chain outlets, such as the multi-level Zara apparel store coming soon.

A key trend that was evident three years ago has continued – the influx of apparel stores onto the Promenade. They obviously have found a solid market, even though not all have succeeded.

One of the most encouraging developments Downtown since 2001 is an upswing in new stores and restaurants on some of the streets around the Promenade. They have been a mixture of chain and independent outlets.

Although Downtown Santa Monica has held its own through the last three years, it hasn’t been easy. Even some big name chains have found that success isn’t automatic even in a vibrant district, as evidenced by some recent store closures.

Over the past three years competition for Downtown has intensified, as new shopping and movie theater complexes open in Los Angeles. Competitors – such as The Grove – are helped by the fact that some people continue to be turned off by panhandlers Downtown.

Tourists remain a very important market for Downtown businesses. After a sharp drop in foreign and corporate visitors in the wake of 9/11 and a soft economy, tourism is on the upswing again.

There are encouraging reports from some restaurant operators of an increase in patrons from Europe and Japan.

In the first two months of 2004, Santa Monica’s hotel occupancy rate rose 7.1 percent to 78 percent and its average room rate increased 6.1 percent to $213.68, according to a report by PKF Consulting and the Los Angeles Convention & Visitors Bureau.

But there is still work to be done. While Santa Monica’s room rate percentage increase exceeded that for Los Angeles County, the increase in occupancy rate was slower. Still, even with the slower growth, Santa Monica’s hotel occupancy was better than the county’s 74 percent.

This year’s early results follow a slight increase in occupancy and room rates for Santa Monica compared to 2003.

Santa Monica has made some progress on one of the big issues noted three years ago – parking problems caused by Downtown growth. The City adopted a plan to increase public parking. Now it needs to be implemented.

Meanwhile, one of the most important issues for the future of Downtown remains to be resolved – the future direction of Santa Monica Place.

Hopefully, there will be extensive public discussion soon about the future of the indoor shopping mall, which opened in 1980 as part of a redevelopment project.