REAL ES­TATE Santa Mon­ica Place’s halo ef­fect

A re­tail build­ing near the newly ren­o­vated mall sells for more than $26 mil­lion.

Los Angeles Times - - Business - Roger Vin­cent

A re­tail build­ing on the Third Street Prom­e­nade in Santa Mon­ica has sold for more than $26 mil­lion as in­vestors bank on the newly ren­o­vated Santa Mon­ica Place mall to bring more shop­pers to the neigh­bor­hood.

The three-story struc­ture, once oc­cu­pied by a Bor­ders book­store and more re­cently by a tem­po­rary Kit­son bou­tique, will be up­graded to at­tract an­other up­scale re­tailer, the new owner said.

Kit­son, a small chain of trendy cloth­ing bou­tiques based in Los An­ge­les, has taken over a prom­i­nent spot at the en­trance of Santa Mon­ica Place on Broad­way. The mall has of­ten been crowded since it re­opened last month af­ter a $265-mil­lion up­grade in­tended to make it a lux­ury shop­ping des­ti­na­tion. Ten­ants in­clude Bloom­ing­dale’s, Tif­fany & Co. and Louis Vuit­ton.

“We’re count­ing on their suc­cess to spread to the first block of the Prom­e­nade,” said Dan Blat­teis, a Santa Mon­ica real es­tate bro­ker and in­vestor who bought the 33,000-square-foot build­ing at 1415 Third Street Prom­e­nade through a part­ner­ship called ASB/Blat­teis Prom­e­nade. The seller was an­other limited li­a­bil­ity part­ner­ship.

The Third Street Prom­e­nade was more suc­cess­ful than the ad­ja­cent mall for many years and con­tin­ues to be one of the re­gion’s top draws for shop­pers, din­ers and tourists. The trans­for­ma­tion of the high-end mall on its south end, how­ever, may raise prop­erty val­ues on nearby blocks if flush re­tail­ers rush to bask in its glow.

The block of the Prom­e­nade near­est the mall is like the in­ter­sec­tion of “Main and Main,” Blat­teis said, us­ing terms for prime real es-

Build­ing,

tate lo­ca­tions. “It’s high street re­tail.”

Blatte is said he planned to ren­o­vate the unattrac­tive 24-year-old build­ing and cre­ate “a clean vanilla box” for a new oc­cu­pant. He said he was ne­go­ti­at­ing with po­ten­tial “pres­ti­gious flag­ship ten­ants” but de­clined to name them.

Many Santa Mon­ica shop­keep­ers and land­lords have suf­fered in the re­cent eco­nomic down­turn. Large chains and small bou­tiques alike turned out the lights at sev­eral lo­ca­tions and the re­tail real es­tate mar­ket turned cold.

“There was very lit­tle sales or leas­ing ac­tiv­ity in 2009,” said real es­tate bro­ker Steve Al­ger­mis­sen of Cush­man & Wake­field, who rep­re­sented Blat­teis in the trans­ac­tion. “Now more ten­ants are look­ing for space.”

The 1920s-era Mann’s Cri­te­rion Theater build­ing on the Third Street Prom­e­nade at Ari­zona Av­enue was also re­cently pur­chased by in­vestors, Al­ger­mis­sen said.

Some re­tail­ers would like to be near Santa Mon­ica Place but still have their own iden­tity out­side the mall, the bro­kers said.

One land­lord, ar­chi­tect Tommy Landau, said he had been ap­proached by what he called “high-level” re­tail­ers in­ter­ested in rent­ing or buy­ing his build­ing on Sec­ond Street across from an­other en­trance to the mall.

“They want their own sig­na­ture build­ing,” he said.

A spokes­woman for Mac­erich, the owner of Santa Mon­ica Place, said re­cent foot traf­fic num­bers weren’t avail­able but that more than 100,000 vis­i­tors came each day dur­ing the ren­o­vated mall’s first week­end.

“The open­ing of the new Santa Mon­ica Place has been a tremen­dous suc­cess by ev­ery mea­sure,” said Anne Sin­gle­ton, Mac­erich vice pres­i­dent of leas­ing. “We con­tinue to hear that the suc­cess of our prop­erty is ben­e­fit­ing the sur­round­ing re­tail ar­eas in Santa Mon­ica, in­clud­ing Third Street Prom­e­nade, which we view as an an­chor to our project.”

Brian van der Brug

POP­U­LAR DES­TI­NA­TION: Thou­sands crowd the court­yard area of Santa Mon­ica Place in Au­gust. The mall re­opened last month in a $265-mil­lion up­grade.

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