As online shopping continues to grow in popularity among everyday shoppers, a variety of retail outlets are moving out of their brick and mortar stores. But that doesn’t mean these prime pieces of Los Angeles real estate will sit empty for long. As the tech sector continues to grow within the city, so does the need for creative office spaces, making large commercial real estate once occupied by retail stores the perfect option for these growing start-ups.
The Third Street Promenade in the heart of Santa Monica is the perfect example of this growing trend across Los Angeles. The increased desire for online shopping in the retail sector has forced several retail outlets in the shopping space to either close their doors completely or opt for a building with smaller square footage. The shopping area brings in more than 11 million visitors per year, but in spite of the foot traffic, the Promenade faced a 6% vacancy last year. During that time, the mall lost large retailers like American Apparel, Nasty Girl, and Barnes and Noble.
What was once a bustling shopping and dining destination, has now become prime real estate for a variety of tech companies looking for a place to set up shop. Since these small start-ups are now being priced out of the Silicon Valley market, many tech companies are taking their business to Silicon Beach instead — mainly to the areas of Santa Monica, Culver City, and Playa Vista.
In addition to housing the offices of tech companies, these vacant retail spaces are also perfect for mixed-use buildings and co-working spaces. Co-working and wellness company Work Well Win is set to transform the former Barnes and Noble building in the Third Street Promenade into a mixed use space with retail remaining on the bottom floor and a co-working space on the top.
The trend continues across the city as other well-known shopping spaces are being retrofitted to house offices and other creative spaces. The Westside Pavillion was facing hard times after two of the mall’s anchor stores, Nordstrom and Macy’s, left the space. The struggling retail outlet is currently being renovated to convert nearly 80% of the building into useable office space, with more than 500,000 square feet of offices in the works. The rest of the mall will retain its retail roots, with the Landmark Theater and Westside Tavern staying in the building. The renovation is expected to be complete by the middle of 2021.
And retail buildings aren’t the only commercial properties being tapped to fill the need for usable office space in the city. Buildings like the historic Globe Theater building in downtown L.A. are also being transformed into office space on the top floors, with a retail area on the ground level and a bar in the basement.