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A man walks past the vacant 2714 Main St. storefront on Tuesday morning. City officials and real estate brokers met with tenants to discuss ways to prevent merchants from going out of business. (photo by Brandon Wise)

DOWNTOWN — As vacancies continue popping up along commercial districts in Santa Monica, city officials are looking for ways to help landlords and tenants weather the financial storm.

City Hall on Tuesday gathered a crowd of commercial brokers, landlords and representatives of various Business Improvement Districts for a roundtable discussion about leasing strategies and how tenants and property owners can work out a situation that would allow the former to remain.

“We have been hearing from all parts of the city … that we have a lot of vacancies and businesses are suffering,” Miriam Mack, the manager of the Economic Development Division, said.

Both Main Street and Montana Avenue have been hit with a slew of vacancies over the past year. Some have attributed reasons to the recession, while others claim that increases in rent are to blame.

The situation in the two business districts are reflected in the taxable sales income, which dropped 4.8 percent from 2007 to 2008 for Main Street and 9.5 percent for Montana Avenue during the same time period. Taxable sales revenue fell just 1.3 percent for the Pico Boulevard district from 2007 to 2008.

Mack said that there is about 175,000 square feet of vacancies in the city, including the former Circuit City space on Fourth Street. About 91,000 square feet are in the business improvement districts.

“RetailNomics: Leasing Strategies for the Santa Monica Retail Market” featured a three-man panelist including Dan Fagan of Commercial Brokers International, Rafael Padilla of PAR Commercial Brokerage and Rob York of York Consulting.

Fagan, who also serves on the Montana Avenue Merchants Association board, said that one of the challenges is maintaining an open line of communication between tenants and landlords, adding that it’s easier for merchants to ask for a rent decrease if the property owner is physically present. He said that merchants want better access to their landlords or broker so they feel their concerns are being heard.

Some struggling merchants are tapping into their own savings and their children’s savings accounts to stay afloat, Fagan said.

“They’re looking for assistance anywhere they can take it,” he said.

He said that some merchants have been able to secure a rent abatement for three to six months or a decrease.

The Bayside District, home to the Third Street Promenade, endured several years of pain but is now holding relatively well, York said.

A consultant to the Bayside District Corp., York added that Santa Monica is actually faring better than other cities and will be able to recover from the recession faster as a result. He said that keeping tenants is not only in the best interest of the landlord, but also surrounding property owners.

York added that he believes the economic situation is improving.

“We can be optimistic about the future … but we are not done yet,” he said.

Tenants asking for rent decreases should also be ready to show proof of financial hardship to landlords, Padilla advised.

“If you go ask for something, make sure your books are open,” he said. “It’s a need, not a want.”

At least one broker in the audience echoed the suggestion, saying that he has landlords who have received letters asking for such assistance for a long time and isn’t sure of whether motives behind the requests were sincere, likening it to crying wolf. Many tenants who ask for rent decreases don’t respond to requests of financial proof, he said.

The issue of zoning and the hurdles it presents to leasing also came up during the discussion. A broker from Coldwell Banker said that it took him more than 15 months to lease the former Airport Pharmacy space on Pico Boulevard because it sits in a zone that is different from adjoining properties.

Marc Pollock, the president of Westside Retail, said the challenges he faces in leasing properties is not necessarily related to zoning, but meeting parking requirements imposed by City Hall.

His company represents about a dozen properties in Santa Monica.

He has negotiated several rent decreases.

Pollock said that if city officials plan to address the issue of leasing and vacancies through legislation, it should think about solving the problem by thinking long term.

City officials said they plan on following up the roundtable with another meeting dedicated solely to zoning and planning issues.

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