Santa Monica’s Third Street Promenade has been an economic engine for more than 30 years, but the COVID-19 pandemic and resulting safer-at-home orders have city leaders wondering how the three-block retail area can be improved for an evolving future.

The Promenade has generated approximately 15% of Citywide sales tax revenue in recent years, according to a staff report for an upcoming City Council meeting.

“However, the Promenade is facing a combination of challenges unparalleled in its history, and is currently not well-positioned to weather evolving trends in retail and dining that have only accelerated during the COVID-19 pandemic,” said the report.

Council is set to discuss the Third Street Promenade Stabilization & Economic Vitality Plan during a study session on Tuesday.

Nearly 40% of the Promenade’s storefronts are currently vacant, with over 60% of these vacancies predating the onset of the pandemic, the staff report adds. Meanwhile, an increasing predominance of national chains and lack of unique engaging uses on the Promenade limit both its attractiveness to residents as well as its ability to compete against a growing number of neighborhood nodes and private developments across Greater Los Angeles.

As a result, Downtown Santa Monica Inc., in close collaboration with the City, has embarked on an effort that seeks to rapidly assess the current landscape and hopefully will lead to recommendations to redevelop or re-tenant the Promenade, so the area can regain its appeal to residents and competitiveness in retail and entertainment landscapes, DTSM Inc. CEO Kathleen Rawson said in an interview Friday.

Rawson recalled the previous iteration of City Council directing staff to be bold, innovative and creative in reimagining the future of the Promenade back in November 2019 when the Promenade 3.0 plan, which sought to reimagine the Promenade for the 21st century, was presented to the public.

The efforts continued for several months afterward.

“But we had to pivot when the pandemic happened, because the Promenade 3.0 was really focused on a substantial investment, which would be funded by the City and private property owners,” Rawson said. “Well, the economics have changed dramatically, so the current effort is really focused on how can we convert the spaces that are on the Promenade, which are not conducive to today’s retail needs, into something that would expand the type of uses that we have and would encourage property owners to put money into their buildings.”

Rawson explained there could be uses for light manufacturing for shops wanting to produce handcrafted sweaters in the back while maintaining a retail space in the front. Breweries could also take advantage of the Promenade’s shops, which Rawson said are nearly three times larger than the space needed for today’s retail arrangements.

“So we aren’t focusing on generic retail; instead we are looking to expand the diversity off the types of businesses on the street and make them much more reflective of the city and the citizens of Santa Monica,” Rawson said. “Think more entertainment and other things that Santa Monicans would not only embrace but celebrate.”

That’s what the stabilization plan is really focused on, she added.

“And I’m proud to say the six people who are serving on the advisory committee are made up of residents, people who understand building form, people who understand marketing and promotions, people who understand real estate; so they are residents of this community with that expertise who are smart and believe in the Third Street promenade and believe in the mission and love their community. And I think with those voices at the table putting this plan together, there’s going to be some really great things for the community to respond to,” Rawson said, mentioning the City will not have to pay a dime because DTSM Inc., has been fortune enough to build up a reserve of funds. “And our reserves have allowed us to go through with this exercise for the benefit of the community… This is rainy day money and it’s raining cats and dogs.”

Aside from the advisory committee, city officials said outreach to Santa Monica residents and Downtown employees will be critical to ensuring the Promenade of the future is reflective of the community’s needs and desires so a virtual town hall meeting and workshop will be held in early Spring to equip the consultant team with a better understanding of the types of stores, dining, entertainment, and experiences that will foster greater engagement with the Promenade by Santa Monicans.

“In the meantime,” the staff report states, “those interested in following the project’s progression and providing feedback should visit”