DOWNTOWN — As retailers slash prices to attract cash-strapped holiday shoppers, local landlords are following suit.
Apartment rental rates are down as much as 15 percent from the peak of the market about 18 months ago because of increased vacancy, landlords say, prompting many owners to offer additional incentives to fill their buildings.
“With a lot of vacancy, property owners are getting creative trying to market their properties,” said Bill Dawson, vice president of Sullivan Dituri Co., a property management firm. “They’re having more open houses, they’re trying to do more expensive amenities in the units to make them more attractive, maybe offering a little free rent.”
December is typically a slow month in the rental market, but this year the weak economy is combining with the seasonal lag to make for an especially renter-friendly market, said Mark Verge, who owns Westside Rentals.
“If you’re trying to make a deal, this is the time. Do it now, do not wait until January first,” he said.
“There’s some presents to be had. December’s always slow but this year’s slower than most.”
Wes Wellman, president of Action Apartment Owners Association, which represents about 500 landlords in Santa Monica and the Westside, agreed the market favors prospective tenants.
“The next month or so represents a real opportunity for bargain hunters,” he said. “We’ve seen a pick-up in activity just in the last week or two in response to price slashing by apartment owners.”
An apartment hunter who gave her name only as Linda said she lived in Santa Monica for 18 years but left after developing an illness that limited her income. After noticing recent sharp declines in rental prices, though, she said she re-entered the market.
“Two years ago I wouldn’t even be looking,” the part time Santa Monica College instructor said.
Vacancies have increased as tenants have been forced to move out after losing jobs are suffering pay cuts. They have looked to other areas of Los Angeles County for more affordable rents.
Going commercial
While Santa Monica commercial districts have avoided the skyrocketing vacancy rates that have plagued some Southland cities, commercial brokers have seen deals slow to a crawl in the past year.
“This has been the toughest year that I’ve seen in the 20 years we’ve been on the [Third Street] Promenade,” said Barbara Tenzer of Tenzer Commercial.
Rafael Padilla, principal of Santa Monica-based PAR Commercial Brokerage, said retail and office rents in the city are down 20 percent to 25 percent from a year ago. Office vacancy, he said, has gone from less than 5 percent to about 12 percent.
Santa Monica once was home to some of the most expensive commercial lease rates in the region, with some landlords charging as much as $6 per square foot. That has dropped to $4 or less in some areas.
But both Tenzer and Padilla said they’ve seen encouraging signs in the second half of 2009.
Padilla said larger chain stores have begun to re-enter the real estate market after staying away in the first six months of the year. He noted recent retail deals in Santa Monica with Chipotle Mexican Grill and with phone companies Sprint and Verizon.
Tenzer said she’s noticed a trend of more foreign-owned business seeking retail space in Downtown, and more people willing to open up businesses.
“It seems that the scariness of what happened — people are sort of adjusting to it. It’s not going to be what it was but we’re all going to survive,” she said.
nickt@www.smdp.com
