Broker calls $45K monthly rent a new ‘benchmark’
A new Levi Strauss store planned for the Third Street Promenade has set a record high rent along the pricey commercial corridor.
Levi Strauss has agreed to pay nearly $45,000 a month for the 4,000-square-foot store — previously occupied by Rag Factory — at 1409 Third Street Promenade, according to Randy Starr, a real estate broker at the Tenzer Commercial Brokerage Group.
“That’s the new benchmark for retail,” he said.
The deal works out to about $10.65 a square foot, or $1,451.61 a day, which doesn’t include various fees attached. Levi’s will have to sell 97 pairs of jeans a day at $35 a piece, based on a 31-day calendar, to break even on just its rent. Average retail rents along the Promenade have fluctuated between $9 and $10 a square foot while space for restaurants have garnered about $7 a square foot, according to sources.
Levi’s officials reportedly are attracted to the store’s location because of its 42-foot-long display windows that front the Promenade and its expansive interior, Starr said.
“It’s one of the few spaces on the Promenade where you avoid the bowling alley effect,” said Starr, noting most Promenade locations are narrow and deep. “It’s one of the prime spaces and Levi Strauss, with their financial clout, really went after it.”
“It’s one of the prime spaces and Levi Strauss, with their financial clout, really went after it.” — – RANDY STARR Real estate broker
Levi Strauss officials did not return calls Thursday.
The company will officially take possession of the space today. It may take between three to five months to complete construction and for the store to be fully operational, Starr said.
“The space itself is a clean space,” he said. “So there shouldn’t be any real issues.”
While city officials are not sure if the high rent being paid by Levi Strauss constitutes a new trend, they noted it was one of the highest they had heard of on the Promenade.
“Whether a single rent of that kind is a benchmark remains to be seen,” said Mark Richter, the city’s director of economic development. “There are other vacancies on the Promenade, and I think rents tend to be forced upward when there is a lack of supply.
“But it shows how much they wanted to be there,” he added.
The Rag Factory, which has several locations in the Los Angeles region, was one of the few remaining locally owned and operated stores along the Promenade. High rents have forced many independent retailers to seek more inexpensive locations on side streets.
Many of the national retailers moving onto the Promenade are willing to pay higher rents because they see it as an advertising investment. With the high level of foot traffic, companies have established flagship locations that act more as a showcase than as a money-maker.
“If you can afford the space as part of your advertising dollars, then it’s hard (for the independent guys) to compete,” Starr said.
Demand for retail space along the Promenade is soaring. After a six-to seven-month slow-down in new retail leases, fervent leasing activity has begun anew, Starr said.
“The decrease has stopped and it’s hotter than ever for retail space along the Promenade,” he said. “It’s still really successful.”
Originally published in the Santa Monica Daily Press print edition on January 31, 2003. Read the original PDF.