Historic Santa Monica Sears Store Becomes Office Again

A local landmark since shortly after World War II, the Santa Monica Sears store has spent more than two years revamping its $ 50 million makeover into a chic office building for creatives, spiced up with a handful of restaurants and shops appeal to locals and the millions of annual visitors who typically visit the seaside town.

This ambitious project is intended to be a showcase for how to reuse obsolete department stores in urban areas. Its owners predict it will turn out that way, but their timing has turned into a global disaster.

Now that the complex, renamed Mark 302, is ready for tenants to build their own spaces, the pandemic has put the office and restaurant rental markets on their heels.

Work began on the old Sears in a different world – Santa Monica office space was hard to come by and the restaurant scene was thriving. Today, few new office leases are signed in the region, and closed restaurants are commonplace as COVID-19 fears and operating restrictions push customers back home.

“It’s been a tough market,” said Ken Lombard, COO of Seritage Growth Properties, which owns the former department store with its partner Invesco Real Estate.

Despite the current headwinds, developers are optimistic about the prospects for Mark 302. It has a lot to offer, they say, starting with an address in Santa Monica.

“It’s unique and it’s in a great location in what people see as the Los Angeles tech corridor,” Lombard said, and it should attract companies from the economically resilient areas of technology and entertainment. “The coolness of the building and the type of design lend themselves to this type of tenant.”

The store was designed by architect Rowland Crawford in a late Art Deco style called Streamline Moderne, known for its curved shapes and long horizontal lines. Crawford has designed several Los Angeles area buildings, including the Brentwood Country Mart and the Times-Mirror building in downtown LA

His name gave the store some cachet, which opened with a bang in 1947, said Carol Lemlein of the Santa Monica Conservancy.

“The architect was relatively well known back then, and it was just a really big deal to have a store like this in Santa Monica,” Lemlein said after the makeover announcement.

The Santa Monica Sears was one of many department stores built in the post-WWII years to take advantage of Southern California’s booming growth and pent-up consumer demand unleashed after the war ended. . It was the 10th Sears store in Los Angeles County.

The past two decades have been difficult for department stores, however, with shifts in consumer tastes for durable goods and shoppers’ growing attraction to shopping online.

Giants such as Sears, Macy’s and JC Penney Co., which once dominated the retail landscape, have closed hundreds of stores in recent years and the pandemic has accelerated the pace of change, analysts say. The Santa Monica Sears closed in April 2017.

“We are seeing 10 years of retail evolution in 10 months,” said Bay Area real estate consultant David Greensfelder as buyers step back from the shared experience of browsing indoor malls and department stores.

Mark 302 may also struggle to attract stores, said Greensfelder, who is not involved in the project. The building at 302 Colorado Ave. is separated from the Third Street Promenade pedestrian mall and downtown Santa Monica by the towering Santa Monica Place Mall.

“There are a lot of other places to go for retailers” in Santa Monica, said Greensfelder, including empty shops ringing on the Tourist Boardwalk.

But the timing of renting the Mark 302 office space may not be as bad as the market blocked by the pandemic would suggest.

“They’re bringing it to market just as we’re going to get a feel for when we can come back,” said Greensfelder.

Indeed, there has been an increase in the number of businesses visiting the building in recent weeks, said Mary Rottler, who is in charge of rentals for Seritage.

The efforts to have a COVID-19 vaccine ready for distribution soon are shaking the planning instincts of economic operators.

“As vaccines get closer to availability, I think people are really starting to seriously think about their office options,” Lombard said. “We are again encouraged to find the right tenant for the building,” which has 50,000 square feet of office space for rent.

The pandemic-related office market slowdown prompted Seritage to focus on health safety measures in the modernized building, such as contactless elevators and a virus-trapping air filtration system, he said. he declares. Tenants will have outdoor workspaces and the exclusive use of a furnished rooftop terrace with views of the Pacific Ocean, the Santa Monica Mountains and downtown Los Angeles.

The developers converted the three-story building to four by upgrading an upstairs mezzanine once used to store Sears merchandise. The old basement, formerly served by a loading dock, will also be rented to tenants.

1940s ground floor windows that had been closed in recent decades have been reopened to help illuminate up to six restaurants or stores. On the north side of the building will be a 25-foot-high mural visible from the nearby Metro light rail station.

Seritage is hoping to eventually add apartments to what is now the building’s parking lot, but the company has yet to seek city approval for the accommodation.

The New York-based real estate investment company has acquired 266 Sears and Kmart stores across the country that could potentially be redeveloped. It took control of the stores in 2015 in a $ 2.7 billion deal that involved leasing most of them to Sears Holding Corp., which also owns Kmart.

Seritage sold a 50% stake in Mark 302 to Atlanta investment manager Invesco in 2018 in a deal valuing the property at $ 145 million.

The two companies are also in the process of redeveloping a former Sears in San Diego into a similar complex with offices, stores and restaurants called the Collection in UTC. Offices were rented there from the supplier of coworking spaces Industrious. It should open next summer.

Finding tenants for Mark 302 in Santa Monica will be more difficult than it would have been before the pandemic put a damper on the market, said Santa Monica real estate broker Rafael Padilla of Par Commercial Brokerage.

“What they’ve done is a beautiful and creative project” that might appeal to tech or entertainment companies, he said. “The problem is more competition than before.”

The restaurant industry is going through tough times, Padilla said, but chefs and entrepreneurs will find ways to come together after the pandemic and bring new concepts to the local level that Seritage may not have anticipated.

“Maybe they wanted Wolfgang Puck,” he said, “and now they’re going to have Wolfgang Chuck.