Santa Monica Retail Increases Investor Momentum

Santa Monica retail attracts renewed investor interest as XYZ.rent expands holdings and experiential tenants drive Promenade recovery.

March 11, 2026

Nina Dale

XYZ.rent expanded its Santa Monica retail portfolio with the $17M Junipher Building purchase.
Investor Daniel Negari sees long-term value in Santa Monica’s core despite elevated vacancies.
Retail sales totaled $143M in the past year as pricing adjusts post-pandemic.
Experiential retail is expected to drive the next growth cycle on the Promenade.

Key Takeaways

Renewed Investment in Santa Monica Retail

Santa Monica’s retail market is attracting significant investor attention as local firm XYZ.rent, led by Daniel Negari, continues to acquire key properties in the city’s downtown core, according to CoStar. In February, XYZ.rent purchased the historic 28,500 KSF Junipher Building on the Third Street Promenade for $17M, adding to recent acquisitions such as the former REI store at 402 Santa Monica Blvd and a multi-building hub from Federal Realty.

Negari’s acquisitions have positioned XYZ.rent among the largest landlords in the entertainment and retail district, with holdings now totaling roughly 368 KSF of retail and office space and over 150 apartments in the area.

Market Shift and Pricing Reset

Santa Monica retail has endured higher vacancies—currently at 13.6% on the Promenade, down from a 2024 peak of 15.1% but still above the historic average. Despite a 2% annual dip in PSF valuation, properties continue to command high rents, averaging $70 PSF. The past 12 months have seen $143M in retail sales volume in the city, signaling a rebound as private investors remain active. This renewed activity comes as investors across Southern California continue targeting high-profile commercial properties, including major office acquisitions in nearby tech hubs.

High-profile deals, such as XYZ.rent’s acquisition of the vacant former REI property at nearly half its 2009 value, highlight both pricing resets and long-term optimism for Santa Monica retail recovery. Negari contends that current pricing offers value for investors willing to bet on the city’s enduring fundamentals.

Experiential Retail Drives Future Growth

Negari and other landlords are focusing on experiential types of Santa Monica retail to fill vacancies and spark renewed activity. Sectors like food and beverage, fitness, and entertainment are expected to anchor the next cycle, replacing traditional apparel and legacy tenants. Enhanced city ordinances, such as a new entertainment zone allowing open-container alcohol in certain Promenade blocks, and major new residential projects, are also supporting revitalization efforts.

As Santa Monica implements policies to support its real estate recovery, investor sentiment led by firms like XYZ.rent suggests a belief in both the market’s resilience and the continued strategic appeal of well-located Santa Monica retail assets.