Retail Vacancies Have Compounded the Mall’s Struggles
Santa Monica Place, a high-profile shopping destination in Santa Monica, continues to face significant financial setbacks as its valuation plummets and its ownership navigates a challenging economic climate, according to reports.
The Macerich Company, a real estate investment trust based in Santa Monica, defaulted on a $300 million loan backing the 534,000-square-foot mall earlier this year, as reported by The Real Deal. The loan, which entered special servicing for the second time in two years in April, was originally set to expire in December 2023 but was extended by lender Wells Fargo, according to Globest.
Morningstar Credit recently reported that the mall’s value has declined by 59 percent since its loan issuance, from $622 million to $255 million, TRD reported. CFO Scott Kingsmore explained during a Q1 earnings call that the decision to default was due to the property’s declining performance and “challenging underlying capital structure.” Macerich reported a $127 million loss in Q1 2024, partly due to the bankruptcy of Express, a retailer with 23 stores across Macerich properties, as reported by Globest.
Retail vacancies have further compounded the mall’s struggles.
Bloomingdale’s and ArcLight Cinemas vacated approximately 150,000 square feet of space in 2021, leaving more than half of the mall available for lease by early 2023, TRD reported. Efforts to draw foot traffic, including pop-up events like a Barbie-themed exhibit, have yielded limited results.
Designed by renowned architect Frank Gehry, Santa Monica Place opened in 1980 and underwent a $265 million renovation in 2007.
