Success in Excess?

In 1989, shortly after he was charged with helping to pump life into the newly designated Third Street Promenade, Jeff Mathieu, Santa Monica’s economic-development manager, visited the outdoor mall to catch an evening movie. Mathieu entered the old Criterion, a cavernous 1,000-seat theater, sat down and looked around. "My wife and I were the only people there," Mathieu recalled. "I knew this would be a challenge."

Today, Mathieu must squeeze past as many 15,000 visitors who, on warm weekend nights, pack into a single block of the narrow strip that stretches from Broadway to Wilshire Boulevard. Throngs gather round a boisterous assortment of street performers who draw, play, bang and dance for donations till well past midnight. Diners fill sidewalk tables, and moviegoers form long lines to enter sold-out shows.

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In 10 short years, the Third Street Promenade has gone from blight to boom, drawing an estimated 4 million visitors a year from across the region and around the world. It is the proverbial goose that lays the golden eggs, only the eggs keep getting larger and larger.

"It just took off," said Herb Katz, an architect who sat on the Santa Monica City Council during the early stages of the transformation, and now chairs the Bayside District Corporation board, which oversees the downtown district, including the Promenade. were scared to death. It was so instantaneous. It was like winning a million bucks. What do you do?"

Last year, the Promenade’s 150 establishments generated $158.7 million in gross taxable sales, a 440 percent rise in 10 years, according to the city. And more than $500 million in private funds have been pumped into the strip over the past decade.

But Third Street’s sudden prosperity has placed the city in the unusual position of managing — if not reining in — success. During the past month, the City Council has approved a measure to better manage the flow of cars, cabs, trucks, pedestrians and bicyclists that often clog the intersections and alleys, and to encourage the crowds to spill over into flanking streets. The council also passed an unprecedented ordinance that requires street performers to rotate spots every two hours and trim the size of their setups and displays. And it is contemplating a moratorium to stem the flood of retailers that threaten to price out the restaurants that give the promenade much of its lively ambiance.

"Yes, the Promenade is far more active and has far more people than we ever imagined it would, especially on weekend nights," said former Santa Monica Mayor Dennis Zane, the politician widely credited with helping to usher in the boom years. "For many people in the community, I think it’s fair to say there are too many people. The best thing that could happen to the Promenade is if Westwood had a resurgence."

The wild success of Third Street has recently pitted a liberal council, which fears that skyrocketing rents threaten to turn what’s left of the eclectic strip into a faceless row of corporate retailers, against property owners, who champion the free-market forces that have in large part led to the remarkable boon for their pocketbooks, as well as for the city’s coffers.

Rents have shot up from a dollar or two per square foot in 1989 to around $8 — with some spaces going for as much as $12 a square foot, prices that are second only to those of Rodeo Drive in Beverly Hills. In fact, space is such a precious commodity that one tenant was reportedly offered $300,000 to vacate the premises so another store could move in.

"It has gone from where there was very little interest to where it is a premier location to open new concepts and flagship stores on the West Coast," said Robert O. York, partner in the Fransen Co. of Santa Monica, a consulting firm hired to help lure businesses to the Promenade. These businesses included a number of national companies that turned the Promenade into a launching pad for retail chains and new retail concepts.

The success has drawn some two-dozen major retailers to the bustling strip, where the marquee presence in front of millions of strollers a year is perhaps as valuable as the retail dollars they bring in. The chains include the Gap, Banana Republic, Guess, Urban Outfitters, Barnes & Noble, Borders, Rockport and J. Crew. Some foreign companies, such as Adidas and Puma, have chosen the Promenade for their first U.S. stores.

The success of the chains has helped some independents — such as Puzzle Zoo and Undercover — which have cashed in on the boom. It took Undercover owner Adam Shaffer one visit to decide to open shop on the Promenade in 1993. "I came on a Friday night," said Shaffer, whose store sells high-end women’s apparel. "I never saw so many people in one place except for Disney World." Shaffer sold his business on the East Coast and headed west.

Now, he would like to see other high-end stores follow suit. And while he acknowledges that the larger stores are turning the strip into a more mainstream street, he believes the chains also have helped add luster to the strip. "The image of the Promenade has come far from where it was five years ago," Shaffer said.