On warm weekend nights, Santa Monica's main retail and dining district feels like a shadow of its former self.
On the Third Street Promenade, the occasional music busker and wandering tourists pass rows of empty storefronts. But starting next month, the city hopes to fill those spaces with something stronger: cocktails, live music and festivals drawing crowds from across the region.
This will be made possible through an entertainment zone ordinance passed last week and set to take effect in time for summer. The law, passed by the Santa Monica City Council, allows open-container alcohol consumption in certain blocks along the Promenade during designated hours. The program, enabled by a California law passed last year, marks the first open-container zone in Southern California and signals a significant shift in the city’s approach to revitalizing its struggling retail core.
“Few places in the country have the potential to rival Santa Monica’s year-round coastal climate,” said Andrew Thomas, CEO of the nonprofit economic development group Downtown Santa Monica Inc., in a statement. “This new experience will further elevate our downtown as a place to socialize and connect.”
The zone will allow bars and restaurants with alcohol licenses to serve to-go drinks on weekends starting in June, with an official launch tied to the city’s annual LGBT festival on June 21. Supporters say it’s a creative way to encourage foot traffic and boost revenue for small businesses, while skeptics worry about implementation, tenant fit and whether enough retail remains to benefit.
It's hopeful news for the future of Santa Monica, "but the devil’s in the details," Ryan Hawley, vice president of retail brokerage at JLL, told CoStar News. "The city needs to quickly put out a clear plan for how this zone will actually operate."
'Net positive'
Retail metrics help explain the need for change. Availability in Santa Monica has reached 15.3%, the highest in nearly a decade, according to CoStar data, while rents have fallen 2% in recent years. Tenants like Rite Aid, H&M and REI have recently closed stores in the region.
At the south end of the Third Street Promenade, the challenges — and the hopes for recovery — are visible. Santa Monica Place, the open-air shopping center designed by Frank Gehry, is being repositioned after its owner, Macerich, defaulted on a $300 million loan last year.
Once a crown jewel of the city’s retail offerings, the mall’s value has dropped 59% since 2017, from $622 million to $255 million, according to Morningstar. Decreased foot traffic, high vacancies and changing consumer habits have all contributed to the slide.
Retail construction has remained minimal across the submarket, with no projects underway, and rent growth has trailed the broader Los Angeles market.
The new entertainment zone could help reset the balance, officials and business owners hope.
“If you’ve got that experiential block where people are walking around with their drinks, some might leave your space — but others will come in. It’s a net positive,” Hawley said.
Like many downtowns across the country, Santa Monica’s Third Street Promenade saw pedestrian traffic dwindle over the past five years as remote work took hold and tourist numbers declined in the wake of the pandemic.
But there are signs of a rebound. In April 2025, the Promenade recorded 351,282 visitors — nearly 19 times the foot traffic seen in April 2020.
Entertainment zones
Las Vegas and New Orleans are famous for allowing public drinking in designated districts, but they’re no longer exceptions. Cities across the U.S. have begun experimenting with entertainment zones that permit alcohol consumption outdoors in specific areas, hoping to attract foot traffic and boost downtown economies.
Kansas City’s Power & Light District, for example, lets patrons carry alcoholic beverages in plastic cups labeled with participating venues’ logos. In Savannah, Georgia, open containers are allowed in the city’s Historic District, a policy that’s helped make the area a popular draw for both residents and tourists.
California joined the movement in 2024 when lawmakers passed Senate Bill 969. The law gives cities and counties statewide the authority to create entertainment zones where adults can legally drink alcohol in public areas like streets, sidewalks and plazas. It’s part of a broader strategy to help businesses recover from the pandemic by making public spaces more vibrant and social.
The legislation builds on a 2022 law that allowed only San Francisco to test the concept. Since then, that city has launched five entertainment zones and piloted several more. One of its early tests — an Oktoberfest celebration — drew 10 times as much foot traffic as the same event a year earlier, according to city officials.
As more California cities consider following suit, debate over the policy’s potential risks is growing. Public health advocates, including the California Alcohol Policy Alliance, opposed SB 969, warning that expanded public drinking could contribute to higher rates of drunken driving and alcohol-related harm.
In Santa Monica, those concerns took center stage at a contentious eight-hour City Council meeting. Dozens of residents voiced opposition to the proposed zone before it passed, citing fears over public safety, late-night disturbances and changes to the character of downtown.
Push for foot traffic
Under the plan, the entertainment zone will run Fridays through Sundays from 6 p.m. to 2 a.m. Businesses that opt in must verify patrons’ ages, issue wristbands, and use non-glass containers. Drinks can be carried outdoors within the zone but cannot enter other businesses.
The ordinance passed just weeks before Santa Monica hosts one of its boldest events in years: an international skateboarding competition on May 23. The Street League Skateboarding Championship Tour will transform the Santa Monica Pier into a custom-built skate plaza, complete with live music and vendor booths. While it takes place ahead of the alcohol zone’s start date, the event previews the city’s vision for what a more dynamic, experience-driven downtown could look like.
“Santa Monica is the perfect backdrop for this kind of event,” said Frank Lamicella, CEO of Thrill Sports, the parent company of Street League Skateboarding, in a statement.
City officials say the open-container zone is part of a broader strategy to adapt to modern retail realities.
“This caters to the new trends in shopping and dining,” Mayor Lana Negrete said in a statement. “It’s an example of the many ways Santa Monica is thinking creatively about our economic growth.”
Hawley noted that the 1200 block of the Promenade has seen traditional retail give way to experiential concepts as vacancies mounted. For example, concepts like John Reed Fitness, a gym with an immersive nightclub-like atmosphere and AI-powered "intuitive" equipment, and Holey Moley Golf Club, an indoor mini-golf venue with food and beverage service, have begun to backfill space, but the area is struggling to find its identity.
"This entertainment zone will absolutely put Santa Monica on the map for festivals," Hawley said.