In Los Angeles County, the beachfront city of Santa Monica has been working to regain its reputation as one of the nation’s top real estate hubs following the pandemic, a period of rising vacancies, declining tourism and public safety concerns that hobbled its once-booming retail core.
One investor is shelling out millions for retail properties in a vote of confidence for the city that appears to be on the rebound, depending on whom you ask.
“The fundamentals were never broken,” Daniel Negari told CoStar News. “Santa Monica still has the coastline, the weather, the demographics, the tourism, the walkability, and one of the most iconic downtown districts in America.”
Raised in Los Angeles, Negari began his career as a teenage entrepreneur, made money as a mortgage broker before finishing college at USC, and later carved out a niche as a digital domain operator, creating domain names on such generic top-level domains as .xyz and .college, and charging fees for their use.
His latest wager is the on the vacant, former Gap-anchored historic Junipher Building at 1355 Third Street Promenade that his firm XYZ purchased from RDR Properties for $17 million this month, adding another high-profile property to a growing portfolio concentrated in the city’s downtown core.
The purchase follows a string of acquisitions along the Promenade and nearby streets, including XYZ's purchase of 402 Santa Monica Blvd., as Negari builds what he describes as a long-term, “evergreen” bet on the three‑block, pedestrian‑only shopping, dining and entertainment district just a few blocks from the beach.
Once one of Southern California’s most coveted retail corridors, Santa Monica’s downtown struggled through the pandemic and its aftermath, battered by rising homelessness, elevated crime concerns and a tourism slowdown even as the broader Los Angeles economy rebounded.
Retail availability on the Promenade has edged down from a 2024 peak of 15.1% to 13.6%, still well above the historic average of roughly 8.2%, according to CoStar data. Average asking rents of about $70 per square foot remain among the highest in the country, even after declining 2.2% in the past year.
But Negari — now one of the biggest landlords in the entertainment and retail district — isn't the only one investing in the rebound.
Retail price reset
Sales volume in Santa Monica totaled $143 million over the past 12 months, up from $135 million the year prior, with private investors controlling nearly two-thirds of asset value in the city, according to CoStar data. At the same time, however, the average price paid per square foot has declined by 2% year over year.
Recent purchases underscore both the reset and the opportunity. In March 2025, a 4,500-square-foot vacant retail property at 2941-2943 Main St. sold for $7 million, a 30% markdown from its 2019 price, and in December, XYZ purchased the former REI store at 402 Santa Monica for $16.3 million, almost 50% below its 2009 pricing.
“At today’s basis, I do not view this as a reckless risk,” Negari said. “I am buying iconic assets at market pricing, allowing me to add value in the future.”
Negari said he is underwriting “prime real estate in an irreplaceable location,” arguing that current pricing does not reflect the long-term value of the Promenade’s historic buildings and global brand.
In 2018, XYZ made its first downtown Santa Monica purchase when it acquired the 9,000-square-foot office building at 310 Wilshire Blvd., just off the Third Street Promenade, for $9.4 million.
That foothold expanded significantly in 2024, when the firm bought an eight-building shopping and office hub on the Promenade from Federal Realty for $103 million. Then came the purchase of the former REI store, and XYZ's latest purchase of the 28,500-square-foot Junipher Building, built in 1912 and also known as the Bayside Arts Building.
All told, Negari's Santa Monica portfolio totals some 368,000 square feet of retail and office space plus more than 150 apartments sprinkled around the area across 18 small complexes, according to CoStar data.
"I have built up a concentrated portfolio of some of the best properties in Santa Monica because I believe the bottom is in, and the comeback is real,” he said. “My capital is evergreen, and I am investing for the long-term future of this community.”
Santa Monica's future
When it comes to filling Santa Monica vacancies, Negari said retail uses that offer experiences will anchor the next cycle, pointing to food and beverage, fitness, entertainment and curated flagship concepts as the categories most likely to thrive.
“The future is experiential, period,” he said. “If it can be replaced by a click, it is probably not the future of the Promenade.”
The idea is taking hold in aging retail centers nationwide, as landlords swap out legacy apparel tenants for experience-led concepts such as Netflix House, Dick's House of Sport, FunLab and Slimeatory.
Santa Monica is modernizing some of its rules to help push revitalization. The City Council passed an entertainment zone ordinance that allows open-container alcohol consumption in certain blocks along the Promenade during designated hours, marking the first such zone in Southern California.
The city also gave XYZ permission to add a Times Square-style, 1,000-square-foot billboard to its properties at 301 Arizona Ave. and 1202 Third Street Promenade in a bid to boost energy in the neighborhood and revenue for the city.
Meanwhile, about 470 residential units are under construction in the city from major firms including Related California and Tishman Speyer.
For Negari, the investment strategy is both financial and personal, noting that he was born in Santa Monica and views the turnaround as “impact investing."
“I am not going to let an iconic district fall by the wayside," he said.