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Category: Leasing, Report, Research Reports Tags: Landlord Rep, Leasing, Manhattan Beach, retail, Tenant Rep

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Overview of Downtown Manhattan Beach

Downtown Manhattan Beach, with an approximate population of 35,000 residents, is one of the most sought-after commercial retail markets in Southern California. The beach spreads over two miles, maintains an average year-round temperature of 69 degrees, and accounts for over 3.8 million visitors annually. The area boasts the 32nd most expensive zip code in the nation, supporting an average household income of $144,000. In April 2020, the median home price for Manhattan beach not only increased but reached the highest-ever median price at $2.499 million, according to MB Confidential. The U.S. Census Bureau found Manhattan Beach to be the second most educated city in Los Angeles County, and Forbes ranked the school district as the 6th best in the country.


The COVID-19 Impact

Historically, commercial retail inventory doesn’t often surface in Downtown Manhattan Beach. Leases pass hands locally, transactions are structured off-market, and tenants’ re-brand before giving up space.


Besides City Hall, everything in Downtown happens quickly and quietly. Tenants looking to come into the market put themselves at a disadvantage if they don’t have real-time knowledge & local presence. The city is cautious when it comes to chains as the community is adamant on keeping a “local neighborhood” feel, and ideally want to limit the risk of Downtown becoming an oversaturated tourist market.


When COVID-19 struck, the city swiftly approved extended patio permits, despite conservative perspectives towards change. According to Dig Manhattan Beach, out of the 1,600 residents and businesses surveyed, 93 percent favored temporary public right-of-way dining. The city council was progressive in ensuring tenants had the option to stay open and could continue servicing and maintaining a healthy rent-to-sale ratio. Cities such as Hermosa Beach and Redondo Beach endorsed similar plans to extend patio seating, shortly after the successful implementation in Manhattan Beach.


The Side Bar on Manhattan Avenue quickly pivoted and opened a take-out window with a pop-up Poké concept and built out a back patio. Sharkeez Group also took time to reinvent themselves. The former beach bar, “Sharks Cove” will soon open as a flagship restaurant called Esperanza, which is slated to open Q2 2021.


While more business started re-opening in early June with new safety protocols in place, many did not. With stay at home orders still in place and fewer people traveling, only local bystanders could identify new opportunities in the market.


Retail supply increased in Manhattan Beach as some tenants struggled to keep up with rent. Le Pain Quotidien, Seafolly, and Papyrus all filed for Chapter 11 protection. Le Pain Quotidien was acquired and announced they will continue operating at one-third capacity, with the Metlox shopping center location set to remain open. A newcomer into the market, Verve Coffee Roasters is acquiring the Papyrus location next to Lemonade on Manhattan Beach Boulevard. Seafolly will discontinue all U.S. operations, and Matthews™ will actively market their space adjacent to Lorna Jane. Surprisingly, landlords have no pressure to offer “discount deals” in Manhattan Beach as demand has been stronger than ever. Grade A tenants who usually have the best real estate selection went into a holding pattern, giving opportunistic tenants the shot to capitalize and secure A+ storefronts.


Restaurant rents range from $8.00 to $10.00 per square foot, general retail ranges from $7.00 to $9.00 per square foot, while office ranges from $5.00 to $7.00 per square foot. For more information, The Definitive Guide to Manhattan Beach Rents is available by request.

Accessibility to parking is a crucial factor that concerns office tenants. With many local restaurants extending patio seating, some permanently, this is lowering the parking percentage, handicapping buyers from developing excess office for better use.As a retailer, it is crucial to be located on a high-traffic street, such as Manhattan Beach Boulevard. Pasha Fine Jewelry, previously on Manhattan Avenue, relocated in-line at 213 Manhattan Beach Boulevard. While paying higher rent, the retailer will experience increased activity on the main walkway.


After patios were implemented across the Manhattan Beach submarket, the City of Los Angeles mandated another stay at home order in December 2020, which re-closed all restaurants. However, the City of Manhattan Beach found a loophole in the ordinance allowing “Public Seating Areas” so that restaurants could continue to produce sales and not completely shutter. This has put Manhattan Beach on the map and allowed the downtown district to flourish.


Recent Announcements in Manhattan Beach:

HealthNut: Originated in Calabasas, HealthNut grew widely popular after the national support from Kylie Jenner of Keeping up with the Kardashians. Initially, HealthNut was only targeting Brentwood but couldn’t pass the prime location in Downtown Manhattan Beach. The company quickly adapted to a smaller footprint to capitalize on the real estate opportunity.


Tacolicious: Tacolicious opened in Manhattan in June 2020. The Bay Area concept has multiple locations Northern California including concessions in the Golden State Warriors new arena. It is expected to see them expand their Southern California footprint.


Esperanza: A new upscale Mexican restaurant that is replacing South Bay’s Shark’s Cove. The properties glass-lined façade is part of Sharkeez Group’s $2.7 million buildout that will serve as the flagship restaurant. Other concepts include Baja Sharkeez, Tower 12, Palmilla, and Panama Joe’s. 


Silverlake Ramen: This restaurant previously avoided the Downtown Manhattan Beach area, and settled at the new Manhattan Village. This location was selected in an effort to capture Rosecrans Boulevard’s office population. The Matthews™ tenant representation, Aditya Ramnath, said the decision was well driven by the national tenant considering the tenant mix at Manhattan Village, and the more accessible parking the mall provided.


Nordstrom Local: This retail location was recently signed at Metlox, which presents one of the first signs of a retail revolution. Smaller format stores that provide a consumer experience, with limited tangible products on the shelves, is a new for the retail market. Online sales will continue to skyrocket, and if vendors can reduce rent while lowering overhead, brand identity will be maintained at a lower expense. For those retail brands that completely abandon brick-and-mortar locations, they will likely suffer long-term as identity will be lost, and relevance and sales will dwindle. Open aired streets like Manhattan Beach Boulevard, Larchmont Boulevard, and Main Street (Ocean Park) will become more popular than regional lifestyle centers and malls.

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