Quick Take
Downtown Santa Cruz is transforming, and it’s doing better than most, argues Scott Newsome, a Santa Cruz city councilmember. While other coastal cities struggle with high vacancy rates and sluggish recoveries, Santa Cruz’s downtown is seeing major investment, momentum and new business activity, he writes. Newsome outlines millions in current and future projects, including housing, transit, public spaces and economic incentives, as the engine behind downtown’s resilience.
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Downtown Santa Cruz is no stranger to change.
The flood in 1955 and the Loma Prieta earthquake in 1989 each precipitated a transformation in our city’s core. The current moment is no different.
A residual hangover from the pandemic, fundamental shifts in consumer behavior due to e-commerce and the state’s removal of local authority over housing are each forcing the heartbeat of our city to reinvent itself. While transformation can be unsettling, the new iteration of downtown is off to an exciting start and, looking at the data, we are faring better than other small coastal towns.
Currently, the storefront vacancy rate in downtown Santa Monica and downtown Santa Barbara are 25% and 12.9%, respectively. I could not find current data on the Capitola Mall, but as of 2022, its vacancy rate was over 30%. Even downtown San Francisco has a current vacant storefront rate over 20%.
In contrast, the vacant storefront rate across our entire downtown is 12%. On Pacific Avenue, 16 out of 108 storefronts are either vacant or not leased. Stated differently, over 85% of the storefronts on Pacific Avenue are either filled or leased.
Current and future investment in downtown helps explain why our downtown is faring better than most. Over the past two years, the council has supported close to $30 million in downtown infrastructure improvements on landscape and streetscape, over $3 million to beautify downtown through new paseos and activating alleyways, over $275 million in a planned new downtown Metro center and downtown library that also includes housing and a much needed community child care center, and an estimated $180 million in a new hotel to attract tourists and conferences to downtown.
Additionally, a police substation will soon occupy the old Logos Books & Records space to accentuate a safe, clean environment in downtown, while the council in the coming years will be considering an around $100 million permanent arena for the Santa Cruz Warriors.
And close to 1,400 units are either in the process of or scheduled to be built downtown in the coming years. This means thousands of more people living, working, shopping and investing their lives in downtown every day.
This over $588 million in current and potential future investment has helped build momentum in downtown. Over the past six months, 15 new businesses have opened, positioning themselves to capitalize on the coming growth. These businesses span a range of industries, such as retail, fitness, restaurants, nonprofits, health food and technology.
New downtown businesses since November 2024:
- Paystand
- Game Santa Cruz
- Nico’s Ice Cream
- Offshore Sounds
- The Neighbor’s Pub
- Twist Boutique
- Jireh Boxing Kickboxing Cardio
- Heavenly Crepes
- Gabrielita Tamaleria
- Fusion Fare
- Santa Cruz Land Trust
- Terra Superfoods
- Cove Lifestyle Boutique
- Pastime Goods
- The Salty Otter
Additionally, eight businesses are soon to open in downtown (names not released until the ribbon-cutting), a national retailer has signed a letter of intent to occupy the old New Leaf space, Oasis recently filled the old Rip Curl space, and there have been talks of a new tenant inching closer to signing a lease on the old O’Neill space.
To speed up this momentum, Vice Mayor Shebreh Kalantari-Johnson and I together with the city’s economic development department brought forward a downtown economic recovery and support package at the most recent council meeting. This package, dubbed the Vibrancy package, focuses on near-term and long-term approaches to addressing vacant storefronts in downtown.
In the near term, the city will provide incentives to fill empty storefronts. Streamlining the permitting process for the first 20 businesses that submit plans will save prospective businesses up to $20,000 and five months in the permitting process. The city will also guarantee minimum rent for property owners enrolled in the Downtown Pops! Program of up to $1.25 per square foot with a cap at $5,000 for larger spaces to help businesses move in, grow their customer base and bring new vibrancy.
Storefronts vacant for two or more years, in contrast, will be required to enter a program. This program will have a fee, standards, such as cleanliness and aesthetic standards, and repeatable fines for property owners who do not meet these standards. Such storefronts can quickly exit this program and avoid these fines by either leasing the property or joining the Downtown Pops! Program, a successful city program that helps new businesses open in downtown through lowering barriers to entry.
Barring further rash economic decisions by the reckless leadership in Washington, this package should help put downtown in a great position moving forward. It will help align the interests of downtown property owners, businesses, and our community.
Change is never easy, but each time our downtown has reinvented itself, it has emerged stronger and more vibrant. This moment will be no different.
.Scott Newsome is a political science lecturer at UC Santa Cruz and a member of the Santa Cruz City Council.