SANTA MONICA, CA — Santa Monica's prolonged economic slump has been significantly worse than in several neighboring cities, with inflation-adjusted taxable sales falling nearly 33 percent over a decade and some of its best-known retail sectors suffering far steeper losses, according to a sweeping new RAND study.
The study by Santa Monica-based RAND examined the city's economy, crime, homelessness, commercial property and housing production, comparing its trajectory primarily with Beverly Hills, Culver City and West Hollywood.
Researchers found Santa Monica's taxable sales fell from about $3.24 billion in 2015 to $2.18 billion in 2025 when adjusted for inflation, a decline of approximately $1.06 billion, or 32.8 percent. Clothing and accessories suffered the steepest drop, plunging 75.1 percent, while food services and drinking establishments, including restaurants and bars, fell 23.8 percent.
Home furnishings and appliance sales fell 66.9 percent and the broad "other retail" category dropped 51.2 percent. Building materials and garden businesses were the only category examined that recorded an increase.
The comparison with neighboring cities is particularly stark.
Beverly Hills, Culver City and West Hollywood all returned to their pre-pandemic taxable sales levels by late 2021, according to RAND. Although all three subsequently declined, Beverly Hills and West Hollywood finished 2025 about 10 to 15 percent below their 2015 baselines, while Culver City was down about 25 percent.
Santa Monica recovered to only 89 percent of its 2015 level in mid-2021 before beginning another decline. By early 2026, taxable sales were approaching just 60 percent of the 2015 baseline.
"Across the board, Santa Monica's recovery was weaker and its subsequent trend more steeply downward," researchers wrote.
Tourism has also struggled to recover. Annual visitors are currently estimated at just 58 percent of the pre-pandemic baseline of 7.5 million, according to city staff cited by RAND. Hotels have fared better, with occupancy reaching 76 percent by March 2026, the highest among the Southern California hotel markets examined, although inflation-adjusted hotel revenue remained below pre-pandemic levels.
The city's commercial struggles remain particularly visible downtown. Third Street Promenade had a 31 percent retail vacancy rate as of August, based on CoStar data analyzed by RAND, with spaces larger than 30,000 square feet 47 percent vacant.
RAND estimated that at least 45 percent of Santa Monica's total retail vacancy was associated with properties on the Promenade and at Santa Monica Place.
The findings come as the city is already trying to reverse the trend. In March, the City Council approved a package of economic development measures, including a $3 million economic development fund, restaurant incentives, fee relief and efforts to make it easier to convert vacant retail space into restaurants.
RAND's findings become more complicated, however, when researchers turn from Santa Monica's economy to two other issues that have figured prominently in debate over the city's decline: crime and homelessness.
The city's homeless population has remained relatively stable over the past decade and declined modestly in 2026, according to RAND's analysis of Los Angeles Homeless Services Authority Point-in-Time count data.
Researchers estimated 793 homeless people in Santa Monica in 2026, the lowest figure in the 2017-2026 period they examined, although the 2026 data were preliminary. The highest count was 1,026 in 2019.
Homelessness remains heavily concentrated downtown and near the beachfront, where it is particularly visible to businesses, tourists and other visitors. Among the comparison areas examined, RAND found only Venice had similar levels.
Crime showed a strikingly similar geographic divide. Aggravated assaults and robberies have roughly doubled since the early 2010s and remain elevated, but RAND found those increases were overwhelmingly concentrated downtown and peaked in 2018, before the pandemic. Most other violent and property crimes examined were relatively stable over the past two decades, while serious violence outside downtown had not increased notably.
Researchers divided Santa Monica into 500-foot geographic cells and found the 5 percent of the city's area with the most crime accounted for 50.6 percent of aggravated assaults and 71 percent of robberies from 2023 through 2025. Those hotspots were overwhelmingly clustered downtown, particularly west of Lincoln Boulevard.
RAND recommended that Santa Monica continue expanding its business concierge program and pursue additional ways to fill vacant commercial space and increase foot traffic, including temporary pop-up businesses and more events.
For homelessness and public safety, researchers recommended more frequent measurements of homelessness and concentrating outreach and public-safety resources in downtown hotspots. The report also suggested the city consider restarting its Homeless Community Court.
The researchers cautioned that the study was descriptive and could not establish what caused Santa Monica's economic decline. RAND interviewed 14 people from government, business and development backgrounds but did not include people with lived experience of homelessness, police representatives, labor union representatives or affordable-housing developers, limitations the researchers expressly acknowledged.
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