June 18, 2024
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Our view: Caruso’s master class has lessons for State Street

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Everyone who’s had a taste of the entrepreneurial life knows that it’s not just the deals you make but also the deals you don’t make that are the hallmarks of success.

So when Rick Caruso, arguably the most successful developer in Los Angeles in recent decades, took the state at the UCSB Economic Forecast event on May 9 it was the story of a Santa Barbara deal he didn’t make that turned heads.

Caruso, whose Rosewood Miramar is one of the most successful new hotels on the West Coast, recounted that more than a decade ago, he was encouraged by JP Morgan Chase to take over management of a property on State Street in Santa Barbara with an option to buy it.

“We decided, given a whole bunch of circumstances, not to exercise our option on it, which I was disappointed but in hindsight was the right thing to do,” he said, in a frank assessment of downtown Santa Barbara’s sagging fortunes.

And he offered some frank advice to the city’s leadership. 

“State Street should be great,” he said, adding this.

“We’re not in the retail business. We’re not in the hotel, hospitality business, the apartment business. We are in the business of enriching lives… that’s the way that we have to approach State Street. Looking at it and saying how can we envision this street to enrich the lives of the guests and the residents?”

Caruso said that any recovery for State Street should include a mixed-use element where retail can subsidize housing and provide services to residents that are comparable to a concierge approach. 

He mentioned his successful Americana project in Los Angeles stating: “We run it or like a hotel, you have a concierge, you have room service, you got all these services that we provide you and you’re living in this fun, safe environment. And I think you could duplicate that up and down the street and it would really have a vibrancy to it.”

LESSONS FROM THE MIRAMAR

On his successful Rosewood Miramar development, Caruso said he’d like to add more retail to the project, with an eye toward subsidizing a housing element, something some local residents oppose.

To build the hotel on the site of a storied roadside inn, Caruso engaged in seemingly endless rounds of negotiations with well-heeled residents like actor Julia Louis-Dreyfus, eventually winning approval from the Santa Barbara County Board of Supervisors. 

At the UCSB Economic Forecast, he at least temporarily got in the last word on the hotel, an expensive but also award-winning property that has enhanced Montecito’s reputation as an exclusive hamlet.

“We took a big chance on the Miramar but more importantly, the community took a big chance on me because I’ve never built a hotel and that place is magical because the community has embraced it.”