Santa Monica, a coastal city of 90,700, declared fiscal distress in September after mounting liability settlements, falling international tourism and years of fading retail. City Manager Oliver Chi says the city is in recovery mode, aiming to reverse the decline.

Foot traffic has recently improved on the Third Street Promenade, where shoppers browse stores like Patagonia and Starbucks. World Cup visitors have added a welcome boost, giving local businesses a temporary uplift.

For investors, the rebound signals a potential turnaround in a market long clouded by vacancy and declining tax revenues. Business leaders see opportunities in revitalizing the promenade and diversifying beyond seasonal tourism.

The recovery hinges on broadening revenue sources beyond transient visitors and legacy retail. If Santa Monica can attract new tenants and sustain foot traffic, it may reverse fiscal strain; otherwise, reliance on cyclical tourism remains a risk.