Developer Rick Caruso Wants to Build More Luxury Retail Stores at His Seaside Hotel in Montecito

Los Angeles billionaire developer Rick Caruso has built some of the largest and most elegant shopping centers in Southern California, but one of his smallest retail projects on the drawing board is creating a battle ground between residents living in an upper-crust, beachside community.   

Caruso, whose self-named company owns the expansive five-star Rosewood Miramar Beach hotel in Montecito, Calif., about 80 miles north of Los Angeles, wants to add about a dozen luxury stores to his seaside resort in the town where Oprah Winfrey, Gwyneth Paltrow and the Duke and Duchess of Sussex reside.

The beach resort, whose daily room rents this summer generally start at $1,600, already has a handful of small high-end shops, including Brunello Cucinelli and The Webster, off the main lobby with its massive chandelier and black-and-white marble floors. But this new retail project will be built on what is now the hotel’s west side parking lot where about a dozen ground-floor shops topped with luxury apartments would occupy two buildings.    

The other part of the project, to be built on part of the hotel’s east side parking lot, will have 26 affordable housing units that hotel staff could rent for $900 to $1,300 a month while living close to their work. The cost to maintain the affordable housing would be financed by the upscale retail/apartment complex.

Most everyone agrees that the affordable housing is a good idea because it is impossible to find affordable rent in the immediate area. The cheapest one-bedroom apartments in nearby Santa Barbara go for at least $3,000 a month.

What is churning up community debate is the retail and luxury apartment addition proposed to rise two stories high that nearby residents say would ruin the neighborhood’s country-lane ambience, add traffic and construction noise and block the mountain views seen from the nearby historic All Saints-by-the Sea Episcopal Church where actor Julia Louis-Dreyfus was married. (Her father-in-law, the Rev. Dr. George Hall, was the rector there between 1948 and 1980.) The 124-year-old wood-and-stone church looks like something out of another era and is surrounded by tall trees and a well-tended lawn.

“My neighbors and I are saying, ‘Stay in your own lane. If you want to have shops in the lobby and the main building, that is fine,’” said Cliff Ghersen, a retired local schoolteacher who has lived in Montecito near the resort since 1972 and is a spokesperson for Neighbors of the Miramar, a recently formed group with 120 people on its mailing list. “But they want to build another dozen shops covering 17,000 square feet.”

His neighborhood’s attraction, he said, is that it is non-commercial, quiet and a throwback to another era. “People come here for the lifestyle, which is different from Los Angeles,” the schoolteacher said.

Residents liken the retail addition, with a coffee shop, to creating a mini mall. “We say NO to Miramar Mall. Preserve Neighborhood Character,” says one sign posted on a residential street one block away from the proposed retail/luxury apartment project.

“I think Rick Caruso is willing to kill the goose that lays the golden egg, which is the charm and beauty of Montecito for his own personal profit. It has nothing to do with Montecito,” said Kathleen Laurain, who has lived in Montecito for 45 years.

The Montecito property has been a fashion and celebrity draw since it opened, hosting the wedding of influencer/activist Gigi Gorgeous and Getty heir Nats Getty in 2019, and a Dior Rivera takeover of the main pool in 2021, as well as activations with Staud, Kendall Conrad and other brands over the years.

New stores would be in addition to a new batch of luxury brands opening in converted bungalows near the hotel’s entrance. Bottega Veneta and Zegna just unveiled outposts there, joining a James Perse opened several years ago. Two more retail bungalows for unnamed luxury brands are on the way.

“I think to put more restaurants and shopping centers into the coastal zone makes absolutely no sense,” said Hillary Hauser, who grew up in Montecito and lives in Santa Barbara. She is the cofounder of Heal the Ocean, a nonprofit that focuses on wastewater infrastructure and ocean pollution. “Why couldn’t Caruso have left well enough alone?”

But several residents support the retail and luxury housing concept, whose size has been reduced since it was first introduced last summer. Thomas Lloyd-Butler, a San Francisco resident who has a beach house near the Rosewood Miramar, said he wrote a protest letter to Rick Caruso when he first learned of the venture. “My biggest concern was what was described as a mini mall. I thought there would be a lot of impact from external signage, drive-up parking and traffic,” he said.

But he got a call from Bryce Ross, executive vice president at Caruso, who personally met with Lloyd-Taylor and explained the stores would be facing in toward the hotel, traffic would be minimal because many shoppers would be hotel guests, and there wouldn’t be any external signage. Also, after listening to community feedback, the retail/luxury residential complex was shrunk from three stories to two. “I felt that as a two-story project, we could live with it. It is no higher than the existing buildings at the hotel.”

Cori Hayman, who lives about a mile away from the hotel, is a member of the Miramar Club, a private club that is an extension of the Rosewood Miramar. She is often down at the resort and believes the hotel is a bonus for the community with its guest and resident events and the lush gardens open for all to stroll. She said the new stores won’t take up that much room and will be surrounded by a green space. The luxury apartments, she explained, will allow more people to enjoy the area and the affordable housing will help hotel workers. “I think the project is great,” Hayman said. “We need housing, whether it is expensive or affordable.”

Marni Blau, another Montecito resident, sees the project as a positive. In a letter to The Santa Barbara Independent, she said: “I live here, and like a lot of us, I am excited to visit the shops planned for the Miramar. The stores can support affordable housing for hotel employees, without any public financing, which makes the plan even better. Who else is willing to do that?”

The proposed retail and housing concept was first introduced to the community last summer. At first there were to be 16 affordable units but that later was increased to 26.

But the retail/luxury apartment section on the western edge of the hotel near quaint residential cottages, majestic old houses and the church on Eucalyptus Lane, has fueled heated backlash. In addition to the height reduction, the retail part has shrunk from 25,000 square feet to 17,000 square feet, and now there are eight luxury apartments instead of 15. Underground parking will have to be constructed to replace the surface parking lot.

The height reduction and smaller retail layout pleased many, but Rev. Channing Smith, the Episcopal church’s rector, wants to see further reductions. Even at two stories, the project would block the mountain view from the church’s Columbarium picture windows, where funeral urns are interred and parishioners can meditate or commune with loved ones.

At a Montecito Association board meeting in May, Smith urged the hotel to occupy that area with only one-story buildings and “leave our neighborhood intact.” Currently, Smith is not commenting on the hotel addition while he endeavors to get the project scaled back.

But the Caruso company, which has some of Southern California’s most lucrative and successful high-end shopping locales, including The Grove, The Americana at Brand and Palisades Village in Los Angeles, emphasizes that the luxury retail and homes are necessary to pay for the affordable housing project, which will help Santa Barbara County meet its state requirements for more affordable housing.

“Montecito is one of the most expensive housing markets in the country. Since opening, we’ve learned from our employees how difficult it is to find housing in Santa Barbara,” said Ross, the executive vice president at Caruso. “When the state rejected Santa Barbara County’s Housing Element because no locations for affordable housing were identified in Montecito, we raised our hand to explore adding affordable housing at the Miramar. Today, we are the only proposed affordable housing in Montecito.”

The idea for retail, Ross said, came from hotel guests saying they wanted to see more shops. “Through our outreach, we learned there was a desire from our guests and the community to add additional resort shops at the Miramar. The shops are smaller, and they’re curated specifically around the needs and desires of resort guests,” Ross noted. “Guests and community members alike have told us it would be great to have more boutiques at the Miramar.”

After months of community meetings and debate, the Rosewood Miramar presented its project proposal in May to the Santa Barbara County Department of Planning and Development. The county came back and asked the resort to supply more information, including traffic and parking studies, a historic report analyzing any potential impacts to surrounding historic resources, an arborist report detailing the project’s impact on trees, and a list of proposed shop uses.

This new project would be the first major addition since the 154-room hotel opened in 2019 after Caruso acquired the historic Miramar Hotel and its surrounding 16 acres of beachfront property in 2007 for $50 million. The Miramar started out as a health resort in the late 19th century for people wanting to take the waters. During the Depression, the resort fell into bankruptcy. But in 1939, Paul Gawzner purchased it for $60,000 and added a 150-room hotel whose roof was painted cobalt blue to enhance the white exterior. It became a popular vacation spot for middle-income tourists who wanted a relaxing holiday by the sea.

Over the years, the Miramar turned dowdy but continued to receive guests until 2000. By then, hotel impresario Ian Schrager was the owner, having purchased the hotel for $31.7 million in 1998. But Schrager abandoned his plan to renovate the hotel and sold it for $43 million in 2005 to Ty Warner, the man behind the Beanie Babies stuffed toys. He too abandoned his hotel project and sold the complex to Caruso.

It took years before Caruso was able to get the hotel project off the ground, working with neighbors and navigating a complicated county approval process. The result is a grand hotel whose style is meant to have the look and feel of a 1930s manor influenced by the designs of renowned Los Angeles architect Paul Revere Williams.

The hotel has two swimming pools, several restaurants and a beach bar overlooking the turquoise-and-white striped umbrellas and lounge chairs on the beach. In the next couple of years, it could also have a small luxury retail center, high-end apartments and affordable housing.