County Shopping For Developer Of 37 Stores At Miami International Airport
Written by Paola Iuspa on March 6, 2003
By Paola Iuspa
The county’s aviation department is looking for someone to redevelop and manage 37 retail stores at Miami International Airport.
The selected developer will develop, finance, lease and manage newsstands and specialty retail shops spread across 40,000 square feet of retail space in the central terminal. But the developer won’t be able to operate any of the stores, said Adrian Songer, the airport’s property manager.
"We want to avoid any conflict of interest between the developer and the tenants," he said.
In addition to fees charged to the tenants who lease space, the developer will receive a percentage of each store’s revenue.
The square footage of retail available could change during the awarding process as the airport is in the middle of a $4.8 billion expansion program, Mr. Songer said. To be completed mostly by 2008, the capital improvement project will end with the relocation of existing airlines to new concourses and reconfiguration of the central terminal. More than 80 companies attended a pre-proposal conference to find out about this opportunity, said Lenora Allen-Johnson, with the department’s contracts administration division.
Aviation officials hope to award the contract by October and have the developer begin work within 90 days thereafter. All the stores could be up and running in a year, Mr. Songer said Tuesday.
But some with experience dealing with business at Miami International said the awarding process could take at least a year.
Miguel De Grandy, lobbyist representing Sirgany Enterprises, which operates the 20 existing newsstands at the airport, said it would probably be a lengthier process.
"Historically," he said, "projects of similar magnitude took at least a year from the day the request for proposals were advertised to the day the contracts were awarded."
With about $30 million in sales, Sirgany is considering a proposal, Mr. De Grandy said. The airport vendor’s lease expired in January and it now has a month-to-month contract.
Some of the 37 retail stores are vacant while others have tenants with monthly contracts, aviation department staff said.
The purpose of this massive retail program is to end the management agreement system that the aviation department now has in place.
Currently, the department owns the retail inventory and hires a company to operate the stores. Under the new concession agreement, the developer would own the operation and pay the aviation department a minimum annual guarantee and a percentage of gross sales, said Zeke Orji, the department finance director.
The new system will yield the airport more profits, he said.
Food and beverage operations became concessions in 1998 while duty free was previously converted, he said.
Now the department requires that the selected company sublease the stores to retailers who in turn would pay the developer a base rent and a percentage in revenues.
Lobbyist and airport consultant Chris Korge objects to the conditions set by aviation officials.
Mr. Korge, a former airport lobbyist and current radio station owner and real estate developer, said the percentage in revenues plus the base rent that the developer would have to pay the department is too high.
Besides, he said, the passenger traffic is expected to shift in five years from the central terminal to the planned north terminal, future home of the American Airlines. When that happens, he said, retailers in the central terminal would see their revenue drop and struggle to pay their rent and a percentage of their sales.
But Mr. Songer said the department took that change into account when drafting proposal specifications. He said the rent percentage will be tied to the number of passengers using the terminals.
Miami-Dade Aviation Department officials will accept proposals for the retail developer until April 8.
"If passenger traffic goes up," Mr. Songer said, "then the rent will go up. If it goes down, so will the rent."